In this week’s episode, Dave, Cate and Pete take you through:
- A look into recent market cycles
The Property Professor shares some research from ABS home value index data on property market movements over the last 5 years. Cycles are a key component of the property market and they are difficult to predict. However,when property prices do drop, the declines are generally not as large in magnitude as the increases.
- Consumer spending and impact on the property market
The household savings ratio is now up to 19.8% from 11.8% last quarter due to the Sydney and Melbourne lockdowns. Inflation is starting to increase, but this may only be transitory, as spending increases once lockdowns are lifted, but as savings decrease, people will tighten their belts once again. If listings decline in the new year, we may see buyer conditions stiffen and prices increase if consumer confidence remains high. Supply and demand ratios are anticipated to tighten if listings decline.
- Property market further softens over November
Australian housing values increased a further 1.3% in November, gradually losing steam from March’s high. With the exception of Brisbane and Adelaide, monthly growth for each capital city has declined to 1.1% or less. Perhaps with growing unaffordability, investors are turning to Brisbane and Adelaide, both of which are the star performers currently.
- Rents and vacancy rates
Darwin and Hobart are still rocketing along, but the rate of growth in rents is starting to come down. Investors have flocked to these markets, meaning that rental stock is increasing, and this has consequently taken some of the heat out of the growth. A 2% vacancy rate is considered equilibrium, while Perth, Adelaide, Canberra, Darwin, Hobart are all below 1% vacancies, (indicative of a tight rental market) hence causing pressure in these markets.
- Houses vs units
The median price gap between houses and units is the highest on record. Based on median values, capital city houses are now 37.9% more expensive than capital city units. However, the difference in the quarterly rate of growth between houses and units is now the narrowest it has been since October 2020, with only 1.6 percentage points between the two broad housing types. If you’re looking to purchase a quality unit, now is probably as good a time as any to buy, considering the gap is likely to shorten in the future. However, the trio warn against buying “any” unit. There are good units and, well… not so good units. It’s imperative to know the difference.
- New listings rise but total stock remains low
A rise in the number of homes available for sale is a key factor driving the slowdown in capital growth. New listings are up 34% from the same time last year and 15.7% above the 5 yearaverage. However, total listings are still 15.4% below this time last year and 24% below the 5 year average, indicating that buyer demand is soaking up the new stock on the market as well as the old. Listings that have been on the market for over 180 days have dropped a drastic 51% from this time last year.
- Growth in regions continues to burgeon on
Over the month of November combined regions achieved 2.2% growth and this is not just because of the COVID-induced escape from the city. Now affordability issues are forcing people to consider and aim for regional property, with the support of infrastructure upgrades and lifestyle factors that attract newcomers. It will be interesting to watch this space over the next few years.
- People are still pessimistic about now being a good time to buy a dwelling
The ‘time to buy a dwelling index’ has bounced back to 91.1 points over November from 83.3 in October, although still in negative territory. The trio discuss the reasons why confidence has remained lower around purchasing property in the current market. One reason is that there is always a percentage of buyers who drop out of the property search over this time to take part in holiday preparations and social gatherings, perhaps even more so this year due to the freedom of being released from lockdowns. This is one of the reasons why December is a great time to buy, as other buyers put their property plans on hold for various reasons.
- Investor numbers continue their steady creep higher
Investors now represent 32.9% of new lending, which has been slowly increasing, month on month. The ratio of investors to owner occupiers now is on par with the general split of property ownership in Australia, (which is split 66% owner occupiers and 34% investors.) However, investor levels are still below 46%, which is when APRA stepped in to cool the market in 2015.
- Unemployment increases but expected to be temporary
The unemployment rate increased to 5.2% in October from 4.6% in September. However, this increase is not expected to last long-term, as the increase was caused in large part due to Melbourne, Canberra and Sydney lockdowns. Job adverts are up significantly, which is a positive sign.
- The latest update from the RBA
The Property Planner shares the key decisions from the latest board meeting of the nations’ Reserve Bank. Will we see a rate rise in 2022? We think that’s highly unlikely.
- Predictions for 2022
The Property Planner, Buyer and Professor share some early predictions for where they think the market will head in 2022. The trio will record a whole episode on their predictions in the new year, stay tuned!
Cate Bakos – The Property Buyer’s Golden nugget:stay close to the agent on the campaign. Don’t assume the price expectations has to stand, because a lot of vendors are committed to selling. A lot of people have Christmas day deadline in their head. And circumstances can change, but if you think a proeprty is only marginally out of your reach, have a chat to the agent because you might get lucky in this last fortnight.
David Johnston – The Property Planner’s Golden nugget:we’ve got a two direction market. Brisbane, Adelaide and Perth are moving ahead in terms of price value growth and the other capital cities have reduced in the last month. These middle cities could have some opportunity to come. The gap between Sydney and Melbourne median is now $302,000 – we’re going to keep watching this number over the next year or two.