On 17/12/2018
2018 will be the year of the largest declines in our real estate markets for many years.
In the past two years, a number of factors have played a part in creating a perfect storm, leading to a fall in housing prices (particularly in Sydney and Melbourne) and a slowdown in housing price growth in the United States. from other states.
This includes:
• Low affordability after housing prices in our two largest capitals have grown at unsustainable rates for several years. In particular, first-time buyers have a hard time keeping a deposit large enough to enter the market.
• Strict credit conditions – initially because of APRA's macroprudential controls (decreased lending to investors and reduced interest-only loans); but then, the Haynes Royal Commission on Banks denounced certain practices, call them "interesting", which led the big banks to become risk-averse.
• An increase in the supply of new and unplanned apartments in most of our capitals.
• a collapse in foreign demand as we removed the welcome mat from thousands of foreign investors who were driving up the price of new apartments;
• Higher off-cycle interest rates for banks in August and September.
• Increased interest rates for some real estate investors while other borrowers had to meet additional cash commitments of switching from an interest only to a principal loan and a loan. interest.
• Investors are concerned that the proposed changes to debt reduction and capital gains tax will mean a change of government next year.
• A generalized crisis of investor confidence caused by the continuing stream of scary headlines to the media
Yet despite all this, we live what I call a "soft landing".
You see … there is no forced sale, desperate sellers have to give up their homes at all costs.
In reality, the current slowdown is quite different from the previous ones, which were generally triggered by a change in monetary policy (interest rate) or by economic shocks such as the global financial crisis.
This time, we are at the heart of an orchestrated slowdown because of the significant tightening of credit conditions imposed by our regulators, who wanted to avoid the kind of stock market crash that we could have experienced if real estate markets Sydney and Melbourne had continued to grow. Unsustainable rate that they were.
What no one really predicted was the extent of tighter credit conditions following the Haynes Royal Commission which, in addition to the previous regulatory tightening, had prevented many borrowers from borrowing as much as possible . a year or two ago.
Now let's take a look at the latest statistics and graphs provided by Corelogic to see what's happening in real estate markets in Australia.
Results of the index as at November 30, 2018.
Source: Corelogic
National housing markets continued to weaken last month, with price declines essentially concentrated in Sydney and Melbourne, which together account for about 55% of the value of the Australian real estate asset class.
Since its peak last July, the Sydney real estate market is down 9.5%, which should eclipse the previous record recession in the last recession, with a 9.6% drop between 1989 and 1991.
The value of housing in Melbourne peaked four months later than Sydney, in November 2017, and has since declined by 5.8% until the end of November 2018.
Let's put the context in this:
According to Corelogic's estimates, the total number of residential real estate markets in Australia is $ 7.6 trillion, but the total value of all residential debts is $ 1.8 trillion.
In simple terms, with a total loan-to-value ratio of less than 30%, all the noise made about the high level of mortgage debt is really baseless.
There is no sugar in the envelope
Nationally, housing values ​​are down 4.2% since last October's peak, when it returned to its most recent levels (December 2016).
And it is realistic to expect prices to continue falling until mid-2019, but probably at a slower pace.
In the past year, stocks have moved rapidly from growth to decline, especially in the larger capitals.
High-value housing markets continue to be the driving force behind the market downturn.
As this still occurs at the stage of the cycle, the quarter that generated the highest value of the market was at the origin of the national economic slowdown.
This reflects the lower conditions in capital cities, especially Sydney and Melbourne, and the fact that there is less discretionary spending in the upper part.
The value of high-quality housing continues to record much larger declines than more affordable housing.
Sydney Housing Market
The Sydney real estate market has peaked in the middle of 2017 and the value of real estate in Sydney has dropped by 9.5% since then.
But remember that this is due to the fact that median house prices have risen to 70% in Sydney over the past 5 years.
Some segments outperformed others, especially the eastern suburbs, and overall apartments performed better than homes.
It is clear that some segments of the Sydney real estate market are likely to fall considerably above average – we are looking at you as "off the planned properties", where a large pipeline of new construction remains to be absorbed.
Currently, most "off-plan" purchases are worth considerably less than the contract price at the end of the contract and banks are more reluctant to lend on these goods, so some buyers will find themselves in a financial crisis.
2018 will also be remembered as the year of bid settlement rates in Sydney, which rose from nearly 80% during the heady days to around 40%.
However, the first home buyers are active in Sydney, which creates stronger markets during the bottom quarter of the market.
Housing vacancy rates rise in Sydney and Metropole Property Management, we find that homeowners are often forced to reduce their rents to ensure tenants' security in the event of a vacancy.
Rents fell 3% in Sydney in the last 12 months, and some places (eg, Rouse Hill) have more than double that rate.
On the other hand, strong economic growth and job creation are driving demographic growth and continued demand for real estate in Sydney. At the same time, tourists and migrants continue to arouse international interest.
Trent Wiltshire – an economist at Domain and author of their real estate price forecast report, suggests that 2019 should be a year of greater stability.
He predicts that Sydney property values ​​will remain stable in 2019, then increase by 4% in 2020.
The value of housing in Sydney decreased by 12.8% in the three-month period ending November 2018 and decreased by -8.1% in the past year.
They are now -9.15% lower than the peak of July 2017.
Melbourne Housing Market
The Melbourne real estate market peaked in November 2017 and has a soft landing after 5 years of strong price growth.
Property values ​​are now 5.8% below their maximum, with apartments performing better than houses.
However, over the past five years, median home prices in Melbourne have increased 41.5% and increased 77.3% over the last decade.
But now, auction liquidation rates in Melbourne have fallen below the magic mark of 50%, it takes a little more time to sell a house (38 days vs. 31 a year ago) and sellers are putting off a little more than their asking prices 12 months ago (-5.6% against -4.6% a year ago.)
It is likely that real estate prices in Melbourne will drop a little more, but no crash is to be expected.
Trent Wiltshire – an economist at Domain and author of their real estate price forecast report, suggests that 2019 should be a year of greater stability.
Melbourne property values ​​are expected to fall by about 1% in 2019, then increase by 4% by 2020 according to Domain.
It is likely that the value of the property will be underpinned by a robust economy, employment growth, the highest population growth in Australia and the influx of 35% of migrants abroad.
Do not forget … Melbourne remains the driver of the country's population growth and growth rate is expected to slow down a bit Melbourne remains one of the world's 10 fastest growing cities developed, with a population likely to grow by about 10% in the next 4 years.
While housing values ​​are trending down, rents in Melbourne are rising moderately.
The value of dwellings decreased by -2.4% over three months to November 2018.
Over the past year, values ​​were -5.8%, house values ​​down 7.6% and units -1.7%.
Brisbane Housing Market
Overall, the Brisbane property had a year of no interest with minimal price growth.
In fact, it is what is happening in Brisbane in recent years with a slow growth in the price of real estate. However, all indicators suggest that Brisbane's real estate market has significant growth potential over the next three years, with Queensland being the most successful country in the world. migration in the last year.
While the overall value of housing has not changed in recent months, markets were fragmented and some segments of the Brisbane property market were outperforming, especially homes located within 5 km of the CBD. .
There remains an oversupply of flats in Brisbane and values ​​remain 11.2% lower than their previous record in 2010, but with high supply levels returning to equilibrium and rising demand, we could start to see a steady improvement in this sector.
According to SQM Research Brisbane, the vacancy rate has gone from a peak of 4.1% recorded in December 2016 to 2.8% today.
Post vacancy rates are expected to continue to decline in 2019 as a result of the influx of interstate migrants, particularly from Sydney and Melbourne, at a time when completed apartments are below the acceleration of demand.
Another positive sign that emerges is the strong job creation in Queensland, in part because of all the ongoing infrastructure development.
The number of migrations between states continues to improve
Trent Wiltshire – an economist at Domain and author of their property price forecast report, suggests that the value of Brisbane's properties could rise by 4% in 2019 and by 5% in 2020.
Our Metropole Brisbane team has seen a significant increase in local consumer confidence as many other buyers and investors have expressed interest in real estate. At the same time, we are receiving more and more applications from interstate investors for many years.
The Brisbane values ​​rose 0.1% over three months until November 2018 and rose 0.3% over the past year.
The number of houses increased by 0.6%, while the number of units decreased by -1.1%
Adélaïde Housing Market
The Adelaide real estate market has remained stable over the last decade, with an increase in real estate value of 10% over the last 10 years (in other words, the price houses did not keep pace with inflation.)
In the last 12 months, the value of homes has increased by 1.4% and the value of apartments has increased by 1.3%.
On the rental side, the vacancy rate has steadily declined and rents have increased 2.6% over the last year.
I know that some interstate investors see Adelaide as a future "hotspot," but I want to point out that there are some long-term growth factors in Adelaide.
Adelaide is currently experiencing difficult economic conditions, marked by an increase in unemployment.
While Adelaide may be a liveable and affordable city, our research suggests investors look elsewhere.
For example, the Brisbane real estate market offers better long-term growth drivers.
Adelaide's values ​​rose 0.2% over the three-month period preceding November 2018 and increased 1.4% over the past year.
The number of dwellings increased by 0.6%, while unit values ​​increased by 1.3%
Perth Housing Market
Perth's real estate market has been down since its peak in June 2014.
Although stocks continue to fall, many other indicators now suggest that the Perth property market is collapsing, although it has not yet found a floor.
But like all other capitals, the market is fragmented and performance varies from one subregion to another.
Rents increase slowly as vacancy rates are steadily declining
Although the prospects for the state economy have become more positive with the recovery of the Perth economy and the resumption of population growth, the surplus of housing to Perth should stay in place for a while.
While the Perth market may stabilize over the next year, it is far too early for a countercyclical investment in the west of the country. I can not see the prices increase significantly for several years due to the reluctant demand of investors and the large excess supply of new apartments there is little or no prospect of growth in capital or rent growth in the Perth apartment market for many years.
Like other states, the demographic evolution of Western Australia has a considerable impact on the overall performance of its real estate market.
For people to find their way back into the state, more jobs will have to be created.
The value of dwellings decreased -2.1% over the three-month period ending November 2018 and decreased by -4.2% over the same period last year. Past year.
The value of Perth housing is now -14.8% higher than the peak of June 2014.
Hobart Housing Market
Hobart has been the best-performing city in the last three years, with home values ​​up 9.3% from a year ago, but indicators suggest the market has now outgrown its limits.
Given the relative strength of the rental market, the recovery of the Tasmanian economy (driven in particular by tourism) and the sustained population growth due to net migration between states.
House prices are expected to continue to rise in the near term, but as more apartment projects under construction are completed, price growth is expected to slow.
Rents rose sharply in Hobart as the vacancy rate remained at historically low levels
One of the costs of the Hobart real estate boom is that over the last five years, median house prices have risen about twice as fast as household income, causing a deterioration in housing prices. Financial accessibility of housing in Apple Isle.
This, along with the fact that investors are shifting their focus to the next "hot spot," is another reason why Hobart's real estate price growth is nearing its peak.
Trent Wiltshire – an economist at Domain and author of their property price forecast report suggests that the value of property in Hobart is expected to increase by only 2% over the next two years.
The value of dwellings increased 1.7% over three months up to November 2018 and is 9.3% higher than last year.
Houses rose 8.9% while unit values ​​rose 11.1%
Darwin's Housing Market
The Darwin real estate market, which peaked in August 2010, is still suffering the effects of the end of our mining boom today 8 years later.
But as prices have fallen by less than 1% over the past year, real estate prices in Darwin could finally be on the decline.
Rents have dropped 10% in the last 12 months. In fact, rents fell 38% from their peaks according to SQM Research.
Unlike the East Coast capitals where many jobs are created, Darwin recorded a net job loss last year and the Northern Territory Treasury Department is forecasting a new year of demand-driven economic recession negative conclusion from the States.
Darwin does not have significant growth relays on the horizon and it would be better for investors to avoid it.
The value of Darwin dwellings increased 0.2% in the three months to November 2018, but declined 0.8% in the past year.
The value of housing in Darwin is currently 23.1% lower than their historical peak.
Canberra Housing Market
The Canberra real estate market is a "serene market", the value of housing has increased by 4.0% over the past year, real estate price growth (+ 4.6%) being well above that of the apartment market (+ 2.1%).
The strong demand for rental housing in Canberra comes from foreign students and ministry professionals, which resulted in a 7.7% increase in rents in Canberra over the last year. Rents for apartments rose 4.8%.
In fact, over the last 3 years, Canberra rent has increased by 32% for houses and 18% for apartments.
Trent Wiltshire – Economist at Domain and author of their property price forecast report, suggests that housing prices in Canberra are expected to increase by 4% over the next two years, while apartment growth will be more moderate (+ 2% in the next two years). next two years.)
Economic growth in Latin America is expected to begin to slow down as of fiscal year 2019 while remaining above the national average.
Population growth is expected to remain strong, supporting the underlying demand for housing.
Public sector employment accounting for more than 40% of jobs in the Australian Capital Territory, though history repeats itself, the uncertain political climate that led to the federal elections in the US. next year will reduce local consumer confidence and reduce demand for housing somewhat. as always, this will be corrected after the elections and the Canberra real estate market will probably continue to perform well in the medium term.
The value of housing in Canberra increased 1.5% in the three months to November 2018 and increased 4.0% in the past year.
The value of homes increased by 4.6% and housing values ​​by 2.1%
The rental market
Rental markets in Australia continue to slow, with national rents unchanged during the month and rising only 0.7% over the past year.
This is unusual, with rents generally rising at a time of slowing real estate markets, as fewer Australians buy property and more remain as renters. However, the excess supply of properties meets the demand for rental housing.
Rental yields continued to rise from their historical lows, with rental growth outpacing value growth; however, yields generally remain well below the long-term average in most cities.
Signs of our declining markets
Our quieter markets resulted in lower sales of real estate with a trading volume 12% lower than last year.
Vendor statistics have generally decreased, with the number of days required to sell a property and the amount needed for sellers to raise their original asking price.
And of course, auction liquidation rates are at their lowest for a long time.
These factors have weakened supplier confidence, which has led to a decline in the number of properties for sale, but inventories are up, due to the slower pace of sale of properties for sale.
Compared to sales in the previous 12 months, the number of transactions settled was down -12.0%.
These figures are estimates of sale sales. Off-plan sales are usually settled at the end of the project. At that time, they are recognized at the date of the contract. Given this, sales in recent years are expected to rise after the conclusion of these regulations.
The number of days on the market measures the average time between the date of first registration and the date of the contract for properties sold over-the-counter.
The sale of the combined houses in the capital currently takes on average 51 days, compared to 42 days at the same time last year.
Brisbane, Adelaide and Canberra are the only capitals in which discount levels are currently lower than those of the previous year.
Low auction liquidation rates are an indication of the lower demand for real estate. There are fewer real bidders who sell these properties at auction and the number of properties sold at auction is lower.
Supply and Demand
While Australia's population continues to grow quite rapidly, the rate of growth has slowed, both the net outward migration rate and the natural growth rate have declined.
Population growth in Sydney and Melbourne declines slightly with a slight decline in net overseas migration, as well as an increase in interstate migration from Melbourne and Sydney to southeastern Ontario. Queensland.
That being said, Melbourne is still experiencing interstate migration from South Australia and Western Australia.
Of course, slower population growth has a negative impact on housing demand.
Housing approvals increased in September, but the trend is toward declining amenities, particularly in the apartment sector.
It remains to be seen how many of these new approved properties will be built in light of the slowing housing market and generally tighter financial provisions for investors and developers.
It is clear that developers are losing the appetite to start new projects because they have difficulty getting pre-sales and hence building funds.
Finance
Official interest rates remain at 1.5%, but variable mortgage rates have increased slightly in September and October, due to the rise in off-cycle cycles by some lenders.
While previous real estate cycles have generally been dictated by changing interest rates, the current downturn has been heavily influenced by the evolution of credit availability.
Investor loans are well below their peak and continue to decline as APRA succeeds and slows our markets.
At the same time, while homeowner loans have slowed down, they remain relatively healthy, up 7.0% year-over-year to October 2018, but the average size of loans to homeowners has declined slightly in recent months.
The slowdown in credit growth is mainly due to a sharp reduction in investment lending. -18.1% over the past year and -35.6% from the 2016 peak.
The first buyer's financing commitments for the first occupant have increased since the middle of 2017.
Given the slowdown in our economy and weak wage growth, it is unlikely that official interest rates will increase over the next year.
The least we can say is that the RBA could argue in favor of lower rates to boost our economy and support real estate prices falling.
Bottom line …
The value of properties (especially in Sydney and Melbourne) has grown at a rapid and unsustainable pace for several years.
This was stimulated by:
• Relatively better economic conditions than in the rest of Australia, leading to
• Strong population growth, including increased migration
• Local and foreign investors pursuing roughly the same type of property at a time when mortgage interest rates are low.
• Homeowners are eager to modernize as property sees value increase.
Nous sommes maintenant clairement dans la prochaine phase du cycle de l’immobilier, celle de la croissance modérée dans certaines régions, de la quasi-absence de croissance dans d’autres et de la chute des prix dans d’autres.
Les marchés immobiliers australiens sont très fragmentés, sous l’effet de facteurs locaux tels que la croissance de l’emploi, la croissance de la population, la confiance des consommateurs ainsi que l’offre et la demande.
Le temps est donc opportun pour les acheteurs de maisons et les investisseurs d’acheter un bien à un moment où ils se feront moins concurrence.
Cependant, la sélection correcte des actifs sera plus importante que jamais, aussi n'achetez que dans les régions où il existe de nombreux moteurs de croissance à long terme, tels que la croissance de l'emploi, la croissance démographique ou des modifications majeures des infrastructures.
De même, les banlieues en cours de gentrification vont probablement surperformer.
Source des graphiques et des données: CoreLogic
……………………………………….. ………..
Michael Yardney est PDG de Metropole Property Strategists, qui crée de la richesse pour ses clients grâce à des conseils et à la défense des droits de propriété indépendants et impartiaux. Il est un auteur à succès, l'un des plus grands experts australiens en matière de création de richesse par le biais de la propriété et a écrit le blog Property Update.
Avertissement: les points de vue exprimés par les contributeurs ne sont pas nécessairement les mêmes. reflètent les opinions de votre investissement immobilier.
               Â
Pouvez-vous vous permettre d'acheter dans cette banlieue? Découvrez combien vous pouvez emprunter
