A lot can happen in one week in our property markets, can’t it?
So here’s a look back at some of the things I read or learned this week, that I believe you should also know.
1. House prices continue to rise
Housing prices have continued rising through the month of February. In fact price growth is accelerating.
Prices in four of the five big capital cities are already over 1% higher this month, up to 1.6% in Sydney.
Adelaide prices performed the strongest last year, and while they have continued rising, other major capital cities are currently rising at a faster rate.
Perth prices have increased by 2.8% so far this year.
2. Look how many jobs we’re creating
93 per cent of the jobs lost at the peak of the COVID-19 first wave in April and May had now been recovered.
Both unemployment and underemployment have continued their downward trends in further positive signs that Australia’s economy is bouncing back quickly from COVID-19.
The official jobless rate dipped again from 6.6 per cent in December to 6.4 per cent in January, with the ABS estimating that 29,100 extra people were employed last month.
The recovery in the Australian labour market has progressed much quicker compared to other recessions — normally it takes a few years for employment to get back to its pre-recession levels.
3. Rental Market Update
After last year’s softness in the wake of the pandemic, Sydney’s rental markets seem to be stabilising again.
Vacancy rates remain on the high side (by Sydney’s standards), but detached houses asking rents look to have turned up, with hints even that apartment rents may also be stabilising.
The continued economic recovery is playing its part, jobs returning, providing the wherewithal for rental demand to resume.
Melbourne’s rental vacancy rate remains more elevated, the state economy now recovering after the hits from the extended lockdown, with a hint that asking rents for detached houses maybe now starting to level out.
The stand-out turnaround market has been Perth with a sub 1% vacancy rate, levels not seen since the heady days of the resources boom earlier last decade with the expansion of iron ore capacity and major LNG projects.
The Adelaide rental market also looks tight with asking rents rising in real terms.
After some initial jitters early in the pandemic, Brisbane’s vacancy rate has been declining since, now supporting asking rents, especially for houses.
4. 2021 will be a record year for Detached Home Building
It is anticipated that almost 130,000 new detached homes will commence construction in 2021.
The previous record of 120,000 starts in a calendar year was set in 2018.
The government incentive of homebuilder has delivered – there will be record volumes of new detached homes being built around Australia.
Remember this was an incentive to help the building industry more than it was to help first home buyers – some who were overcommitting and others who are overpaying.
On the other hand, there is a slump in apartment construction which, considering the long lead time to get big projects out of the ground, may lead to an undersupply moving forward.
5. Talk of mortgage stress remains overstated
According to Dr. Shane Oliver, chief economist of AMP, there is no denying housing affordability is poor, debt is high and some households are suffering significant mortgage stress.
But most borrowers appear to be able to service their mortgages.
The share by value of housing loans on bank payment holidays has collapsed from 11% in May to just 2.4% in December.
And the collapse in mortgage rates – that has seen household interest payments as a share of income fall to their lowest since the mid-1980s – has helped.
6. Inflation has quickly picked up, back to where it was prior to the pandemic
Now is the time to take action and set yourself for the opportunities that will present themselves as the market moves on
If you’re wondering what’s ahead for property you are not alone.
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