BIS Shrapnel’s latest assessment of Australia’s housing market was doom and gloom for all capital cities from 2016-2019, with Brisbane and Hobart tied in first places for the best and safest places to buy property for growth.

Brisbane’s estimated median house price is forecast to increase from $520,000 to $555,000 from 2016-2019 making it the third most expensive capital city in Australia, after Sydney and Melbourne respectively.

To keep it in perspective though, whilst BIS is predicting price falls in every capital city besides Brisbane and Hobart, it’s only talking about a modest 7% growth in our fair city and Hobart. But that’s far better than the negative growth predicted for the other cities.

Other Capital Cities Don’t Fare As Well

BIS are talking about prices falling 9% in Sydney, 8% in Melbourne, 9.5% in Adelaide, 9% in Darwin and 8% in Perth. Those of you good at maths will understand that when comparing percentage drops against growth that the drops are bigger than the growth (because the % are from higher amounts).

What is a bit disconcerting though is Shane Oliver’s comments from AMP Capital who believes these price drops could be considerably bigger…

…which all furthers the case for even more increased demand in the Brisbane and Hobart property markets.

China Invests Big in Queensland Property.

Our website traffic grows every month–which you’d expect to be normal with in business.

But what has surprised me over the last year is that a growing number of visitors to our website have been from China.

It wasn’t so long ago that a Chinese visitor would be rare. If they wanted to buy property in Australia they’d always go through one of the Chinese agencies. Whilst that is still largely true, it’s no longer the case. The Chinese have a ravenous appetite for Australian property.

20% of all new properties in Sydney were sold to Chinese investors this year. Yes, 20%.

Global investment bank Credit Suisse expects Chinese nationals to sink around $44 billion into Australian residential real estate over the next seven years. Given the restriction on non-permanent residents forcing them to buy newly built properties, Credit Suisse estimates that Chinese buyers are currently purchasing around 12% of new homes in Australia.

Which begs the question:

Why Is China Buying Australian Property?

There’re a few main reasons: [Read more…]

Have we moved through the peak of the growth cycle?

The RP-Data Rismark Home Value Index reported its first month on month fall in May after capital city dwelling values consistently rose over the previous eleven months. The extent to which the May decline was a seasonal factor has been a key topic across the media; generally the month of May is a seasonally weak time for housing markets and no doubt the most recent result suggests that was the case again this year.

When we adjust our index for seasonality the May numbers are still down 1.2% compared with a 1.9% fall in the original index reading. When we take the adjusted reading and also look at trend rate of growth over a rolling three month period it becomes increasingly evident that the Australian housing market has probably moved through the peak of its growth phase.

In fact, the quarterly rate of growth peaked back in June of last year at 1.9% in original terms and has since trended progressively lower. [Read more…]

Dwelling Values rise 10.1%  2013-2014 Financial Year

Capital city dwelling values have shown a 1.4 per cet capital gain over the month of June 2014, with all cities apart from Adelaide and Darwin recording a rise in dwelling values.

According to RP Data research director Tim Lawless, the strong result has partially reversed last month’s 1.9 per cent fall and provides a – 0.2 per cent decline in dwelling values over the June quarter.

Over the 2013-2014 financial year the top performing cities for capital gains have been Sydney and Melbourne where dwelling values are up 15.4 per cent and 9.4 per cent respectively across each city.

Brisbane Housing Market

The Brisbane housing market, where conditions have generally remained relatively sedate, is now gathering some pace with dwelling values moving 7.0 per cent higher over the past twelve months, the third strongest result of any capital city.

The Worst Performing Property Markets

On the other hand, the index results show that the softest performances over the past year have been recorded in:

• Hobart (2.5 %)
• Canberra (2.9 %)
• Adelaide (2.9 %)

[Read more…]

Making a profit or loss from real estate

An overview of RP Data’s latest Pain & Gain Property Report

RP Data has just released its quarterly Pain & Gain Report for the March 2014 quarter. Over the first quarter of the year, 9.8% of properties nationally sold for less than their previous purchase price meaning 90.2% of properties sold at or above their previous purchase price. This analysis doesn’t include expenses such as holding costs and purchase and selling costs so the proportion of actual loss-making re-sales would be higher than this reported figure on a net basis.

The figures also showed that there was a big discrepancy between the proportion of loss-making re-sales across the capital cities and regional markets. The data showed that loss-making re-sales are much more prevalent in regional areas than across capital cities. This is reflective of the fact that although values are higher over the year in all capital cities, it is not the case across many regional areas. Over the 3 months to March 2014, 6.5% of properties across the capital cities re-sold for less than their previous purchase price compared to 16.0% of re-sales in regional areas. [Read more…]

This is according to the latest RP Data – Rismark Home Value Index Release.

After a surge in values over the first quarter of this year, April’s housing market results have shown a marked slowdown in capital gains with dwelling values only 0.3% higher over the month.

Dwelling values across Australia’s capital cities shifted down a gear in April, rising by just 0.3 per cent across the RP Data – Rismark combined capital city index. The slowdown in the rate of capital growth comes after a very strong 2.3 per cent month-on-month rise in March and 3.5 per cent increase over the first quarter of the year.

Highlights over the three months to April 2014:

• Best performing capital city: Darwin, 5.1 per cent
• Weakest performing capital city: Canberra, 0.2 per cent
• Highest rental yields: Darwin houses with gross rental yield of 5.8 per cent and Darwin units at 6.1 per cent
• Lowest rental yields: Melbourne houses with gross rental yield of 3.3 per cent and Melbourne units at 4.2 per cent
• Most expensive city: Sydney with a median dwelling price of $680,000
• Most affordable city: Hobart with a median dwelling price of $340,000