Property Investors are back in the market | Property Insiders [VIDEO]

I took some time over the long weekend to look at some articles and commentary that came out just a year ago when the GVC (Great Virus Crisis) was just beginning.

While the media was full of negative commentary then, in these weekly Property Insider video discussions Dr. Andrew Wilson and I gave measured commentary, based on the perspective we’ve both gained from many years in the market. Sell And Buy Property

But this resulted in us being circled by a pack of “hangry” housing bears.

They were all confidently growling that local house prices would slump by the largest margin on record.

Of course, at that time they were fuelled by some crazy forecast from the banks and those perennial negative Perma Bears who were praying for the mother of all housing depressions.

Now, just on a year later, the media is full of positive news and most of the bears have gone back to hibernating in their caves, but some are still out there telling us the upturn in our property markets is just temporary.

Well…as I said there is so much good news in the media at the moment I don’t think we can cover all that’s happened in the last week, but watch this week’s chat with Dr. Andrew Wilson, Australia’s leading housing economist and chief economist of My Housing Market, to learn what’s really going on.

The mortgage cliff that didn’t materialise

Remember how the property pessimists were worried that we would fall off the cliff due to the many deferred home loans?

Many banks gave temporary relief to borrow is impacted by COVID-19, allowing them to defer payments for a period of time.

However, APRA reports that as of 28 February, a total of $14 billion worth of loans are on temporary repayment deferrals, which is around 0.5 per cent of total loans outstanding, down from $37 billion (1.4 per cent of total loans outstanding) in January.

Sure lots of homeowners and property investors took advantage of the mortgage safety net, but they didn’t need to use it and are now repaying their debts.

We’re not falling off of a fiscal cliff and our banking system is sound and stable – so it’s a pity the Negative Nellys created so much stress amongst those who listened to them last year.

I feel sorry for those who listened to them and either sold up or missed out on the profit-making opportunities the market has offered.

Watch this week’s video as Dr. Andrew Wilson and I discuss the current state of play.

Loans

Total Loans

Home loans show there are good times ahead:

The value of new loan commitments for housing fell by 0.4 per cent from a record-high $28.75 billion in January to $28.64 billion.

On the other hand, investors are back in the market with lending to investors rising by 4.5 per cent in February to 3-year highs of $6.94 billion, while lending to owner-occupiers fell by 1.8 per cent to $21.70 billion.

Watch this week’s video as Dr. Wilson explains how investor lending was particularly strong in Victoria

For owner-occupiers, the value of loans for construction rose 4.4 per cent in February to a record-high $4.25 billion.

Renovation loans rose 8.3 per cent to 11-year highs of $322.4 million.

Housing Finane

Housing Approvals

Owner Occupier.jpg

Building approvals surging

​February saw another big upside surprise for dwelling approvals which leaped 21.6% in the month to be up 20.1%yr.

​The record house building approvals were driven by the government’s HomeBuilder program which has now have sparked shortages of key tradespeople and helped push the price of materials up by as much as 50 per cent. Build Your Property

​Rampant demand in the renovation and home building sector is hitting customers with significant delays and pushing up the price of materials.

And disruptions to international supply chains are only making matters worse.

​With dwelling approvals for houses at record highs, it’s likely we will see additional pressure growing on construction costs as demand continues to build for residential construction materials and resources.

Watch this week’s video as Dr. Andrew Wilson and I discussed how the lift in residential construction costs is also placing upwards pressure on inflation where housing costs receive the heaviest weighting within the CPI ‘basket’ of goods.

Although HomeBuilder has now been phased out at the end of March 2021, it’s highly likely we will see a continuation in this trend towards higher residential construction costs as it will take some time for builders to work through the surging pipeline of house approvals.

Dwellign Approvals

Approvals By State

Job vacancies

Despite the concerns of double-digit unemployment, 90% of the jobs lost over Covid have been recovered.

In seasonally adjusted terms, job vacancies rose by 13.7 per cent or 34,800 to a record 288,700 available positions in the three months to February.

Vacancies are up 26.8 per cent or 61,000 available positions in February compared with a year ago.

Of course, JobKeeper has now ended and while there is some concern that more people become unemployed, the residential property boom if you’re in strong demand for construction workers.

Job Vacancy

Now is the time to take action and set yourself for the opportunities that will present themselves as the market moves on

Metropole Team

If you’re confused about the mixed messages in the media you are not alone.

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Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and one of Australia's 50 most influential Thought Leaders. His opinions are regularly featured in the media. Visit Metropole.com.au


'Property Investors are back in the market | Property Insiders [VIDEO]' have 16 comments

    Avatar

    April 2, 2021 Mary

    @Joseph
    Your comment about “Australia heading towards Japan” and being over 1T in debt

    Have you seen this link lately?

    https://www.usdebtclock.org/world-debt-clock.html

    Australia is doing AMAZINGLY WELL compared to the rest of the world.

    I suggest to try removing the lens of pessimism and looking at life in general with a more realistic and optimistic outlook

    People are angry when prices go down
    People are angry when prices go up

    Can’t seem to win either way eh?

    Reply

    Avatar

    March 3, 2021 Jennifer

    90% of jobs recovered? I I don t think so. The tourism and travel sectors have been decimated and the education sector is not far behind. It s a shame that 9-5ers forget that these sectors even exist. I personally have been getting by on menial casual jobs for over a year and it looks like that will continue for most of this year as borders remain closed. Some of us have had our lives turned upside down for the foreseeable future, so No, it is not back to normal. I m lucky as I had some money and a mortgage already but I can t even go to the bank to access a better rate through refinancing as I don t tick a single box right now. And I work for a very reputable company normally – stood down definitely through no fault of theirs or mine. Not all of us are back to normal!

    Reply

      Michael Yardney

      March 3, 2021 Michael Yardney

      We quoted the Australian Bureau of Statistics latest figures. Of course for the many people like you who are still without a permanent job and the situation is terrible and we are not wanting to belittle that.

      Reply

    Avatar

    February 4, 2021 Raj Thakrar

    Hi Michael,
    It is too early to be generalist and say property prices will hike. There are number of factors in play here.
    1 Due to lock down some sales were on hold
    2 Government Incentive in play
    3 Relaxed lending rule
    4 Government incentive
    Cost of new build artificially inflated by builders and developers sending cost of new build to new level making house price higher. The buyers technically are not benefiting for these Government incentives they are going in to builder and developers pocket. Housing in Australia is still young growing market so bubble will burst scenario does to stack up. It is always demand and supply simple economics.

    Reply

    Avatar

    December 10, 2020 Philip Lee

    The property market didn’t collapse because the government is throwing everything at it to keep it afloat. Our property market is not a free market driven by market fundamentals. It is manipulated by the government cutting interest rates to zeo, stamp duty concessions plus first home buyer grants, and government guarantees for deposits all sucking in the financially unsophisticated into putting themselves into a life of mortgage stress. It’s just kicking the can down the road.

    Reply

      Michael Yardney

      December 10, 2020 Michael Yardney

      Philip. You are correct, our property markets have never been a “free market”, they have been manipulated by the Reserve Bank and APRA. Remember a couple of years ago when investors were dominating the market pushing up prices, the RBA raised interest rates and APRA made it much harder for banks to lend to investors and this slowed down the markets.
      Currently intervention has supported our markets and that’s good. It’s the government’s job to protect its constituents – you and me and one way of doing that is providing stability to our housing market. They are too big to fail and no one will let them fail.

      Reply

    Avatar

    October 16, 2020 Joseph Battaglia

    Michael your optimistic views irrespective of the true underlying data is disconcerting.
    The government is covering up the reality of the situation, throwing money against the wall at all costs (hoping some will stick) and falsely propping up the economy whilst kicking the can down the road. The rhetoric from parties with bias/interest in the real estate market are also contributing to the propaganda that “things are ok and sentiment is up” – whilst reality is different.
    We are not leaders on the world stage, for our real property obsession, in fact we are almost ridiculed that we are a nation that increases their wealth through selling properties to each other increasing the price at each transaction.

    Its fiscally clear, we should allow the reset button to deflate this overvalued bubble and get back to reality. I mean seriously, some of these prices are ridiculous!

    Are we going the way of Japan?
    This QE is just irresponsible on all counts.
    Over $1T in debt for such a small economy… come on, who are we kidding.

    Reply

      Michael Yardney

      October 16, 2020 Michael Yardney

      You are right Joseph, many of our industries are on life support from the government at the moment. And while the property market was being supported by loan deferrals, they seem to be cleaning themselves up nicely. What is the alternative? Do you really want to see businesses go broke and people go hungry? Our government and those around the world have learned how to handle economic downturns. And spending our way out of a downturn is a valid economic argument

      Reply

    Avatar

    October 2, 2020 Dave

    Dear Michael. Your articles are interesting
    and usually very well written . However this one is full of a lot of spelling and sentence construction mistakes that in parts make it hard
    to follow . Take a look at where it says sh-t (Let me know if you need a proof reader ) 😉

    Reply

      Michael Yardney

      October 2, 2020 Michael Yardney

      Thanks for the heads up Dave – you are right lots of errors in this one. As I can talk faster than I can type I usually use voice to text, and it is pretty accurate. But clearly I missed a couple of bad bloopers this time.

      Reply

    Avatar

    July 24, 2020 Martin

    The RBA will print money. And has printed plenty of it already to fight covid-19. It just doesn’t give the money directly to the government. It prints new money and uses it to buy government bonds on the secondary market so that institutions can take a cut as they buy the newly issued bonds from the government So that the government can pay for jobkeeper and Then these institutions onsell them to the RBA for a markup.

    Reply

      Michael Yardney

      July 25, 2020 Michael Yardney

      There has been a lot of discussion recently about Modern Monetary Theory, which suggests central banks should print more money and then give (lend) it to the government, to help pay for it debts.
      This week RBA governor Philip Lowe said that he won’t do that (print extra money) instead the banks should borrow on the open market at the prevailing low interest rates because they can afford it.
      Rather than print more money he gave the Morrison government the green light to increase debt levels and lock in a larger budget deficit to support the economy during its recovery from the virus crisis

      Reply

    Avatar

    June 26, 2020 Alex P.

    While Dr Wilson may say that more sellers entering the market is an expression of confidence, the flip side is that it may be the smart money taking the opportunity to exit while prices are still holding up. If you drill down in the data is there a way to differentiate whether these are investment properties or owner occupied properties being sold and how does that relate to historical data. Second point is that government intervention has done a good job of addressing short term liquidity over the crisis but there have been no measures on a similar scale to address solvency, and solvency is what really matters after the liquidity tap has been turned off.

    Reply

      Michael Yardney

      June 26, 2020 Michael Yardney

      Alex, you are right on both counts.

      Our experience on the ground speaking to buyers, sellers and estate agents, is that there are very few distressed properties coming on the market at present.

      Similarly we do not believe the government is going to pull the rug out from under us in September after he’s gone to such an effort to support the economy and our markets

      Reply


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