Nationally housing prices have been falling since mid-2017 and are now 10% down from their peak.
But lately, people are starting to ask: “Are we there yet? How much further property prices likely to fall?”
This current market downturn, which looks like it will end up as the longest and most severe downturn in modern history, is being caused by the constrained ability to access finance, poor consumer confidence and the oversupply of too many of the wrong properties, rather than the typical cause of a market downturn such as economic recession or high interest rates.
However, some green shoots are appearing… so let’s look at the latest graphs and statistics from CoreLogic to get a better idea of what’s happening around our property markets in Australia
CoreLogic report that:
- Nationally dwelling values fell for the 18th consecutive month in April 2019, recording a -0.5% decline
- Over the month, combined capital city values fell by -0.5% which was the smallest decline since October 2018.
- The combined regional markets recorded a -0.3% fall.
- Over the past year, national dwelling values have fallen by -7.2% which is their largest annual fall since February 2009.
- Combined capital city dwelling values were -8.4% lower over the year and combined regional market values were -2.6% lower.
- The number of property transactions is down 14.4% nationally year on year, Adelaide and Darwin were the only cities in which sales volumes rose over the year.
Monthly price declines are now moderating, suggesting that we are probably past the worst and prices should begin to stabilise by late 2019.
However, it looks like this will be the longest and deepest property downturn in modern history, despite the fact that the underlying economic fundamentals are sound.
The Sydney property market peaked in mid-2017 after dwelling values surged almost 80% since the beginning of the last cycle in 2012.
Sydney real estate values have been falling consistently since then, with dwelling values falling by 2.5 % over the past three months, but the rate of decline is easing (0.7% over the month of April – the smallest decline in 6 months).
The Sydney market is now down 13.9% since values peaked in July 2017.
This time round there has been a larger decline in the value of houses in Sydney than for Sydney apartments and more expensive properties are experiencing a bigger downturn than cheaper properties.
This is due to affordability factors as well as a surge in first home buyer activity which is supporting demand across the more affordable end of the market.
First home buyers are active in Sydney creating stronger markets over the lower quarter of the market – especially apartments.
With dwelling values having fallen by – 10.9% over the year to April 2019, only two regions, both of which are located in the Blue Mountains (Blue Mountains North and Wentworth Falls), have recorded annual growth.
Sydney homes now an average of 62 days to sell, compared to 33 days a year ago, however, vendors are discounting their properties by an average of 6.9% compared to 4.9% a year ago to affect a sale.
The fact that Days on Market and Vendor Discounting is dropping and auction clearance rates are rising are all positive signs for Sydney property market.
The Melbourne property market peaked in November 2017 and CoreLogic report a 10% fall in values over the last year, but values only fell 0.6% over the last month (the smallest decline since June last year.)
Over the last year, there were 25% fewer sales than the previous year, a sign that sellers are not putting their properties on the market unless they really need to sell.
Melbourne homes now an average of 43 days to sell over the March quarter, compared to 27 days a year ago, however vendors are discounting their properties by an average of 6.2% compared to 3.8% a year ago to affect a sale.
But the Melbourne property market is very fragmented, with values of detached houses having fallen more than apartments. Apartment values were down 4.1% over the last year compared with a 12.6% drop in house values.
The resilience across the apartment sector, despite higher supply levels, probably comes back to a combination of affordability constraints in the market as well as more first home buyers supporting housing demand across the lower price points of the market, thanks to the First Home Owner incentives.
Many have been predicting that now is the time that the Brisbane property will finally have its turn in the sun, but despite performing better than much of Australia, CoreLogic report that recently market conditions have softened a little.
Brisbane house values slipped 0.4% lower in the month of April are down 1.9% over the last 12 months despite rising demand from a growing population and relatively affordable prices.
However, the markets are very fragmented, with apartments (-2.4%) continuing to underperform free-standing homes (-1.8%), and some suburbs strongly outperforming others.
The slower Brisbane housing market means that:
- The average selling time of a home is 60 days (34 days a year ago) and
- Vendors are discounting their properties an average of 4.7% to affect a sale (4.2% a year ago)
- 9.3% fewer properties sold in the last 12 months compared to the previous year.
We are not expecting the Brisbane market to have a substantial correction like Melbourne and Sydney are experiencing because the lower property values in Brisbane have made it less susceptible to being caught out in the fallout from the tighter lending restrictions.
At the same time the underlying strong demand from home buyers and investors from the southern States at a time when yields are attractive and housing affordability is relatively healthy and putting a floor under property prices.
Our property markets are slowing
CoreLogic report the number of property transactions is down 14.4% nationally year on year, Adelaide and Darwin were the only cities in which sales volumes rose over the year.
Other signs of our slowing property markets are rising Days on Market (the time it takes to sell a property) which is a sign that there more properties available for sale then there are active buyers, and also the increase vendor discounts necessary to sell a property.
Vendors seem to have got the message that it isn’t a great time to sell, with fewer new listings being added to the market than over recent years, while total advertised stock levels are tracking much higher, due to a slower rate of absorption.
Auction clearance rates are higher than they were late in 2018 but much lower than a year ago with volumes also much lower.
Our rental markets are also doing it tough
Rental markets continue to trend lower.
National rents were 0.3% higher over the month and 0.4% higher over the past year which remained at their slowest annual rate of growth on record (data from 2005).
Rental yields have continued to lift from their record lows as rental growth outpaces value growth, however, yields generally remain well below the long term average in most cities
Other market indicators
The trend in population growth has eased over the twelve months ending March 2018, as both the rate of net overseas migration and the rate of natural increase fell. Slower population growth has a negative implication for housing demand.
Dwelling approvals are trending lower and expected to fall further, despite a slight increase over the month.
Housing finance data and credit aggregates highlight the slowdown in mortgage demand.
While housing finance commitments were slightly higher in February, they are substantially lower year-on-year.
Housing credit is growing at an historically low annual rate of 4.0% with owner-occupier credit growth slowing to 5.7% while investor credit growth increasing at a historic low rate of 0.7%.
Official interest rates remain at 1.5%, however, the expectation from the market is that cuts are more likely than increases from here.
In fact, if employment figures don’t improve we could have the first of a number of rate cuts very soon.
Smart buys: Brisbane’s best properties under $800,000 for sale right now
Here’s our pick of the best buys in Brisbane and some of its surrounds at the moment — and they’re all under $800,000.
34 Ivy Street, Toowong
With tongue-and-groove floorboards, a cast-iron fireplace begging for love, a sunroom, and a prime position on 405 square metres, this three-bedroom original workers’ cottage is bound to catch eyes of inner-west renovators. No price has been set yet but agent Alex Jordan says as a vacant block on land it would achieve over $600,000.
McGrath, Alex Jordan 0410 424 749
81 Payne Road, The Gap
The rear of this multi-tone brick house surprises. There’s a single-garage-cum-workshop or home office between the double carport and an elevated timber sundeck, and there’s also a pool. It is fully fenced on a 625-square-metre block, and has three bedrooms with a further small room inside that could become a fourth bedroom or study.
Harcourts, Stephen Dangerfield 0412 145 802
48 Bringelly Street, Arana Hills
From its white picket fence to its flat sandpit-friendly backyard, the DNA of this three-bedroom, one-bathroom house is pure family. Set on a flat 607-square-metre block about 20 metres from the local bus stop, Grovely State School is 900 metres away and Arana Hills Plaza, restaurants and cafes are at the end of the street.
Coronis, Jo Dryden 07 3351 5151
19 Allamanda Crescent, Albany Creek
This substantial four-bedroom, double-storey house sits on a 1250-square-metre landscaped block. It has ample room for its pool and double garage, and there is a massive covered entertaining area and both casual and formal living and eating rooms. Two state high schools are located within 2.4 kilometres of the front door.
Style Real Estate, Claire Little 0422 755 171
40 O’Quinn Street, Nudgee Beach
This 54-year-old updated beauty on a double block opposite the beach offers three bedrooms, three bathrooms and 1000 square metres of land. Open-plan living and dining space, plenty of natural light, timber floors, and a second living area with clever built-in bench seating and storage are boons. The rear has a storage shed, two garden sheds and a single garage.
Calio & Scott Real Estate, Carl Calio 0416 145 288
6 Chase Crescent, North Lakes
Worth a look if a first-time home buyer, or investor watching budget-friendly growth areas, this super neat, modern three-bedroom, two-bathroom house also has a double garage. It is set on a low-maintenance and landscaped 486-square-metre block. It also has decent-sized, open-plan living and media rooms.
Hudson Property, Viv Robinson 0407 918 184
50 Windsor Place, Deception Bay
This two-bedroom, one-bathroom cottage on a 397-square-metre corner block has serious update or rebuild potential. Set three blocks west of Moreton Bay and one block to the suburban public primary school, it is liveable as a home or easily rentable with a modern kitchen and fenced backyard. It has a separate sunroom and a single carport.
Ray White, Lydia Robins 0438 166 763
441 Beenleigh Road, Sunnybank
This renovated, four-bedroom, one-bathroom house has parking space for two cars on a 708-square-metre block. The floor plan is open between living, dining and kitchen areas and the metro rail station is about 400 metres away. Its reserve price is unknown as required by Queensland auction laws, but it was found in a search for homes under $800,000.
Auction, June 29, 12.30pm
RE/MAX, Gary Dellios 0411 879 935
4 Parliament Street, Bethania
The federal election is done for 2019, but here is another way to get into Parliament. With three bedrooms and one bathroom, this brick-and-tile house also has a double carport and a double garage. On a flat 758-square-metre block, the back section is contained making for a fine play zone. Neutral timber-look flooring in the kitchen-meals area balances the retro swirl carpet in the living-dining.
LJ Hooker, Trina Wilson 0427 188 500
Cbus Property Plans $600m North Quay Tower
Cbus Property will partner with local Brisbane developer Nielson Properties to deliver a $600 million riverfront commercial building in the city’s CBD.
The 3,000sq m corner site, an amalgamation of 205 North Quay and neighbouring 30 Herschel Street, will now house the city’s latest A-grade commercial building.
The office development, to be known as 205 North Quay, will deliver 50,000sq m of net lettable area.
Cbus Property chief executive Adrian Pozzo said the site was ideal as it takes advantage of Brisbane’s strong economic outlook, employment growth and the state government’s infrastructure investment.
“205 North Quay is a major riverfront CBD site, ideally located to capitalise on the major infrastructure projects nearby such as the recently announced Roma Street Station, Brisbane Metro, Cross River Rail and Brisbane Live,” Pozzo said.
“Queensland’s economic growth also anticipated to continue to outperform the Australian average.”
“We will look to build on these strong economic foundations and our past success with 1 William Street, to deliver a premium and future-focused commercial tower for Brisbane’s CBD in collaboration with our partner, Nielson Properties.”
No stranger to Brisbane CBD’s commercial market, the project follows Cbus Property’s 46-storey “tower of power” at 1 William Street, home to the Queensland government.
The 205 North Quay development will add to the continued regeneration of the burgeoning North Quarter precinct, which will also include Mirvac’s 80 Ann Street tower to be tenanted by Suncorp, Shayher Group’s 300 George Street project and the recently completed W Hotel on George Street.
The development will also be located in Brisbane’s prime commercial district, capitalising on the major infrastructure projects nearby such as the recently announced Roma Street Station, Brisbane Metro, Cross River Rail and Brisbane Live.
“As a local Brisbane developer, we’re excited to be a part of the evolution of the North Quarter as it becomes a vibrant hub bolstered by outstanding connectivity to Brisbane’s CBD and premium infrastructure and amenity,” Nielson Properties director Ross Nielson said.
Cbus and Nielson have commenced preliminary discussions with the Brisbane City Council.
Last week, Brisbane-based Sentinel Property Group snatched up Makerston House, a neighbouring commercial property in Brisbane’s North Quarter precinct from investment management company Challenger for $103 million.
Further along the CBD riverfront, work has also commenced at the $3.6 billion Queens Wharf developed by the Destination Brisbane Consortium, a joint venture led by casino giant Star Entertainment Group, Far East Consortium and Chow Tai Fook Enterprises.
Work is also under way on Brisbane’s newest riverside public space, with the area between the Goodwill Bridge and 1 William Street to be developed into an above-water pedestrian walkway and recreational area called Waterline Park.
‘Why not Hendra?’ The luxury house that is poised to set a new benchmark for this Brisbane suburb
A prestigious new property in Hendra is tipped to break records when it goes under the hammer in a couple of weeks, setting a new benchmark for luxury in the area.
The five-bedroom, four-bathroom house may be located on General Street, but its myriad of bells and whistles means it’s anything but.
With a plethora of top-line features, including travertine tiles, state-of-the-art fixtures and a mosaic-tiled swimming pool, it includes a climate-controlled wine cellar as well as bespoke cabinetry throughout.
Marketing agent Patrick McKinnon of Place Ascot said the house was part of an emerging trend in the suburb towards luxury new builds. The developers behind the home, Innovare Builders, were quickly transforming the standard of Hendra homes project by project, he said.
“They’ve really lifted the benchmark for what’s expected in Hendra and set the tone for the quality that people look for here,” he said.
“This house should a set a record for the area for 405-square-metre non-racecourse property. The records are around the $1 millions and I think this is better than anything else comparable on the market right now.”
While perhaps not as well-known as its prestigious neighbouring suburbs of Ascot and Hamilton, Hendra’s gentrification is well underway, partly due to the redevelopment of Eagle Farm Racecourse.
The 379-square-metre statement home is within an easy canter of the racecourse as well as many cafe precincts.
Orazio D’Arro of Innovare Builders said Hendra’s multitude of attributes made the decision to develop there simple.
“In a nutshell, why not Hendra?” he said.
“We first chose Hendra because it is a gentrified living suburb with wide, tree-lined streets full of traditional and modern character houses and dotted by cafes, boutiques, other community businesses and gorgeous local parklands.”
Mr D’Arro said the design inspiration was Hamptons exterior meets modern European interior.
“Modern life requires thoughtful use of space and automation as well as comfort and this was at the forefront of each and every design and inclusion decision,” he said.
Located within easy commute of the Brisbane Airport as well motorways north and south, the home can be controlled from anywhere in the world via state-of-the-art automation and electrical integration.
“Part of a busy modern family’s lifestyle demands convenience – even while travelling – and the electronic aids offered up here deliver convenience in spades,” Mr D’Arro said.
Other features of the home include a rear patio designed for al fresco dining and summer barbecues, with a built-in, custom outdoor kitchen that features a barbecue and beverage centre.
The home also boasts an in-ground swimming pool lined with mosaic tiling and a manicured, drought-resistant lawn with landscaped gardens.
The property is located at 6 General Street, Hendra, and will go to auction on Saturday, June 22.
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