23 September 2019

Sound News September

1. Suburbs That Have Quietly Bolted

Australia’s largest property markets have turned a corner. Just coming out of a downturn new data from CoreLogic shows that some areas have already bolted by at least 10% despite the 5.2% decline in the broader market. This highlights the different speeds at which markets are moving. 

In Sydney we’ve seen units in the Northern Beaches and Botany grow significantly over the past year, defying the 6.9% drop in greater Sydney. During this time Eastgardens units increased by a solid 14.3% to $906,882 while Newport in the Northern Beaches climbed by 11.6% to $929,568.

Early signs of growth tend to be found in desirable blue-chip suburbs where buyers wait patiently for the market to bottom out. In Melbourne eager buyers are scrambling into exclusive enclaves of Toorak pushing the median unit prices by 19.2% to $907,675 over the past 12 months. 

2. Australia’s Top 100 Rental Suburbs

New research from Core Logic has revealed the Top 100 areas where property investors can find high rental returns and positivelygeared investments. The team at Sound Property are often surprised how many investors get lured into these markets on rental yield alone. These ‘Top Suburbs for Rental Yield’ reports can be misleading and dangerous for property investors.

The leading state on this list is QLD, with 42 suburbs followed by NSW with 17 & SA with 15. Blackwater, a small country town in QLD took the top spot with an average housing rental yield of 11.7% and a median value of $122,165.

To meet the criteria of the Top Rental Performers Report, suburbs had to achieve gross rental yields greater than 5% and have a vacancy of less than 3%.

Take a look at the Top 20 – most are remote mining or small regional towns with one industry and a fluctuating population. These areas can be volatile and risky for property investors. We have just witnessed this after the recent mining boom, where prices and rents are now a fraction of what they were.

To reduce risk and maximise results in property investment you must look at the 15 Key Investment Drivers such as; Population Growth, Economic Strength, Supply and Demand, Unemployment, Vacancy Rates, and Infrastructure Spending.

3. Home Loan Lending Strongest in Five Years

Up to $26.5 billion worth of housing finance commitments were made in July 2019, marking the second consecutive month of increases. Latest statistic figures show it to be the strongest month since October 2014. 

According to ABS figures on new lending to households, the value of new lending commitments was seasonally adjusted to an increase of 3.9% in July 2019, following the 1.9% rise in June 2019. After a noticeable withdrawal from the market, new loans to investors were up almost 5% on the month prior.

Corelogic’s Cameron Kusher said most of the increase in lending has been mainly new lending over refinances of existing loans, with $26.5 billion in housing finance split between $19.3 billion to owner-occupiers and $7.2 billion worth of commitments to investors.

“The $19.3 billion worth of commitments to owner-occupiers was the greatest value since November 2018 and the $7.2 billion in commitments to investors was the greatest since December 2018”, Kusher said.

After a downturn, Australia’s national dwelling values have seen growth since May this year and loan commitments have begun to pick up.

4. Property market update: Brisbane, September 2019

Brisbane powered through the national property downturn; it’s affordable housing market allowed the city to dodge the impacts of restrictive lending criteria that other major capitals felt.  The city’s property market remained steady, with dwelling prices rising 0.3% for the year to November.

Now that the election climate has passed, we’ve witnessed an increase in consumer confidence as negative gearing and capital gains tax discounts were preserved, interest rates are at record lows and APRA removed the serviceability buffer for borrowers. 

Buyers continue to be attracted to the improving economic growth and job conditions, supported by the biggest infrastructure spends since the 2011 flood recovery. Opportunities abound as properties are more affordable, rental yields are achieving upward of 5% and capital growth for the last five years has been in excess of 6% p.a.

BIS Oxford Economics predicts that Brisbane could be looking at growth up to 20% over the next 3 years driven by high interstate migration, major infrastructure projects such as the second Brisbane airport runway and relaxed lending criteria.

The RBA Cash Rate Survey found Brisbane to overthrow Sydney as the most attractive capital city to invest property dollars, 27% of leading experts would choose Brisbane as their primary investment locations.  

This article is provided for general information only and does not constitute personal advice, as it does not take into consideration your personal circumstances. Please consult a licensed tax or financial advisor before making any decision to invest. Past performance is not a reliable indicator of future performance.