‘More chance of winning lotto’ than housing targets being met – latest residential news


Property prices driven upwards by a lack of supply appear unlikely to change trajectory, with PIPA Chair Nicola McDougall declaring “I have a better chance of winning Lotto next week” than the government has of constructing 1.2 million new dwellings over the next five years.

The upshot of the federal government’s ambitious housing targets falling further behind by the month, while migration levels and population growth remain high, is that property prices around the country continue to climb.

Market conditions in Brisbane and Adelaide remain robust, with Sydney resilient and Melbourne mostly stable – albeit with the significant exodus of investors from Victoria set to continue to negatively impact its rental crisis, Ms McDougall said.

The Perth juggernaut may be slowing though, she added, saying some commentators have called time on the peak of buyer interest and sales activity in the Western Australian capital, with median prices yet to reflect this potential state of play.

According to the Australian Bureau of Statistics, net overseas migration was a staggering 550,000 in the year ending 30 September 2023 – a mind-boggling figure considering the lack of housing supply currently available for renters.

“Not only does that tap need to be turned off dramatically, but more needs to be done at a policy level to encourage investors back into the market to help remedy the rental catastrophe,” Ms McDougall said on Tuesday (16 April).

“An immediate reduction in the three percentage point borrowing serviceability buffer would be a good place to start.”

Within two years, Adelaide’s median dwelling values will be higher than Melbourne’s median dwelling values.

Peter Koulizos, The University of Adelaide

There was no comfort to be drawn from the latest new home sales figures.

The Housing Industry Association (HIA) New Home Sales report, released Tuesday, is a monthly survey of the largest volume home builders in the five most populous states and is a leading indicator of future detached home construction.

While new home sales increased by 4.9 per cent in March compared to the previous month, concerningly, sales in the first three months of this year remain 41.3 per cent below the same quarter in 2021, 18.2 per cent below the same quarter in 2020, and 18.9 per cent below the same quarter in 2019.

HIA Senior Economist, Tom Devitt, said there is an increasing divergence at a state level, as those markets with higher land prices endure a larger downturn in home sales.

“Sales in New South Wales and Victoria in the first three months of 2024 remain down significantly compared to recent years, including sales falling by 48.7 per cent and 32.7 per cent respectively, compared to the same quarter in 2019. 

“The higher land costs in New South Wales and Victoria are the principal reason why sales in these markets are more significantly affected by the rise in the cash rate.

“Lowering the cost of delivering new homes to market is essential to achieving the Australian government’s target of 1.2 million new homes over the next five years,” Mr Devitt said.

Impact on property prices around Australia

Australia appears set for a prolonged period of surging property prices given annual building approvals are tracking at only about one quarter of population growth.

In identifying Australia’s best property investment prospects, Terry Ryder, Managing Director Ryder Research Resources, noted in Canstar’s Rising Stars report, released Monday (15 April), that the halo might be slipping for Perth’s red-hot property market.

“We see Brisbane as the likely leader (in terms of property market investment prospects), with Adelaide and Sydney close behind; Perth starting to slip down the rankings, while remaining a growth market; Melbourne doing better than in 2023; Queensland emerging as the strongest regional market; and Canberra, Darwin and Hobart the weakest locations.”

“We see the Perth market as having passed its peak in terms of market activity, although the price data remains strong,” Mr Ryder said.

“It’s a classic scenario when a market reaches its peak, but it takes time before it’s reflected in the price statistics, which always lag.

“It’s a major trap for investors who are still piling into that market and buying recklessly.”

He said low-priced suburbs and regional WA offered the best prospects, including country centres like Bunbury and Geraldton and Mandurah in Perths Peel region,” Mr Ryder said.

Working class suburbs were also generating high capital growth.

“It’s important to understand Perth – like other cities – has areas that are performing better than others.

“A case in point is Orelia in Kwinana, where not only has it produced 20 per cent annual growth but it also the second fastest growing LGA in Western Australia.

“Investors are increasingly being attracted to the region – about 40 kilometres south of the central city – by its affordable property prices with it being the most affordable precinct in the metro area.

“But don’t let its cheap property price tags put you off, because the region is also home to billions of dollars of new infrastructure and is forecast to create some 10,000 jobs over the next three decades.”

Adelaide’s property market has led the way in Australia since the onset of Covid, growing by 55.3 per cent, ahead of Brisbane (53.5 per cent) and Perth (52.9 per cent).

Peter Koulizos, Lecturer, Master of Property, The University of Adelaide, Adelaide property continues to power on.

Adelaide’s property market will continue to grow from strength to strength, so much so that within two years, Adelaide’s median dwelling values will be higher than Melbourne’s median dwelling values,” Mr Koulizos predicted.

Adelaide continues to invest steadily in infrastructure improvements, notably the road network and rail links, as well as medical and education infrastructure. There is particularly large investment in the Edinburgh Defence precinct, major IT enterprises and big commercial-industrial precincts.

Melbourne’s sound real estate fundamentals

Matt Skehan, Buyers Agent, Azure Buyers Agents, acknowledged that the Melbourne property market had not had the stellar growth of other cities but said the fundamentals were strong.

“Melbourne offers plenty of upside, with its recent underperformance from a growth perspective providing an opportunity for the savvy buyer.

“Despite a lot of negative press, in particular surrounding the increased taxes associated with owning a property in Victoria, it is hard not to like the fundamentals of the market from a demand and supply perspective and the fact it is one of our largest population and economic centres.

“The rental market is extremely tight with a current vacancy rate of 1 per cent (SQM) and rental rates have increased 10.8 per cent over the past 12 months, the second highest gain in the country over this period (CoreLogic).

“Population growth has been strong into Victoria, with high levels of net overseas migration putting further pressure on our already stretched rental market.

“This is due to a combination of our desirable liveability, good schools and relatively affordable housing options.

“There is significant infrastructure spending happening within the State with the Metro Tunnel project, West Gate tunnel project and the Suburban rail loop project to name a few.”


Source link

Call Us Now