The real estate market's climate has changed over the past month, boosted by federal election results, declining interest rates and looser restrictions on APRA loans. However, the value of home ownership in our domestic markets continued to decline over the month. of May
National housing values ​​fell for the 19th consecutive month in May 2019, declining -0.4% – the smallest monthly decline since August 2018.
According to Corelogic, during the month the combined value of capitals fell by -0.4%, while combined regional markets declined by -0.2%.
In the past year, the value of national dwellings fell by -7.3%, their largest annual decline since January 2009.
The combined value of capital dwellings was 8.4% lower during the year and the combined regional market value was -3.0% lower.
Over the past year, values ​​have fallen in all capital cities, with the exception of Adelaide, Hobart and Canberra, however, the annual rate of change in value each capital was lower than the previous year.
The Australian housing market continues to face a general economic slowdown.
Monthly price declines are now moderating, suggesting that the worst is likely to have passed and that prices should begin to stabilize by the end of 2019.
Sydney Housing Market
Housing values ​​in Sydney continued to decline in May, registering a further 0.5% drop for the month and down 14.9% from the July 2017 market peak.
The good news is that it is the smallest monthly decline since last March.
Bid reconciliation rates in Sydney have increased by 60%, even though volumes are lower.
An interesting change in trend is that the values ​​of apartments (-2.3% in the last three months) are currently falling faster than those of homes in Sydney (-1.9% in the last three months) .
At present, a significant number of new apartments are entering the market in Sydney. There are an estimated 54,000 completed apartments in Sydney in 2018 and 2019, which will obviously put pressure on prices and rents.
Sydney homes now have an average of 50 days to sell, compared to 33 days a year ago. However, sellers discount their properties by 6.7% on average, compared to 5.3% a year ago, to affect a sale.
In the last 12 months, 20.2% fewer properties were sold in Sydney than in the previous year.
The fact that the number of days on the market and the discount rate of suppliers are falling and that auctioning rates increase is a positive sign.
The same goes for the fact that the interest of first-time homebuyers increases: 25% of housing loans approved in March in New Zealand go to first-time buyers.
It's a great countercyclical period to buy an investment grade property in Sydney.
Melbourne Housing Market
The value of housing in Melbourne continued to fall in May, down 0.3% on the month, or 11.1% since the peak reached in November 2017, but according to Corelogic, the value of housing in Melbourne remains higher by 25% to what it was five years ago.
Although stocks continue to fall, it is the smallest monthly decline since last March and continues the downward trend observed since February earlier this year.
In the last year, sales were 25% lower than the year before, a sign that sellers are only putting their properties on the market if they really need to sell.
Melbourne homes now have an average of 44 days to sell in the March quarter, up from 29 days a year ago. However, sellers discount their properties by 6.3% on average, compared to 4.0% the year before to affect a sale.
In the last 12 months, 27.4% fewer properties were sold in Melbourne than in the previous year.
The resilience of the apartment sector, despite high levels of supply, is likely due to both affordability constraints in the marketplace and more first-time buyers supporting the demand. cheaper housing, thanks to the First. Incentive measures for homeowners.
Brisbane Housing Market
Property values ​​in Brisbane declined 0.5% in May, with falls limited to the single family sector.
According to Corelogic, the value of apartments rose 0.1% during the month, thus breaking the downward trend in values.
While the value of Brisbane apartments remains 12.5% ​​lower than their peak of 2010, excess supply has slowly been absorbed due to population growth while new product offerings was less.
Slowing housing market in Brisbane means:
• The average time of sale of a house is 55 days (36 days ago) and
• Vendors update their properties by an average of 5% to affect a sale (4.3% a year ago)
• 12.7% fewer properties sold in the last 12 months compared to the previous year
Faced with rising rates of migration, control of supply and the generally affordable level of housing, Brisbane's housing market fundamentals look healthier than those of most other capitals.
At the same time, the strong underlying demand for homebuyers and investors from southern states, at a time when yields are attractive and affordability of housing is relatively healthy and puts a floor on real estate prices.
Housing Market of Adelaide
Adelaide was the only capital city to avoid a decline in housing values ​​by May, as the CoreLogic index rose 0.2% during the month, rising 0.4% in the last 12 months.
Adelaide is Australia's most affordable capital. The value of dwellings fell 0.2% in the last 3 months, but their value has increased 0.4% in the past year.
Signs of a slowing real estate market in Adelaide include:
• The average selling time of a house is 43 days – about the same as last year (42 days ago) and
.
• Vendors update their properties on average to 5.3% to affect a sale (4.9% a year ago)
• 2.3% fewer properties sold in the last 12 months compared to the previous year
While things are looking good for Adelaide property in the near future, in the next few decades most of the growth in long-term employment, economic growth and Australia's population growth will occur in our four major capitals, which means term wealth creation that Adelaide.
Perth Housing Market
Perth recorded a further decline in home values, down 1% month-over-month and 8.8% over the last twelve months, down 19.2% from its peak in June 2014.
The persistent weakness of the Western Australian home market can be attributed to the combination of weak economic and demographic conditions, which are superimposed on a tight credit environment.
Perth's values ​​are now among the most affordable among capital cities, with a median dwelling value of $ 436,000, only $ 4,500 more than the median home value of Adelaide.
Signs of the Downturn in the Perth Housing Market Include:
• Average time to sell a home is 57 days (49 days a year ago) and
• Vendors update their properties by an average of 6.9% to affect a sale (6% a year ago)
• 7.2% fewer properties sold in the last 12 months compared to the previous year
It is far too early for a countercyclical investment in the West – I can not see prices rising significantly for several years.
Hobart Housing Market
Hobart has been the best-performing real estate market in the last three years, but it looks like the boom is now over and prices peaked in March of this year.
CoreLogic figures show a 0.4% drop in housing prices last month.
Other signs of the slowdown in the Hobart real estate market include:
• The average selling time of a home is 32 days (9 days a year ago) and 4,33.3
.
• Vendors update their properties by an average of 4.3% to affect a sale (3.3% a year ago)
• 10.1% fewer properties sold in the last 12 months compared to the previous year
Darwin's Housing Market
The Darwin real estate market, which peaked in August 2010, is still suffering from the effects of the end of our mining boom with a very gloomy job market and a lack of migration and infrastructure spending.
Current values ​​are 29.5% lower than their historical averages and it is unlikely that we would see these types of real estate prices over the next decade.
The small size of Darwin's market makes it more susceptible to local events and Darwin generally has a higher and more variable vacancy rate, resulting from a large and transient population.
Darwin has no significant growth engine on the horizon and it would be best to avoid investors.
Canberra Housing Market
The Canberra real estate market is a "quiet market", the value of housing has increased by 2.4% over the past year, real estate price growth (+ 3.4%) being well above that of the apartment market, where prices fell by 1.1% in the last 12 months.
With federal elections now over, the Darwin market is expected to regain confidence and population growth is expected to remain strong, supporting the underlying demand for housing.
Our real estate markets continue to relax
Vendor statistics have generally improved in recent months but are lower than a year ago.
According to Corelogic, the number of real estate transactions decreased by 16.6% nationwide, Darwin was the only city in which sales volumes had increased during the year.
The other signs of the slowdown in our real estate markets are the rise in the number of days on the market (the time needed to sell a property), which is a sign that there are more properties available for sale that there are active buyers, as well as the seller of increase. discounts needed to sell a property.
The sellers seem to have realized that it was not the right time to sell, with fewer new listings added to the market than in recent years, while the levels of inventories advertised are much higher, due to a rate of slower absorption.
A sign of increased confidence, particularly in the Melbourne and Sydney real estate markets, generating auction liquidation rates.
If these continue to stay in the high 60% range, this could lead to an increase in property values.
Our rental markets are also difficult
Rental markets continue to show a downward trend.
Corleogic reports that national rents remained unchanged during the month and rose 0.4% over last year, which remains the lowest annual growth rate ever recorded (2005 data).
Other Market Indicators:
The trend of population growth has slowed over the twelve month period ending March 2018, with both the net overseas migration rate and the natural increase rate having both. decreases. Slower population growth is having a negative impact on housing demand.
Housing approvals are down and are expected to continue to decline, despite a slight increase over the month.
• Data on housing finance and credit aggregates highlight slowing investment lending, while homeowner loans slowed, but rose 5.5% year-over-year, up to April 2019, while investor credit rose at a historically low 0.6%.
• Official interest rates were reduced to 1.25% in June and the market expects the reductions to be more likely than increases from here
THE LOWER LINE …
We are at an interesting stage in our property cycle with signs that we are nearing the bottom.
Even though there may be a little more inconvenience in our two major markets in the capital, it seems like it's the best time to buy against the tide in Sydney and Melbourne for over ten years and to cycle through the property cycle in Brisbane.
The Canberra property should continue to perform well and Adelaide should hold firm, but Hobart is likely to slowly move to the collapse phase of its own property cycle and there are still more disadvantages for Perth and Darwin.
Of course, the property will remain a valuable asset for long-term wealth creation, but now more than ever, a proper selection of assets will be essential. So buy only in areas where there are many long-term growth drivers, such as employment growth, growth or major infrastructure changes.
Similarly, the suburbs being gentrified are likely to outperform.
Michael Yardney is a director of Metropole Property Strategists, which creates wealth for his clients through independent and impartial advice and defense of property rights. He is a successful author, one of Australia's leading experts in wealth creation through real estate and writes the Property Update blog.
