Market update Nov 2022 – Rents are still climbing, stock supply is tight, and bond yields have softened! (Ep.183)

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In this week’s market update episode, Dave, Cate and Pete take you through:

  1. Continued positive signs as home value index results show rate of decline slows

Like October’s data exhibited, dwelling values’ rate of decline is still slowing in all cities except Brisbane and Hobart, but our national decline is not as severe as the media would have us all believe.  Cate points out that Adelaide’s losses are more subdued and she ponders if Adelaide was late to the party and late to leave the party.

Last month’s twelve month rolling average was slight compared to November, and we expect this figure will start to surge as the heights of last year’s market fade away from the rolling average data set.

Perth and Darwin remain the surprise cities this month, and Pete points out that Perth and Darwin’s median values are the lowest in the country.

2. Rents are still climbing in many cities, and while house asking rents have slowed somewhat, the rate of growth is still very tough on tenants. Units in almost every city are still climbing at a strong rate, particularly for Sydney, Brisbane, Melbourne and Adelaide.

The return of unit popularity for renters could be based on a return-to-the-office call, some may be opting for units due to financial constraints, and many renters are once again enjoying the city offerings now that lockdowns are behind us. Pete and Cate each share a real life example of the brewing issue that renters are now facing.

The number of rental properties available for rent have reached an all time low in capital cities for the decade, and regional data suggests that supply has reached a 14 year low. Dave points out that net overseas migration has reached record highs for the first quarter of this year; clearly another compounding threat to rental affordability.

3. New listings are the lowest in years and Pete shares a frightening chart that shows our winter volumes exceeded our spring volumes.

“The property market is a forward indicator of what is going to play out in the economy next year”, says Dave as he points out why we have this ‘chicken and egg’ issue with our listing activity. Both listings and sales are much lower than previous years.  Pete can’t remember ever seeing winter volumes exceeding spring volumes. Considering the magnitude of employees connected to the property industry, Dave predicts that our unemployment figure will climb in 2023.

Pete points out a stunning observation; the new listing activity nationally in winter exceeded our spring new listing activity. This is a first for as long as the trio can remember.

4. What’s the correlation between dwelling sales and consumer confidence?

Consumer confidence continues to fall and house price expectations have had a significant fall.  Cate shares that limitations to the currency of this index is making things tough for tracking the impact of the rate cuts. If only we could have it in realtime every day!

5. A lot less people are borrowing money for property and investors’ new loan weighting is declining

The uptake of finance continues to move into negative territory and the percentage of owner occupiers vs investors is still favouring owner occupiers. Cate identifies that the first home buyer uptake rate is surprising when contrasted to the jitters she is seeing from this contingent at the coal face, and she highlights that commercial property appetites are lacking and personal finance arrangements signal some signs of pain. Pete weighs in with his concerns about commercial property as longer term leases start coming to an end and businesses reconsider their needs.

6. Amidst the bleak news, there is a sign of welcome change! The bond traders are demonstrating that they feel we’re getting close to the peak for interest rate movements. 

The three year bond yield has declined over this past month and Dave shares the correlation between the bond yield and the cash rate.

7. Unemployment remains low and Pete notes that it’s so much easier to find a job today than in previous years. 

8. The headline inflation rate has come down!

While we were all disappointed to see the cash rate move 0.25% again in December, we are relieved to see signs of easing in our inflation figures.

Eurozone also had some encouraging news about inflation, as did the US. Interestingly the share market shot up upon each announcement, (unsurprisingly!)

Gold Nuggets

David Johnston – The Property Planner’s Golden nugget: Dave’s gold nugget involves looking back in the rear view mirror… for those fortuitous property owners who fixed their interest rate back in 2021, they were able to lock in a rate of 2.1% in Jan for three years, and then again in June at 2.15%, only a small increase. Five year fixed rates for the same months sat at 2.69% and 2.84% respectively compared to an astonishing 6.2% today for three years and 6.59% for five year fixed rates. What a change in a short space of time!

Cate Bakos – The Property Buyer’s Golden nugget: Cate’s gold nugget aims to give listeners who are out there still searching a hot little tip. Given the stock levels for 2022 are now eroding as the trading year comes to a close, active buyers can ask their favourite agents for any insights (or early access) into some 2023 listings.



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