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New Buyer Behaviors Revealed with Increase in Filtered Searches

The economic recession from the COVID-19 pandemic has caused serious restrictions in the ways people can spend their money.

Because of the ‘per person square meterage’ restrictions, we can’t go out to eat or attend sporting events like we used to and the closure of domestic and international borders have made travelling challenging whereas pre-pandemic it was a luxury that many Australians indulge in each year.

With borrowing costs at record lows – and not likely to recover in the near future – and restrictions on movement and spending, it looks like a growing number of Australians are thinking of putting their surplus funds into real estate.

The total search volumes on realestate.com.au were higher compared to the previous year and price-filtered searches are also on the rise.

An increase in filtered searches shows new buyer desires

The shifting nature of search behaviour throughout Australia over the last year can be seen in searches for properties listed for sale with a price filter.

Majority of searches performed on realestate.com.au are carried out with no price filters, but the site still get a massive amount of searches carried out with these filters and they can offer important insight into the changing nature of the property market.

The following are six trends that realestate.com.au is getting in the price filter search data:

  1. A higher share of searches at lower price points

In September 2019, 32.9% of price-filtered searches nationwide recorded the highest price of $500,000 or less, compared to 33.7% in September 2020.

  1. Increase in searches for homes valued at over $1 m

In September 2020, 23.1% of price-filtered searches recorded a maximum search price of over $1 million, versus 21.2% in the same year-ago period.

  1. Increased searches above $1 m in the capital cities than regional markets

In September 2020, 21.2% of all price-filtered searches for capital cities were for homes priced at over $1 million, up from 10.6% of searches across regions in the country.

  1. Change in searches over $1 m higher in regional markets

There were greater searchers for homes priced at over $1 million in capital cities, but regional markets have enjoyed a much greater growth in their share of $1 million searches over the last year.

The price-filtered searches for homes listed above $1 million in the combined regional markets rose from 8.9% in September 2019 to 10.6% in September 2020. The share in the capital city markets has increased from 20.8% to 21.2%.

  1. Lower searches in excess of $1 m in Melbourne but regional Vic increased

In Melbourne, the proportion of price-filtered searches for home above $1 million has dropped from 21.4% in September 2019 to 20.0% in 2020.

Meanwhile, searches for homes above $1 million in regional Victoria have risen from 6.1% of price-filtered searches in 2019 to 7.1% in 2020.

Darwin and regional Northern Territory are the only two places beyond Melbourne to have posted a decline in the proportion of price-filtered searches for homes listed above $1 million over the last year.

  1. Higher searches for $1 m homes across NSW

In Sydney, the share of price-filtered searches for homes above $1 million rose by 250 basis points from 2019, increasing from 38.2% to 40.7%.

In the NSW regions, the growing frequency of searches for $1 million homes has been even greater in Sydney with the volume of these searches increasing from 11.3% in 2019 to 14.0% in 2020.

What do these search trends mean?

There is chatter that working for home will become a more constant feature of Australian employment and that may motivate people to retreat from capital cities.

Out of the total price-filtered searches, searches for capital city searches were nearly twice as high than regional market searches. However, the share of capital city searches has increased by 23% from 2019 compared to a 46% growth in regional searches.

The figures also mean that it isn’t just people who had been priced out of the capital cities who are likely considering a move to regional markets, considering the major change in the share of searches for homes priced above $1 million.

 

If you have a home in Regional Newcastle/Lake Macquarie over $1 million and are thinking of selling, then now might be the best time for you to take advantage of the surplus of buyers in the price range.  Call me today to discuss the opportunity of selling your home to one of these buyers, many of which are cashed up!

 

 

Increase in Boomerang Homes Seen During Covid-19

The number of “under offer” listings being readvertised is rising, according to data compiled by realestate.com.au. The trend is driving speculations that deals are failing due to stricter lending restrictions by the banks and hesitation by home buyers.

The number of boomerang homes across Australia, or those properties going back to the market after having an offer accepted, is increasing, as per the week-on-week data from realestate.com.au between January and July 2020.

While real estate agents are not required to inform realestate.com.au of confirmed sales, the existing data shows a trend in homes shifting from “under offer” back to “for sale” instead of the site’s “sold” listings.

Banks tighten up as buyers retreat

At the beginning of the first coronavirus lockdowns, there was a significant surge in the number of “under offer” homes nationally that returned to the market with an increase from 13.08% to 17.9% in the week starting 23 March 2020. The succeeding week the figure declined to 13.76% before falling even more but has moderately increased since mid-April.

It was a very terrible time for the economy and for real estate and for confidence at the end of March. The period was between when the country went into lockdown and the launch of the stimulus packages. There was plenty of uncertainty during that time and consequently home buyers hesitated and banks were being restrained about who they were giving a loan to. This wariness had continued with the country’s rising unemployment.

Though banks are well-capitalised and not under pressure, they are uneasy about the situation, especially the unemployment situation.

Banks being very careful about who they are lending to is not expected to change any time soon.

It was likely the situation is not quite as serious now, even more so with the news that the Federal Government’s JobSeeker and JobSeeker stimulus would be extended until March 2021, though diminished.

Buyers were aiming to take advantage of the low cash rate with eager first home buyers inundating the market. However, their enthusiasm was curbed a lot by banks less willing to lend than before COVID-19 happened.

Financial institutions were implementing stricter methods to make sure customers could fulfill the terms of the loan, and failed deals were the result of this strict process.

Homes being returned to the market is a function of purchase contracts falling through due to the buyer’s financial circumstances essentially changing – and not in a good way.

Though this is not new, it has been magnified during the pandemic as many employed Australians had been stood down and/or had their wage cut.

Tighter lending rules to continue

This trend is expected to continue until the impact of COVID-19 lessens and the economy starts to mend.

Lenders have launched steps and process checks to ensure new borrowers can continue their monthly repayments through to the loan settlement date. As a settlement condition, some are even requesting for updated pay slips from clients.

Lenders are doing this to protect themselves under their responsible lending policies, not extending credit to a client whose earning capacity has changed from the time they first applied for a loan.

Homebuyers should have no doubt that their employment was safe and their income was not likely to change before making a commitment to buy property.

It doesn’t make sense to move forward with a home purchase if you cannot afford the loan and most likely force to sell the property at much greater loss than they might otherwise incur.

Experts also recommend trying to negotiate with the selling agent to do away with the “forfeit deposit” clause in the contract of sale to safeguard the buyer’s funds.

Slash on Stamp Duty Seen as Big Boost for First Home Buyers and Construction Industry

First home buyers and the construction sector will be major beneficiaries under a targeted boost, which will end stamp duty on newly-constructed homes under $800,000 and cut thousands of dollars for homes up to $1 million.

According to Premier Gladys Berejiklian, the adjustment to stamp duty limits would also boost new home construction and create employment as part of Australia’s COVID-19 Recovery Plan.

Under the new amendments, the threshold will increase from the current $650,000 to $800,000, with the concession dropping on higher values before phasing out at $1 million.

Over 6000 first home buyers are expected to benefit from the changes, delivering thousands of dollars in savings for qualified first home buyers.

The changes also increase the stamp duty threshold on vacant lot from $350,000 to $400,000 and phase out at $500,000.

The new changes will only cover newly constructed homes and vacant lot, not to existing properties, and will last for 12 months, which started on 1 August 2020. Other purchases will continue to be covered by existing schemes.

First home buyers would save up to $31,335 on stamp duty on a new $800,000 home, said Treasurer Dominic Perrottet.

Under the existing scheme, more than 93,000 first home buyers have benefited since July 2017. The construction industry will also receive additional support as the nation faces the challenges of COVID-19.

The NSW Government’s $10,000 First Home Owner Grant will also continue to be available for people purchasing a new first home valued at no more than $600,000, or purchasing land and constructing a new first home valued at no more than $750,000 in total.

This means a home owner stands to benefit a maximum of $32,335 if they’re buying a new home and getting the grant.

Here is a table showing the indicative tax threshold changes: 

Property Type Existing Stamp Duty Amount for Eligible First  Home Buyers New Stamp Duty Amount for Eligible First Home Buyers Saving
Vacant Land $350,000 $0 $0 No change
Vacant Land $400,000 $7793 $0 $7793
New Home $650,000 $0 $0 No change
New Home $700,000 $10,445 $0 $10,445
New Home $800,00 $31,335 $0 $31,335
New Home $900,000 $35,835 $20,168 $15,668
Existing Home $650,000 $0 $0 No change
Existing Home $800,000 $31,335 $31,335 No change

 

 

Property Valuation: What is it and how do you calculate it?

In a practical sense, the value of a property is what someone is willing to pay for it. But there are times when people need a ballpark figure before beginning negotiations.

A property valuation, according to the International Valuation Standards Council, is the estimated sale price “between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where parties had each acted knowledgeably, prudently and without compulsion.”

As the definition suggests, the final sale price is normally different from the valuation stated in the report, as it’s almost impossible to guess how people’s feelings, market knowledge, and other motivations may influence negotiations.

When would you need a property valuation?

Both the buyer and seller benefit from a property valuation. By offering a clear indication of a home’s market value, it minimises a buyer’ risk of paying more than what is necessary for the property, and by providing a comprehensive evaluation of a property’s flaws, it can help a vendor decide which improvements need to be done to boost the property’s market value.

With that said, the most common reason why a property valuation is important is because the mort-gage lender (commonly a bank) makes it a requirement. Banks use the property valuation as a “risk report” to guarantee that the security value of the property covers the loan, in case the owner defaults on the mortgage.

Property valuation is also often requested for financial reporting, for taxation compliance, for family law mediation, and for calculating how much should be given to land owners for easements or land acquisition.

How to calculate property valuation?

The foundation of most home valuations is the direct comparison with recent comparison sales. Valuers will also consider these following attributes:

  • The size of the home
  • The number and type of rooms
  • The fixtures and fittings
  • The structure and condition of the building
  • The standard of the fit-out and the home’s architectural style
  • Ease of access to the home
  • Planning restrictions and local council zoning
  • The home’s location and level of amenity
  • The size of the land
  • The aspect, topography and layout of the block

First, valuers will come up with a ballpark figure for the home using a few recent comparable sales. Then, adjust the figure based on any major differences found between the characteristics of the home.

The valuer will also go see the home in question to evaluate its condition and list down any structural damages and nuances that might change its market value. Most valuers will give the clients a standard three-page report of their findings within two days of seeing the property.

If you are considering selling your home but are not yet keen on hiring a property valuer, you can get myself to view your property and provide a Current Market Appraisal or contact us for your monthly Post Code Report, to provide you a better understanding of the estimated value of your property.

 

 

House Prices in Newcastle Increase for the First Time in 12 Months

Property prices in Newcastle have begun to recover following a year-long decline cut 10% off from the prices of an average home.

Data from CoreLogic reveal the house or unit median price throughout Newcastle and Lake Macquarie local government areas rose 0.3% in June 2019.

It is the first monthly price growth since last year and reflected a 0.1% increase in the Sydney property market and a 0.2% rebound in Melbourne. A CoreLogic analyst predicted a slow and rough upturn.

Since it is only a month’s worth of data, analysts are not getting too thrilled, but undoubtedly the pattern has been the pace of decline has been slowing, and these patterns are also on display in the Newcastle and Lake Macquarie regions.

With Newcastle and Lake Macquarie having followed Sydney’s decline, it is logical to assume that it will follow the turnaround. The analyst expressed surprise that the numbers were more solid this month than Sydney, but remain in wait on what the next two months will bring.

Sydney’s monthly result was its first increase since July 2017, and the Melbourne market peaked in November 2017.

Newcastle values began declining much later, at the beginning of 2018, but have began to recover at the same period.

According to CoreLogic’s monthly report in June 2019, Newcastle and Lake Macquarie council area median house price is presently at $539,000 while the median unit price is $463,000.

Another CoreLogic analyst said that reduced interest rates, high population growth, the conclusion of the federal election, and the resolution to the doubts concerning Labor’s negative gearing and capital gains tax proposals, had boosted housing demand.

The tide may have turned for the housing market but the pace of recovery is not expected to be fast.

Supported by the housing decline, a recovery in housing affordability has also been observed, though housing prices are still high in relation to household incomes in Sydney and Melbourne.

Stricter lending requirements are now customary in banks and this would continue to stifle market activity.

Banks are increasingly becoming less dependent on average household expense standards, and potential borrowers should anticipate certain an investigation of their financial situation during the loan application process.

Securing a loan may be more difficult for those who are applying for debt that is higher than six times their income.

Another issue affecting demand would be “increased supply” of high-rise apartments in Sydney, Melbourne and Newcastle.

These areas are going through the peak in a record number of off-the-plan unit sales, several of which are getting valuations at settlement day that are lower than the contract value.

 

 

What is the Property Price Forecast for the Next One or Two Years?

This is what is in the minds of people now that Australia’s property market appears to be bottoming out.

Not so long ago the media was forecasting a housing market collapse but the property cynics were way off the mark and as green shoots are emerging it appears the property cycle is reaching the bottom.

Nonetheless, this has been the most protracted and the worst decline in modern history.

Though the aggregate capital city market prices dropped by just over 10% from their highest level, property prices in Sydney have declined by 14.9% and in Melbourne by 11.1% from the peaks since 2017.

The ailing Perth and Darwin real estate markets have further declined significantly from their peaks following the mining boom.

Change in dwelling values

  Past 12 months Past 5 years Since Peak
Sydney -9.9% 18.8% -14.9%
Melbourne -9.2% 23.7% -10.9%
Brisbane -2.6% 7.1% -2.9%
Adelaide -0.3% 10.9% -1.0%
Perth -9.1% -19.8% -19.8%
Hobart 2.9% 34.4% -1.1%
Darwin -9.3% -29.4% -30.1%
Canberra 1.4% 22.7% -1.1%
       
Regional NSW -4.9% 22.7% -5.2%
Regional Vic -0.3% 21.1% -1.7%
Regional Qld -1.9% 4.4% -5.5%
Regional SA 0.2% -0.1% -2.9%
Regional WA -10.3% -27.7% -33.5%
Regional Tas 5.6% 23.3% -0.2%
Regional NT 0.6% -6.2% -7.9%
       
Combined Capitals -8.0% 13.5% -10.2%
Combined regionals -3.1% 11.1% -3.4%
Australia -6.9% 13.0% -8.4%

Source: CoreLogic July 2019

What is the forecast?

Property values are expected to stabilise in the capital cities by the end of 2019 and will then show modest growth in 2020, according to economist Trent Wilshire in Domain’s mid-year property report.

House price forecasts

  2019 (six-month change) 2020 (annual change)
Australia (combined capital cities) 1% 2% to 4%
Sydney 2% 3% to 5%
Melbourne 1% 1% to 3%
Brisbane 1% 3% to 5%
Perth 0% 0% to 2%
Adelaide 1% 1% to 3%
Hobart 0% 2% to 4%
Canberra 2% 4% to 6%

Source: Domain

Unite price forecasts

  2019 (six-month change) 2020 (annual change)
Australia (combined capital cities) 1% 1% to 3%
Sydney 2% 2% to 4%
Melbourne 1% 0% to 2%
Brisbane 0% 0% to 2%
Perth 0% 0% to 2%
Adelaide 2% 1% to 3%
Hobart 2% 3% to 5%
Canberra 1% 1% to 3%

Source: Domain

A Metropole research shows that prices are expected to decline more in the coming months, but the rate of decline in house prices is slowing.

Interest rates are declining, consumer confidence is improving, there is faith in the country’s government and taxation system, and lending institutions are beginning to relax its requirements and approve more loans.

The result is that more people are filing applications for home loans, more people are going to home inspections and sellers who have waiting for the market to turn our gaining confidence as auction clearance rates are increasing (though on low figures).

Analysts are monitoring for days on market to decline and sellers discounting to decline, along with more homes for sale before they declare a market boom,

Though the economy is declining, solid population growth (Treasury is predicting 1.75%) during a time when the recent construction boom is weakening and building approvals for new construction declined 20% from 2018 shows that the present glut in housing will soon be absorbed in the market cycle will pass.

Sydney Property Market Forecast

Following the biggest correction in home values in the past 30 years, the decline in Sydney prices are expected to end by late 2019, with values at roughly 2% higher by end-2019 and values continuing to increase in 2020.

The drop in Days on Market and Vendor Discounting and increase in auction clearance rates are all positive indicators for Sydney’s real estate market.

So is the increase in first home buyers interest, with 25% of home loans in NSW in March approved for first-time buyers,

But some sectors of the city’s property market are expected to weaken significantly more than that average in 2019 (specifically the off the plan properties and new apartments), while some sectors of the market will weather it out.

Investors are staying away from the off the plan apartment segment and countless of those who bought off the plan a few years back are presently having difficulty reconciling valuations coming in on completion at well under contract price during a time when lenders are more hesitant to approve loans for these properties.

In the backdrop, however, solid economic growth and jobs creation is driving population growth and current demand for Sydney property.

Simultaneously, overseas interest from tourists and migrants remains.

In Sydney, investors are being offered a chance to purchase established apartments in the eastern suburbs, lower north shore and inner west in a “buyer’s market” with slight further drawback and the expectation of the market recovering in late 2019 and 2020.

It is an ideal countercyclical period to consider purchasing an investment grade property in Sydney.

Melbourne Property Market Forecast

House values have dropped 11% and the prices of the Melbourne Apartments has declined 8% since their peaks. However, house and unit values are predicted to rise by 1% between June and December 2019, and in 2020, house values will increase by 1 to 3% and unit values by 0 to 2%.

However, Melbourne’s property market is highly divided, with values in some segments already recovering significantly.

The resilience throughout the apartment segment, notwithstanding increased supply levels, is likely the result of a combination of affordability limits in the market plus increased number of home buyers buoying housing demand throughout the lower price ranges of the market, due to the First Home Owner incentives.

The Melbourne property market is getting back its confidence and the principal basic growth drivers are still solid. An example is auction clearance rates, which are increasing but in much smaller quantities.

General property prices will be supported by a strong economy, jobs growth, the most robust population growth in the country, and the arrival of 35% of all foreign migrants.

Take note that Melbourne ranks as one of the 10 fastest-growing major cities in the developed countries, with its population expected to grow by roughly 10% through 2023.

Brisbane Property Market Forecast

Brisbane’s house and unit prices are forecast to bottom out through December 2019 and house prices to start increasing, while apartment prices will continue to be flat for a while.

But house prices are predicted to increase by 3 to 5% in 2020.

With migration numbers increasing, supply under control and overall strong rates of housing affordability, Brisbane’s housing market basics are proving to be stronger than most other capital cities.

Simultaneously, the underlying robust demand from investors and home buyers from the southern States at a period when returns are appealing and housing affordability is fairly strong and putting a floor beneath property values.

Brisbane economy is being buoyed by big projects like Queen’s Wharf, HS Wharf, TradeCoast, Cross River Rail, the second airport runway and the Adani Coal Mine. However, jobs increase from these projects will not commence for a few more years.

There has been a major improvement in local consumer confidence as more homebuyers and investors show interest in a property.

Canberra Property Market Forecast

House prices in Canberra are forecast to increase by 2% and unit prices by 1% through the rest of 2019 and in 2020, house prices are expected to increase by 4 to 6% and unit prices to rise modestly by 1 to 3%.

This will make Canberra the country’s most robust housing market in 2020, buoyed by high population growth and low unemployment.

But the existing high number of new apartment buildings (unit, apartment and townhouse approvals during the past year are 30% higher than in 2018) will hinder unit values from increasing.

Perth Property Market Forecast

Property prices in Perth have been declining since mid-2014, but are forecast to bottom out over the rest of 2019, and home and apartment values are expected to gradually rise in 2020.

But market sentiment will take a long time to recover in the Western Australian capital.

The increasing population growth, which is expected at 1.5% in 2020, up from 0.9% in 2018, is one of the encouraging factors for Perth.

Hobart Property Market Forecast

Hobart’s property market has been one of the best performers in the past three years, but prices are flat so far in 2019.

In 2020, house prices are forecast to grow by 2 to 4% and units by 3 to 5%.

Adelaide Property Market Forecast

The current modest property price growth in Adelaide is expected to continue for the rest of 2019, with house values forecast to rise by 1% and unit values by 2%.

In 2020, property prices are forecast to increase by 1 to 3%.

House prices have increased steadily by roughly 3% in recent years (units have increased by roughly 2% per year), though prices have become stable in 2019.

What to do to stay ahead in the present market!
With indicators pointing to an excellent countercyclical buying prospects at present, you will need independent expert advice and thorough consideration in navigating the different market conditions in Australia and more importantly here at home in Newcastle.

An independent expert like Annette Pinkerton of One Agency Pinkerton Properties, will help you formulate a strategy or conduct a review of your circumstances and help you achieve your property goals.

 

 

Australia’s Housing Market is on a Downturn. How Bad is it?

For Australia’s toughest market, Sydney, prices are down nearly 9% from its highest levels and even in Hobart, where values remain up at 5% from 2018, the market is on a downturn.

This change is attributed to stricter finance requirements, a drop in local and foreign investors, and a marked shift in sentiment.

Till at least mid-2018, values appear like they will remain on a downtrend in Sydney and Melbourne.

Although there are plenty of negative sentiments, the market is not in a pricing spiral as some analysts said.

Total listing volumes are increasing because it is taking longer for homes to sell, but new listings are declining.

Historically in the middle of a major slowdown in housing, listing volumes grow steeply with owners not having a choice but to sell, and currently this is being experienced in Australia.

In general, Australia’s economy is strong. Unemployment rate is down and business investment is growing. Though many workers are not receiving the wage hike they like and their spending habits are not like before, Australia is definitely not moving towards a financial crash.

In other price crash Australia suffered, like the subprime mortgage disaster in the US, thousands of people were becoming unemployed. However, that is not happening here.

Job loss is the real concern. If your friends and family are losing their jobs and you feel insecure about yours, then that it the time to be concerned about price declines.

In many parts of Australia, jobs and population growth are up. However not like in Perth and Darwin where values have been declining due to an economic slowdown, Sydney and Melbourne are both experiencing solid employment conditions.

There are other statistics that are worth noting beside the good employment figures: the low office vacancy rates, and the strong rental demand.

This slowdown is attributed to finance and is self-inflicted, meaning there is no global financial crisis where we cannot do anything about the situation.

A big concern right now is the sentiment in the property market. Price declines are affecting sentiment, which is worrying the Reserve Bank of Australia – not specifically due to the effect on wealth, but the worry it causes people.

Self-assured consumers reflect positively on the economy since they purchase and invest more. If they lack confidence, the deficiency in spending impedes economic growth. At the moment, as the RBA said, a wage increase is very much needed by all.

There have been further declines in Sydney and Melbourne until now. Since the federal election buyer confidence is slowly returning and it is expected that we may in fact be at the bottom of the market now rather than the beginning of 2020 as predicted.

So it seems the market is not as bad as first thought and that it is recovering faster than analysts forecasted.

 

 

The Resurgence of Multi-generational Homes in Australia

According to a 2011 report Australian Bureau of Statistics, 531,000 people were living with “other related persons” in the family household. That number is expected to increase to 781,000 or more by 2036. In other studies, it was estimated that one in five Australians presently reside in a multi-generational household, and this trend is becoming popular.

It was once normal in many households to have younger members take care of the older generation, but this custom of multi-generational suffered a decline in past decades. But it looks like what was once old is new once again, and it resurged at a time when the life of the average Australian is the most difficult.

Research also indicated that over 50% of people living in multi-generational homes do so because of financial hardship, and the rest, for companionship.

With Australians experiencing a housing affordability problem, rising cost of living and lack of wage increase, it is no wonder that the practice of multi-generational homes (where more than one generation is living in the same home) is becoming popular once again.

The advantages of multi-generational homes

  • Reduced expenses because all bills and living expenses are divided among adult residents.
  • Saving for a house deposit becomes easier for young families because they can divide the cost of rent and utilities with their parents.
  • Some older Australians who can’t afford to pay rent or mortgage on their own can ease their burden by living with their adult children.
  • Parents and adult children can be co-buyers of a home to make it more affordable.
  • Living with their parents is a cost-effective way for young Australian families to care for them compared with a retirement home or other care facility.
  • Young families can save on childcare costs with their elderly parents living with them.
  • A family stays connected and close living together.
  • The people living together can live in an area or property they couldn’t otherwise afford.
  • The financial pressure is lessened.
  • Having companions.
  • Promotes relationship between the oldest and youngest members of the household.

The disadvantages of a multi-generational homes

  • No privacy
  • Noise transmission
  • The people living together have different schedules and those schedules can be in conflict in relation to the use of facilities like kitchens and bathrooms.
  • Having the feeling that you are living in other people’s homes.
  • No space
  • No independence.

Things that are needed to make a multi-generational home a success

  • Making sure all the people residing there have a space of their own, whether to design as they want it or to invite friends over.
  • Consider building a granny flat or a small house in the same parcel of land.
  • Open space is conducive to noise transference. An architect or building designer can fix this at the construction phase or during renovations.
  • Otherwise, use rugs to help minimise the noise of foot traffic.
  • Make everybody aware of the costs related to living together, and what their obligations are.
  • Be respectful with everybody.

 

 

REA Report: The Uncertainty that the Election Brings; Negative Gearing to Cause a Disturbance

Property markets go on a standstill because of elections, according to realestate.com.au in its April 2019 Property Outlook report. Plus, the number of new listings drop and buyers begin a waiting game.

The report added that the May federal elections is especially significant for property because ALP has identified major changes to negative gearings and capital gains tax concessions.

The biggest impact, according to chief economist at realestate.com.au Nerida Conisbee, is the change that limits negative gearing to new properties only stating 1 January 2020. She added forecasts that prices will decline and rents will increase because of that modelling by both sides of government, and the independent consultants.

Australia has become almost fully dependent on “mum and dad investors” to make rental housing available in the country, which is not what is done in other parts of the world.

Individual investors rely on tax concessions to make owning a low-yielding property sustainable. Without another option to tackle the decline in investor activity, rent increases could pose a challenge, especially in areas already experiencing rent-related problems like Hobart.

Another issue is that, in regional locations with a lack of demand for new housing, a decline in rental homes supply would worsen.

And in big Australia cities, tenants may be forced to move to inner-city apartments and outer suburbs with plenty of supply. This would eliminate the middle for tenants which would become the territory exclusively for owner-occupiers.

 

Deadlock

According to Conisbee, a win for the Liberal would stabilize the housing markets. It would re-energise buyer and seller activity, and rents would continue to increase along with the market.

Meanwhile, a win by ALP would make declines continue and delay stability by at least 12 months. The increase in rent would be exceed market increases.

Ultimately, the move to investor incentives would benefit first home buyers and would have little to no impact for most home buyers because most of them bought before the brisk rise in prices.

Declining prices do have a major effect on sentiment, trouble for general consumer sentiment and spending. However, two “bigger” issues are seen.

First, the supply pipeline is dropping and the flow-on economic growth could be critical. Second, rents rising. Tenant with no gain from capital growth in housing are normally younger, in the lower income bracket and most probably experiencing housing stress, which means they are affected by the even the tiniest rent increase.

Conisbee said that initiatives to attract more institutional investors to rental housing through adjustments in the managed investment trust structure will not immediately happen and many not be compensate for a decline in investment by the usual suppliers.

What are your thoughts on this topic?

 

Are Sydney and Melbourne Property Markets Going Bust, or Not?

The best way to deal with Australia’s capital city housing markets is to maintain perspective.

For example, property values in Sydney could decline by about $22,400 in 2019, a 2% drop, based on the latest report from BIS Oxford Economics.

However, that is less than 50% of the $54,675 Sydney’s house price median increased to merely three months from September to December 2016.

On the other hand, prices in Melbourne shouldn’t experience significant drops over the next three years, based on the same report, which forecasts an increase of around 1% per annual through 2021.

The fact is, when viewed on a broader sense, the projected correction equals to a minor issue for most homeowners.

UK-based BIS Oxford Economics is just the latest economic organization to explain the Australian property correction. It joins Macquarie, UBS, AMP, Capital Economics, ANZ, and more.

According to its latest report, Sydney’s median is expected to bottom out 8% less than the 2017 peak of $1.2 million and stand at 4% below it by June 2021. However, the figure will still account for a 3% rise from present levels.

This projection for fairly moderate house price decline follows a surge in Sydney’s median house prices from $560,933 to $1.2 million in less than 10 years, and Melbourne’s from $460,800 to $913,162. This represents a 113.3% and 98.5% increase, respectively.

The drop of 2% forecasted for Sydney by BIS Oxford Economics would be recovered, and a little more, by 2021.

If you have a property in Newcastle and interested in knowing how your suburb is currently performing, we are offering you our time to provide a report.  Call us on 0418447856 to find out how and when we can assist you.