Greetings from Scoutable and welcome to our April Wrap Up.
I hope you are well.
Home values continue to rise but the pace has slowed. National housing values increased by 1.8% in April (according to CoreLogic’s national home value index), in comparison to a massive 2.8% in March. Whilst growth has slowed, national house values are up 6.8% over the past three months. The growth reflects a 10.2% rise since the COVID low in September last year.
Auction clearance rates have also cooled a little, with the combined capital city clearance rate reducing from a recent high of 83% at the end of March to around 77% in late April.
Rental yields have fallen across most of Australia. The national gross rental yield has reduced from 3.72% a year ago to 3.50%. Sydney and Melbourne currently have the lowest gross yields. Sydney is averaging 2.69% (down from 2.92% a year ago) and Melbourne is averaging 2.87% (down from 3.18% a year ago). The low yields are suggesting an imbalance between housing values and housing rents.
CoreLogic reported, “Overall, although conditions remain strong, there are mounting signs the housing market has moved through a peak rate of growth. Growth conditions over the past six months have been unsustainable and are now succumbing to a gradual slowdown in demand due to worsening affordability constraints, a rise in fresh inventory, higher levels of new detached housing supply and less government stimulus.”
The majority of talk in the marketplace is that housing values will continue to rise into 2022, however at a slower pace. This is supported by strong consumer confidence and expectations that mortgage rates will remain low. Last year, experts were suggesting that when COVID mortgage 'holidays' ended there would be a flood to the market with distressed stock. However, according to CoreLogic this is no longer a major concern. “The proportion of home loans that remained on a deferral arrangement at the end of March was just 0.7%, comprising only 0.07% of bank mortgage books. Further, the lift in housing values has reduced the risk of selling at a loss. In fact, the RBA estimates only 1.25% of Australian properties are in a situation where the loan amount exceeds the value of the home.”
Moving forward, it would seem the biggest risk to the property market is the possibility of tighter credit policies. CoreLogic reported “The RBA and APRA have reiterated they are watchful for any signs of slipping credit standards, but have also noted there has been little evidence of a deterioration in lending standards to-date. A rise in the proportion of riskier types of lending or higher risk loans could be met with a new round of credit policies. We know from earlier periods of macroprudential intervention that this would likely dampen market activity and the pace of capital gains.”
If you would like to discuss the property market further, please get in touch.
We would also like to mention that our good friends at Fox & Hare, are hosting an Ask the Experts session on “Your need-to-know guide on the Australian Property market right now” with Domain’s Group Senior Research Analyst, Dr. Nicola Powell as the guest speaker. It will be really interesting to hear Dr. Powell's insights on the market. The event is via Zoom, on Wednesday 26th May from 12 - 12:45pm. More information via the link below.
https://events.humanitix.com/ask-the-experts-your-need-to-know-guide-on-the-australian-property-market-right-now
Until next month,
Kellie Landrey | Principal Buyers Agent
IN THE NEWS
SYDNEY, MELBOURNE, BRISBANE, ADELAIDE, CANBERRA, HOBART HOUSE PRICES AT RECORD HIGH
https://www.domain.com.au/news/sydney-melbourne-brisbane-adelaide-canberra-hobart-house-prices-at-record-high-1047969/
RENTAL MARKET PINS HOPES ON TRAVEL BUBBLES
https://www.theurbandeveloper.com/articles/travel-bubbles-rental-market-student-accommodation
HOUSING BOOM MAY BE HALTED BY REGULATORS OR ECONOMIC TRENDS, ANALYSTS WARN
https://www.abc.net.au/news/2021-04-22/real-estate-faces-macroprudential-risks/100084426
PROPERTY OF THE MONTH
37 Harris Street, Rosebery
Rosebery is positioned six kilometres south of the Sydney CBD. The suburb provides a mix of residential (character freestanding dwellings and new large scale apartment complexes), commercial and industrial developments. Rosebery offers neighbourhood strip retail facilities, including the popular Cannery complex. The area provides easy access to the Eastern suburb beaches and CBD, and with more affordable prices than the neighbouring Eastern suburbs, the area has become popular with young families in recent times.
The property of the month, 47 Harris Street, Rosebery, is situated on just under 400sqm of land. The dwelling provides three bedrooms, lounge room, eat-in kitchen, bathroom, sunroom, laundry and rear yard. The property is presented in original condition, with many character features. There is potential to add value through a full renovation.
The price guide is $1,500,000.
If you'd like to know more about this property or any others, please get in touch.
