Market update Sep 2022 – Green shoots emerging? Price falls decelerate, auction clearances up, consumer sentiment improves & rates rise by 0.25%; Solving housing policy and more (Ep.175)

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

1 Property market falls decelerate over September
For the first month, the rate of price decline has decelerated, which may be an early sign that the market has passed through the worst of monthly falls. Other early indicators are auction clearance rates picking up and stock levels remaining low. With the RBA putting the breaks on rate increases, the trio discuss what’s likely on the horizon.

2. Peak to trough decline
The current peak to trough decline nationally sits at -4.8% since the peak of April 2022. The trio discuss the peak to trough falls for the capital cities and state regions. Note that regional WA is still below it’s peak 14 years ago, a good reminder to be sceptical of property spruikers and do your research prior to entering any investment decisions.

3 Brisbane land tax has been repealed, but has the damage already been done?
Rents for houses in Brisbane are up 14% over the year and vacancy rates are sitting at a low of 0.7%. On a positive move, the land tax proposal was scrapped, (thanks to our friends at PIPA, PICA and REIQ). However, Brisbane has already sustained some pain, with many investors selling up or in the throws of doing so.

Comments from CoreLogic:

  1. The national rental index increased by 0.6% in September, the lowest monthly rise in rents since December 2021.
  2. At the national level, rental growth moved through a peak in May 2022 with a 1.0% rise; since that time, the monthly pace of rental growth has been easing.
  3. The slowdown in rental growth is a little surprising given rental vacancy rates remain so low and overseas migration is ramping up, although there has been a subtle uptick in vacancy rates across some regions.
  4. Since the onset of COVID, capital city rents have risen 16.5% and regional rents are up 25.1%.
  5. It’s likely renters will be progressively seeking rental options across the medium to high density sector, where renting is cheaper, or maximising the number of people in the tenancy in an effort to spread higher rental costs across a larger household,”

4 Where is the big picture on housing?
The trio discuss government and regulator decisions that have made it harder for landlords and investors. Without the big picture of understanding and deciding what is an appropriate mix of ownership between owner occupiers and investors, and how many investors should be private investors, the approach to housing reform is like throwing darts blindfolded. In positive news, the rate of increase in rents was the lowest it’s been in 10 months, which signals that rental growth is tapering.

5 Listings languish
Spring is typically the time of the year that an increase in stock occurs, but the level of listings has actually dropped and is close to the 5 year average. With interest rates on the rise and prices declining, vendors are holding off thinking that now is not a good time to sell. Hobart and Canberra are bucking the trend, with listings at 71% and 41% higher than this time last year. The trio discuss what this means for value growth and dive into distressed listings.

6 House price expectations turns around
In an interesting turn of events, the house price expectations index has ticked over 100, after dropping below 100 for the first time since September 2020 last month. Victoria and Western Australia are most positive, with readings of 108 and 106 respectively. This should improve further due to the RBA slowing down cash rate rises and is another positive green shoot in the month of September.

7 Investors continue to bow out while first home buyers jump in
Over the month of August, investor lending fell by 4.8%, while owner occupiers remained resilient. First home buyers increased by 7%. Personal loans also increased by 9.5%, which is a concern that people are funding something that they don’t have the money for. David shares what bond markets are saying about where the cash rate is likely to end up too.

8 Unemployment remains steady
The trio discuss the unemployment rate and what is on the horizon with new migrants and the scrapping of mandatory isolation for Covid-19.

Gold Nuggets

David Johnston – The Property Planner’s Golden nugget: I’ve made suggestions to our listeners that the back end of this year will be the best time to buy, the signals that we’re getting from the market is continuing to suggest that. Early movers and bargain hunters are likely to be jumping back into the market, we’ve seen resilience in clearance rates, rate of deceleration reducing, green shoots in sentiment that suggests that the back end of this year will be the best time to buy. 

Cate Bakos – The Property Buyer’s Golden nugget: land tax is a different tax to the other ones we experience. If you are buying someone else’s investment property, you may have a portion of land tax that you need to pay out, which is paid by the calendar year. So if you purchase in December, there will be no land tax bill, but there may be if you purchase in January. 


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