Greetings from Scoutable and welcome to our November Wrap Up.
I hope you and your loved ones are well.
The hot topic for November has been the announcement in the NSW budget 2020-21 to axe stamp duty. The proposed model will give people purchasing a property the choice between paying stamp duty upfront or opting for a smaller annual property tax. The annual property tax would be a fixed amount plus a rate applied to the unimproved land value. Investment properties would be taxed at a higher rate than owner-occupied homes. It is proposed that once a new owner elects to pay the annual property tax (instead of stamp duty), subsequent owners must also pay the annual tax.
Whilst we are still a while away from firming up how the new system will work, on face value, the proposed annual property tax would work well for buyers planning to move every few years. However, long term buyers would potentially be negatively affected. Over the course of say a 20 year hold, land values will rise, increasing the annual property tax amount. Land owners will also be at the mercy of the government increasing the rate of tax applied over the years. This could particularly impact retirees. It might work out more cost effective to pay the stamp duty upfront for long term / forever home buyers. Further comments to follow as information comes to hand over the coming months.
CoreLogic’s Hedonic Home Value Index for November (released 1st December), reported a national rise of 0.8% in housing values, marking the second month of rising values for dwellings. The recovery trend follows a 2.1% drop in values between April and September. Please see table below for percentage change in dwelling values for each capital city.
CoreLogic’s Head of Research, Tim Lawless, reported “The national home value index is still seven tenths of a per cent below the level recorded in March, but if housing values continue to rise at the current pace we could see a recovery from the COVID downturn as early as January or February next year. The recovery in Melbourne, where home values remain 5% below their recent peak, will take longer.”
The recovery trend is evident across all the broad regions of Australia. The recovery is fuelled by continued containment of COVID in Australia, improving economic conditions, record low interest rates and low stock levels.
CoreLogic further commented: -
“The housing risks associated with less fiscal support and the expiry of mortgage repayment deferrals have lessened over recent months. Job numbers continued to improve throughout October, despite the wind back of JobKeeper, and the large majority of mortgage repayment deferrals have already moved back onto a repayment schedule. The recovery trend is being led by owner occupiers while investor participation remains at record lows. With prospects for capital gain becoming firmer, and more rental dwellings showing the potential for positive cash flow, it’s likely investor numbers will become more substantial in 2021.”
The apartment rental market continues to be the most COVID impacted sector of the property market. Nationally, in November rents were down -0.6%. House rents have started to recover, reporting 0.7% growth. CoreLogic commented: -
“The monthly data follows a now well established trend where house rents have shown a more positive trajectory than unit rents since the onset of COVID. Across the combined capitals, unit rents have fallen by -5.4% since March while house rents have increased by 1.1%. Most of the weakness in rental market conditions is emanating from Melbourne and Sydney where unit rents are -6.6% and -7.6% lower respectively since March. Every capital city has shown this trend, where house rents outperform unit rents, to varying degrees, however the divergence is most pronounced in Sydney and Melbourne where tenancy demand is more reliant on overseas migration, and supply levels were already high prior to COVID.”
The rental market is likely to firm as state borders reopen and as the labour market improves.
However, due to the reliance of temporary migrants, the re-opening of international borders is needed for the inner city rental markets of Sydney and Melbourne to fully recover.
If you would like to discuss the current conditions of the market in more detail or are looking to buy property in Australia, please get in touch to learn about Scoutable's services and how we can assist with your property search.
Until next month,
Kellie Landrey | Principal Buyers Agent
IN THE NEWS
HOW NSW'S PROPOSED PROPERTY TAX WOULD WORK
https://www.abc.net.au/news/2020-11-18/property-tax-vs-stamp-duty-explainer/12892974
SLICE OF HEAVEN: FAMILY DONATE 900HA OF FREEHOLD LAND (NZ)
https://www.abc.net.au/news/2020-10-15/half-of-deferred-australian-home-loans-back-to-payments/12767990
WHY DIDN'T THE AUSTRALIAN HOUSING MARKET CRASH
https://www.corelogic.com.au/news/why-didnt-australian-housing-market-crash
PROPERTY OF THE MONTH
Unit 1, 46 Ramsgate Avenue, Bondi Beach
Bondi Beach is located 7km east of Sydney's CBD. It is considered one of Australia's most iconic beaches. Bondi Beach is well known for its laidback beachside lifestyle whilst within easy reach of the CBD. The suburb is filled with many retail facilities including cafes, bars, pubs, yoga studios and clothing stores. The area is not only attractive to surfers, but professionals, families, retirees and travellers.
The property of the month was recently purchased by Scoutable on behalf of an investor. The property is positioned less than 300 metres from the sand at Bondi Beach, within a small complex of 12 which was built in 1965. The apartment is situated on the ground floor, providing two bedrooms, one bathroom, combined living / dining, kitchen, balcony and parking for one car. The apartment is 65sqm including the balcony plus 14sqm car space. The property is 350m to Bondi Junction bus stop (5-minute walk) or 270m to CBD bus stop (4-minute walk), providing a 40-minute commute to CBD.
The property was purchased for $1,000,000.
If you'd like to know more about this property or any others, please get in touch.
