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In this week’s episode, Dave, Cate and Pete take you through:
- Rate of decline speeds up in most capitals
Over the month of August, the rate of decline has increased, while in a surprise move, Melbourne’s decline has slowed. Shockingly, Brisbane has jumped from –0.8% in July to –1.8% in August. No doubt due to proposed changes to land tax, flooding and the previous heat in the market. The trio discuss the trough to peak for the capitals and what’s likely to happen next.
- National: -1.6% (fourth consecutive month of value decline and largest decline since 1983)
- Combined capitals: -1.6%
- Combined regionals: -1.5%
- Capital Cities
- Darwin: 0.9% after 0.5% last month (only capital city not in downturn)
- Adelaide: -0.1% after 0.4% last month
- Perth: -0.2% after 0.2% last month
- Melbourne: -1.2% after -1.5% last month
- Canberra: -1.7% after -1.1% last month
- Hobart: -1.7% after -1.5% last month
- Brisbane: -1.8% after -0.8% last month
- Sydney: -2.3% after -2.2% last month
- Rental market – Brisbane land tax is likely to make the rental situation worse
The trio canvas the proposed changes to land tax in Queensland which will likely cause more than a few investors to abandon the Queensland property market and sell up to first home owners, hence intensifying the rental shortage. Rents in Brisbane are already up 14.1% annually for houses, which is likely to be further exacerbated. The greatest risk is that other states will jump onboard and aggregate land tax.
- The outlook for vacancy rates
Supply remains limited for rentals, with the tap of overseas migration just starting to be turned on. With new dwelling constructions starting to fall, the outlook is fairly grim, particularly given the Australian Government has increased the target figure for new arrivals.
- Listings to increase over spring
Supply of stock on the market is set to increase, with covid in the rear-view mirror and spring time on our doorstep. Old (180 day+) listing numbers have started to climb, showing that buyer FOMO and desperation have calmed. Total listings are tracking above the 5-year average, a sign that vendors want to sell before the market drops further. The trio discuss how listings and monthly growth our closely interrelated. The biggest increase in annual listings can be seen in Hobart and Sydney, which also show the largest drop in property values. While Adelaide has the largest drop in annual listings and is the strongest market this year.
- Consumer sentiment
The house price expectations index has dropped for the first time below 100 as consumer sentiment overall takes a hit. Victoria remains the most pessimistic, with a 17.7% drop over August from 99 to 81.6. The trio discuss what this could mean for inflation.
- Finance continues to fall over July
Lending activity continues to slow and mostly investors and business construction has been impacted. The bond yield spiked after the US Federal Reserve Chairman spoke and indicated that the US will do whatever it takes to curb inflation. However, expectations have settled again at 3.1% for the cash rate and we are on our way to hit a 3% cash rate towards the end of the year.
- Victoria leads the unemployment decline but wages are not taking flight
Unemployment drops again to 3.40%, while Victoria leads the pack with the lowest unemployment on record at 3.10%. With the low level of unemployment, it is interesting that wages are not skyrocketing. The trio discuss the delicate tight rope walk of increasing wages, as wage growth must stay under control to tame inflation. Wages should increase, but not at the same rate.
Gold Nuggets
David Johnston – The Property Planner’s Golden nugget: I think the back end of this year will be the best time for buying for any would-be buyers.
Cate Bakos – The Property Buyer’s Golden nugget: let’s all enjoy fresh produce and lettuce again, next Tuesday is taco Tuesday and I can’t wait
Resources
- 12 Reasons why now is the best time in history to refinance!
- All things property tax – how to understand your deductions at tax time (Ep.55)
- Bad credit behaviour – what doesit mean andhow can it be solved before it’s too late? (Ep.65)
- Setting yourself up to purchase with confidence and why getting your pre-approval in place is more critical than ever (Ep. 78)
- Optimising tax deductions – Top mortgage and loan strategy tips (Ep.87)
- Understanding my land tax (Ep.108)
- How to increase your borrowing power – Learn how investors, first home buyers and upgraders increase capacity (Ep.116)
- How much can I borrow? How borrowing capacity can be impacted, massaged and manipulated (without breaking the rules of course!) (Ep.115)
- Why your Mortgage Strategy is more important than your interest rate! (Ep. 9)
- Five mortgage strategies that can grow your wealth
- Mortgage Strategy 101 – Ep 5. Risk Management
- Why your approach and assessment of risk is paramount to property success! (Ep.10)
- Mortgage Strategy 101 – Ep 4. Optimise Investment Deductions
- Mortgage Strategy 101 – Ep 9. – Maximising your tax deductions by using a redraw facility
- Optimising tax deductions – top mortgage and loan strategy tips
- Mortgage Strategy 101 – Ep 6. Offset Optimisation
- No mortgage strategy – #4 of the top 7 Critical Mistakes (Ep.34)
- All things property tax – how to understand your deductions at tax time (Ep.44)
- Why you need to plan for your future home when buying an investment property
- How to turn your first home into an investment property when upgrading
- How to avert mistakes if you want to rent out your former home
- Why short-term investing has long-term consequences
- Diversification 101 – How and why to plan for diversification within your property portfolio (Ep.43)
- How will your mortgages serve you in the long run?
- Mortgage Strategy 101 – Ep 12. How to keep property as you accumulate!
- Mortgage Strategy 101 – Ep 8. How to keep a stepping stone home when you upgrade
- How our mortgage strategy helps us to hold properties
- How to succeed with Property and Create your Ideal Lifestyle
- Mortgage Strategy 101 – YouTube video series.
