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In this week’s episode, Dave, Cate and Pete take you through:
- Victoria still trading despite lockdown
Non-auction sales have risen to 1,028 over the week. Since listings have gone down, this indicates that older stock on the market is clearing and sales, (including online auctions) are going ahead in full force. Virtual open for inspections are occurring, where the vendor gives you a tour of their house and is actively involved in the selling process. Cate shares her tips on how to navigate this innovative way of inspecting property.
- PIPA investor survey – where do you get your property investment education from?
The #1 source for property investment education was from professional advisors, which is great news for all the Australian’s who have been able to make smart property decisions. Second on the ladder was podcasts. Traditionally webinars and seminars were at the top of the list, now only making up 2% each, showing the extent of market disruption. The Property Professor was sad to say that only 4.5% of people get their education from books.
- Value growth in August continues to lose steam, but still going strong
Australian housing values increased a further 1.5% in August, showcasing an annualised rate of +18% pa which is still very high. But we’ve now had a five month trend of slowing growth, peaking in March at +2.8% and then easing month on month. We think this growth trend will continue. Over the last 12 months, we’ve seen +18.4% growth in property values and that will soon reach above 20%.
- Stand outs for the month
There is no end in sight for Hobart’s growth, increasing in August by 2.3%, with Canberra hot on its heals with 2.2% growth. Over the year, Hobart has grown by 24.5% and boasting total returns of 30% when you factor in rent. In the above 20% club for annual growth is also Darwin 22%, Canberra 22.5% and Sydney who has just joined the party with 20.9%. Brisbane is not far behind on 18.3% and Adelaide at 17.9%. Stay tuned for next week’s episode where Pete will reveal how long it’s taken for each city to double in price.
- What happened to Perth?
It seems CoreLogic have been listening to our podcast, and is now trying to figure out why Perth growth has been lagging and have actually removed Perth from their daily and monthly indices. CoreLogic is now investigating a divergence in housing market measurements for Perth. Watch this space…
- Rental growth drives forward with all capitals on an incline, except Darwin and Perth
Darwin and Perth have led the capital cities in rental growth over the last 12 months, Darwin in particular increasing by 23% for houses and 21% for units. Melbourne is still in negative territory for units, however a sharp turn-around is visible from when the market bottomed out. The trio ponder the reasons behind the trending rise in unit rents.
- New listings take a dive, should you hold off on making a purchase?
Overall, listings fell nationally by 7.8%, largely due to the two biggest markets of Sydney and Melbourne taking a dive in listing volumes of –10.7% and –31.2% respectively. The Melbourne market has been largely affected by lockdowns and vendors electing not to sell, (or to delay their campaigns). But demand remains strong, largely driven by FOMO. We think the ratio of buyers to sellers will stay largely the same, even when more vendors come onto the market, as there are plenty of buyers who are also electing to wait it out. Waiting it out could be a good idea if you’re not desperate to purchase immediately, where there will be more choice available later down the track. It’s unlikely that there will be any bargains available, so if you’re waiting for a bargain, you’ll be waiting a long time. The risks of waiting it out, is that the market will move between now and then, and your dream property will become financially further away.
- The latest on our wages
Nationally wages rose 0.4% in the June quarter and 1.7% over the last 12 months. This is below the rate the RBA is targeting, they want to see wage growth ideally in between 3-4% before they start lifting the cash rate, (still not expected until 2024). The Australian Capital Territory recorded the highest quarterly rise of 0.6%, where unemployment is very low and jobs are very stable, which has also flows into their property price growth. The Northern Territory recorded the lowest quarterly wage index rise of 0.1%. Interestingly, Tasmania maintains the highest through the year rise of all the states and territories for the third consecutive quarter at 2.2%. South Australia and Western Australia recorded the lowest through the year rise of 1.6%.
- July lending indicators
Leading indicators for July increased for housing overall by 0.2%, after a fall of 1.6% in June, indicating a plateau in the market. Owner occupiers fell by 0.4%, with first time buyers dropping off a cliff with 7.6% reduction month on month. Investor loan commitments continue to increase, with growth of 1.8% over July, meaning that investors are now make up 29.11% of new finance. This is still below the levels where APRA intervened in 2015 where investors made up 46% of new lending.
- Household savings ratio sees an uptick over July
Savings rates are increasing once again and household savings are expected to hit at least $200 billion this year, with $25 billion added in July as lockdowns in Sydney and Melbourne kept people indoors and spending less. The increase was the second-largest on record, topped only by July last year, as tax returns and government COVID-19 stimulus and supports helped push savings to $167 billion above pre-pandemic levels.
- How to develop your own property plan – start with the end in mind (#4)
- What determines your property strategy (#6)
- Time in the market vs Timing the market (#19)
- Why the family home is often the biggest piece of the investment puzzle (#22)
- The great debate! Capital Growth v Cash flow – which investment strategy is superior? (#56)
- Preparing for auction #2 (#98)
- The winner’s curse and how to avoid it (#94)
- The Seven secret steps to buying a house (#93)
- Property Planning your next purchase – critical considerations and why modelling financial outcomes is vital to success (#92)
- Goal setting fundamentals for property success (#82)
- Why your Mortgage Strategy is more important than your interest rate! (#9)
- How to succeed with Property and Create your Ideal Lifestyle
- Mortgage Strategy 101 – YouTube video series.
David Johnston – The Property Planner’s Golden nugget: RBA is still quite buoyant regarding the economy and expecting it to bounce back as lockdowns end and vaccinations rise. It believes it will delay but not derail the recovery. They reduced quantitative easing and bond buying program, but haven’t increased it. They have confirmed that they will extend the bond buying until February 2022.
Cate Bakos – The Property Buyer’s Golden nugget: Vic premier announced 70% vaccination rate that some restrictions will start to ease, that will be the ability to inspect 1-1 for a vacant property, the agent will have to stand outside while you take a look. Vendors will do what it takes if they need to get the property moved on. Could agents provide hotel accommodation to vendors? We think this is likely, which means that they will want to move fast when an offer is received.