Property market

The Brisbane unit market is showing consistent growth,&nbsp;according to CoreLogic&#39;s Monthly Hedonic Home Value Index.

Values jumped 1.4%, following the 1.6% gains in March and 1.5%&nbsp;over February. Values are now 6% up over 2022 already, well on their way to matching the 14.4% growth over 2021.

The quarterly performance, up 4.6%, is the highest in the country for the unit market.

The median apartment value in Brisbane is now $488,393. At the start of 2021, it was just over $390,000.

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Following the RBA&#39;s first interest rate rise in nearly 12 years at the May meeting,&nbsp;the Real Estate Institute of Queensland (REIQ) said the&nbsp;resilient Queensland market the higher rate forecasts.

REIQ CEO Antonia Mercorella said given the level of inflation, this may not be the last interest rate rise we see, but it was important to recognise that many market conditions and external factors remain favourable in Queensland.

&ldquo;We know that consumer confidence is key, and this move by the RBA will certainly make people stop and think more carefully about how much they are prepared to borrow, because it&rsquo;s a timely reminder that interest rates can and do go up,&rdquo; she said.

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&ldquo;While on the face of it, it&rsquo;s not an insignificant rise, in the grand scheme of things interest rates have been at historic lows for some time and are still very low.

&ldquo;This is also where our relative affordability is an advantage, as our average home loan rate is much lower than in capital cities like Sydney and Melbourne, and so the impact will be felt less here.

&ldquo;We remain confident in the resilience of the Queensland market because the need and demand for housing is irrespective, and an interest rate rise simply causes people to rethink what they are prepared to spend and how big of a loan they are prepared to enter into.&quot;

Total advertised inventory of both houses and apartments&nbsp;is more than 20 per cent below levels from a year ago in Brisbane, and around 40 per cent lower than the previous five-year average.

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The median apartment value in Brisbane is now $488,393. At the start of 2021, it was just over $390,000

Joel Robinson

Brisbane apartment market insights: What happened over April

Melbourne&#39;s unit market has continued to hold firm despite a cooling off in the house market.

CoreLogic&rsquo;s national Home Value Index pegged the Melbourne-wide apartment growth at 0.4% over April, the third consecutive month growth in the unit market has outstripped growth in the house market.

The Melbourne unit market (which incorporates both units and townhouses), is now 0.2% since the start of 2022, after posting 0.2% growth across March and 0.1% in Feb. Values started the year poorly, going backwards -0.4% in January.

The median apartment value in Melbourne is now $630,671.

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The growth in unit values is a stark contrast to the house market, which is sliding due to the affordability factors brought to more of a head following the RBA&#39;s interest rate hike in May, and expectation of further rate hikes.

Houses Melbourne-wide, on average, have remained flat since the start of 2022, but that was mainly due to a strong start in January. The rolling quarterly growth is now -0.5% after a 0.2% decline across April, CoreLogic data found.&nbsp;

CoreLogic&rsquo;s Research Director Tim Lawless&nbsp;says the weakening state of the market has taken the rolling quarterly trend into negative territory across Melbourne for the first time since these cities were in the midst of extended lockdowns in mid-to-late 2020.

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Advertised inventory, at a national level, is tracking almost 30 per cent below the previous five-year average however, in weaker markets like Melbourne, advertised supply levels have normalised, with listings in Melbourne 8.2%&nbsp;higher.

Higher stock levels across these markets can be explained by an above average flow of new listings coming on the market in combination with a drop in buyer demand

&ldquo;With higher inventory levels and less competition, buyers are gradually moving back into the driver&rsquo;s seat. That means more time to deliberate on their purchase decisions and negotiate on price,&rdquo; Lawless says.

Rental markets are also showing multi-speed conditions, with most of the capital cities experiencing an upward trend in rental growth in 2022. Nationally, rents were up 2.7% over the three months to April, taking the annual change in national rents to 9.0%. A year ago, the annual change in national rents was 4.9 per cent. Based on the annual change, house rents (+9.1 per cent) are rising faster than unit rents (+8.7 per cent), however this trend is changing sharply as demand for unit rentals increases.

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&ldquo;On a rolling quarterly basis, we are now seeing unit rents rising faster than house rents especially in Melbourne where rental conditions across the unit sector were previously much softer,&rdquo; Lawless says.

&ldquo;The shift in rental demand towards units reflects both rental affordability pressures, which are deflecting more demand towards the &lsquo;cheaper&rsquo; unit sector, and the return of overseas migrants and visitors. Rental demand from overseas arrivals tends to skew towards inner city and higher density precincts.&rdquo;

In Melbourne, unit rents are 3.6 per cent higher over the past three months compared with a 1.2 per cent rise in house rents. Higher yields and long-term prospects for capital growth could see investors comprising a larger portion of housing market activity.

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With the cash rate set to move through a rapid tightening cycle, CoreLogic expect this trend towards a gradual softening in the growth rate will become more pronounced over the coming months, before the national index starts to trend lower.

&ldquo;Although we are expecting the housing market to move into a downturn through the second half of the year, it is important to remember the context of the recent growth phase,&rdquo; he says.

Melbourne's unit market has continued to hold firm despite a cooling off in the house market


alisonwarters@gmail.com

Melbourne apartment market insights: What happened over April

As Brisbane&rsquo;s median house price skyrockets, the gap to the median apartment price widens, but it&rsquo;s set to be short-lived with Colliers research showing the apartment market tipped is for a dramatic price increase.

Brisbane&rsquo;s median house price increased by 10.7 per cent to $890,000 in the March quarter, according to research by Colliers.

The gap between the median house price and the median apartment price is at 49 per cent, the greatest differential Brisbane has seen in two decades.

However, Colliers Director Residential Queensland Andrew Roubicek believes the city is in for a significant price increase in the apartment market as we move into the second half of 2022, with compounding pressures on the construction sector forcing developers of new stock to lift prices.

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&ldquo;Working closely with developers, builders and architects as part of the project marketing arm of Colliers, and selling more than 5,000 apartments annually, we have seen first-hand the impact of labour and material shortages,&rdquo; Roubicek said.

&ldquo;Costs are rising by up to 30 per cent, and recent floods and COVID-induced issues are intensifying the problem and causing significant delays on construction timeframes.&rdquo;

The impact of cost increases as a result of compounding environmental factors has had a dramatic impact on the construction sector, with several builders entering voluntary administration of falling into receivership.

However, Roubicek said the impacts of the cost increases and external pressures had a far wider reaching implications than the construction sector alone.

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&ldquo;There have been several examples of new developments achieving presale requirements of around 80 per cent, only to have developers refund deposits and tear up contracts because building costs have escalated to a point that the development is financially unviable,&rdquo; he said.

&ldquo;It&rsquo;s left homebuyers utterly upset and disgruntled, particularly in what has become such a competitive market.

&ldquo;As a consequence, developers who are looking to acquire new development sites are forced to increase their projected sale prices by around 20 per cent in their feasibilities. Just 18 months ago a two-bedroom apartment in Brisbane might have sold off the plan for $9,000 per square metre.

&ldquo;But, to build that apartment today the developer would need to achieve a sale price of $11,000 per square metre for the project to stack up. That&rsquo;s a 20 per cent price increase passed directly onto buyers,&rdquo; he added.

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Roubicek said the economic impact of interest rate increases would further impact on housing affordability, forcing buyers back into the apartment market.

&ldquo;Buyers may see better value in the established apartment market in the short-term, as opposed to buying new off the plan. However, this will be a short-lived alternative as supply dries up and investors stake advantage of rental vacancy rates.

&ldquo;We expect surge in demand from investors as the rental vacancy rates continue to fall to less than one per cent and rental yields approach five per cent. This increase in demand will have a significant impact on the second hand apartment pushing up prices reflecting the price of a new apartment.&rdquo;

The gap between the median house price and the median apartment price is a staggering 49 per cent, the greatest differential Brisbane has seen in two decades.



Why Brisbane apartments are set to see significant price growth: Colliers International Australia

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Channel 9 sports commentator and former World Surfing Champion legend Mark Warren and his wife Helen have secured $2,435,000 for their northern beaches home.

Their renovated North Avalon home with vaulted bamboo ceilings sold through LJ Hooker Palm Beach’s David Edwards who was suggesting $2 million plus for the home in North Avalon's so-called golden triangle.

Set two minutes walk to the beach and rockpool, the home sits on a <a href="https://palmbeach.ljhooker.com.au/35AF6Z/15-harley-rd-avalon-beach" target="_blank">level 930-square-metre Harley Road block</a> with tropical gardens. Its kitchen was designed by Brian Boaler.

The empty nest couple, who will downsize locally, bought it for $365,000 in 1995.

This article was first published in the Saturday Daily Telegraph. 

<h2>NSW properties now selling:</h2>

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Surfing champion Mark Warren sells on northern beaches

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Ensuring housing supply, dwellings that meet the social and demographic demands, and providing greater mobility across different tenure types within the market are the minimum changes the Department of Social Services believe to be necessary in the case of changing the current housing policy.
While not seeking to outline any specific reforms, the Department of Social Services pointed out areas for improvement In the submission to the House of Representatives Standing Committee on Economics.
"The Department does note that any future reforms should include a focus on improving the effectiveness of housing supply and the collaboration of jurisdictions with respect to the broader policy settings influencing the operation of Australia’s housing market. 
"In relation to improving housing supply, there are a number of avenues that could be explored. For example, in the context of the Reform of the Federation White Paper process there may be scope to examine the effectiveness of the NAHA in incentivising the states and territories to ensure housing supply is better able to respond to increases in housing demand. 
"With respect to better aligning the broader policy settings influencing housing supply and demand, this will require increased, and ongoing, collaboration by all levels of government. 
"Mechanisms to facilitate such collaboration may be looked at as part of the Reform of the Federation White Paper process, although increased informal collaboration may be just as effective as more formal mechanisms. 
"The roles and responsibilities of the Commonwealth and states and territories, in respect of housing assistance and homelessness services, are currently being examined as part of the Government’s Reform of the Federation White Paper process. 
"Potential reforms to the current roles and responsibilities of the Commonwealth and the states and territories, around the provision of housing assistance and homelessness services, may improve the alignment of current incentives in relation to housing demand and supply. 
"However, this process is unlikely to materially impact the broader policy responsibilities of either level of government in terms of their impact on housing supply and demand. 
"There have been over 25 inquiries and significant reports related to housing policy and planning since the last National Housing Strategy was completed in 1991. 
"The most comprehensive of these reports were the Productivity Commission’s Review into First Home Ownership in 2004, the 2008 Senate Inquiry on Housing Affordability in Australia, the Australia’s Future Tax System Review in 2010 and the 2015 Senate Inquiry into Affordable Housing.
"However, housing affordability, and with it the level of home ownership, across Australia, has continued to fall over this period notwithstanding the recommendations and findings of these reviews. 
"The limited impact of previous reviews underscores the proposition that, without reforms to existing structural policy settings, the current issues with housing affordability will not recede, and indeed are more likely to intensify given the current low interest rate environment. 
"This will likely lead to an increase in the number of Australians being excluded from owning their own home, which is likely to put further pressure on the private rental market and in turn community and public housing and CRA [Commonwealth Rent Assistance]." 
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Department of Social Services weigh in to housing debate

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GUEST OBSERVER 
In July, China tier-1 property prices saw a further moderation in the pace of annual price growth; in tier-2 and tier-3, growth (again) inched higher, remaining at a much lower level than tier-1.
For new housing, 51 cities reported price gains in the month of July, down from 55 in June and a peak of 65 in April. But that is still well up on the number of cities reporting monthly gains a year ago (30 in July 2015). 16 cities reported monthly price declines, although that is also better than July 2015’s 29 cities.
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The secondary market has not seen as strong an improvement over the past year, a net 51 cities reporting monthly gains in July versus 41 a year ago and a peak of 54 four months ago (in March). 12 cities are currently experiencing price declines, compared to 17 a year ago. 
Splitting the 70 cities into the three development tiers, tier-1 continues to experience a robust pace of price growth, an average of 27.0 percent/yr for new housing and 29.3 percent/yr for the secondary market. Versus April’s peaks of 31.5%yr and 36.1%yr, that is still best characterised as a modest deceleration. 
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Within this tier, a normalisation is continuing: 
Shenzhen new property price growth has slowed from 62.5 percent/yr in April to (a still very strong) 40.9 percent/yr; meanwhile, Shanghai price growth has plateaued circa 28 percent/yr, as has Beijing and Guangzhou (albeit nearer 20 percent/yr). 
Similar trends are apparent in the established or secondary markets: Shenzhen slowing from 60.6 percent/yr in March to 33.9 percent/yr currently, and Beijing from 37.3 percent/yr in April to 32.1 percent/yr; Shanghai and Guangzhou price growth has been broadly unchanged in recent months, respectively 30 percent/yr and 20 percent/yr.
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Moving on to the less developed and wealthy tier-2 cities, new and established housing saw annual price growth of 7.8 percent/yr and 6.7 percent/yr in July. Both markets still remain in an uptrend, albeit a very modest one. 
This is even more the case in tier-3, where new and secondary house prices have risen just 3.8 percent/yr and 2.4 percent/yr over the past year. 
Clearly activity is concentrated in the most established and wealthy markets, where there is likely to be a greater speculative element. The problem is that these are not the cities with the greatest growth potential. 
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Further on aggregate activity, we note finally that momentum in housing sales and starts has already turned down. 
The outlook for real estate investment in late-2016 and into 2017 is fragile and unlikely to provide a significant contribution to aggregate growth.
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<div class="section">Elliot Clarke is senior economist, Westpac and can be contacted <a href="https://www.westpac.com.au" target="_blank">here</a>.</div>
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China property update: Westpac's Elliot Clarke

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GUEST OBSERVER
The impending end to the 2015/16 tax year is set to help drive real estate market activity in autumn.
With the end of the tax year fast approaching, many investors and self-managed super funds will be weighing up whether to rebalance in or out of real estate assets and will act well before the  June 30 cut-off.
Throw in the threat of a July Federal Election and we expect appraisal, listing and sales numbers to hold their ground in the lead up to the end of the financial year.
Buyer activity will be consistent in autumn
Real estate has become a round-the-clock market due to the universality of the internet, which means vendors can achieve good sales results regardless of the season.
Buyers are driven to secure a property for a wide variety of reasons, whether it’s to secure a tax-effective investment for a self-managed super fund, or a home to live in – and the season makes little difference to them.  
If the vendor settles on a realistic price and the property is well presented, it won’t matter to buyers whether it’s spring or autumn.
Yet the reality is there will be fewer properties for sale in autumn than in the traditional springtime selling months between September and December, when many owners list properties for sale.
The number of properties for sale in March 2016 was 20 percent less than September 2015, according to Raine &amp; Horne.
If there are fewer properties for sale in April and May than September, and more or less the same number of buyers, it stands to reason that an autumn sale can make plenty of sense.
A more pleasurable experience for buyers
Across much of Australia, autumn is relatively milder than the stickier spring and summer months – although it will be getting chillier in the southern states.
An autumn open home therefore can present a more pleasurable experience for buyers, who will be more likely to poke around properties with more inviting external spaces for longer than they might at the height of the summer.
The colourful backdrop provided by autumn leaves may even strike a chord with some buyers looking for the perfect outdoor experience.
Tumbling autumn leaves, however, means owners need to be diligent with the rake to ensure the exteriors of their properties present in a clean and tidy fashion. 
 
Angus Raine is executive chairman, <a href="https://www.raineandhorne.com.au/" target="_blank">Raine &amp; Horne</a>.
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End of financial year to drive autumn property markets: Angus Raine

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<img src="https://counter.theconversation.edu.au/content/75859/count.gif?distributor=republish-lightbox-advanced" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
Solving the affordable housing crisis is a high priority for state governments around Australia.
This is understandable given the hyper-inflated property markets in many Australian capital cities. Rising concerns that interest rates will increase over coming years also fuel the unaffordability fires.
Proposed solutions to this crisis often focus on opening up new greenfield areas of land in the outer suburbs to develop lower-cost housing. Hence the solution to the affordable housing process is often thought to lie in creating housing with a low purchase price. This approach incentivises developers and housing suppliers to keep the price of new housing stock as low as possible.
This leads to houses that are more costly to own and maintain. Construction savings on features such as insulation, passive solar design, and heating and cooling systems mean such houses have high energy demands. That, in turn, means ongoing living costs such as the cost of air conditioning remain high for the life of the house.
Such houses are also constructed to the minimum standards dictated by the building codes. Poorer design and lower-quality materials can lead to large deferred maintenance costs and lower resilience to natural hazards.
In addition, housing in the outer suburbs has poorer prospects for capital growth, effectively trapping poorer households on the fringes of our cities. The residents of these suburbs also generally face higher transport costs to get to work and services.
Exposed to future risks
We are, in effect, encouraging new home owners to take on larger future risks and costs just so they can buy a house. This keeps government happy by increasing the number of new home owners – a proxy for affordable housing.
But this approach ignores the issue that home owners increasingly cannot afford to continue to own a home, not just buy one.
Increasingly, the first cost-saving action for struggling home owners is to be uninsured or underinsured. About 14% per cent of people have no home or contents insurance whatsoever.
Of those who are insured, many know they are not adequately covered. Back in 2012 it was identified that around one-quarter of home owners and renters had no insurance cover for house contents. Other estimates suggest that nearly one-third of households in Australia remain uninsured. Other studies more recently concluded that 41% of tenants do not have contents insurance.
Events like the recent Cyclone Debbie remind us just how exposed many families are to natural hazards, including physical damage to assets and the associated emotional hardship.
In many cases, families have been financially wiped out as a result of their lack of insurance coverage. These families then go back onto the long waiting list for affordable social housing.
Therefore, by defining affordable housing in terms of only purchase price of housing and number of new home owners, we are dramatically understating the problem of housing affordability.
By facilitating families to invest in houses that require high energy demands to be liveable, and which are located in areas increasingly exposed to natural hazards while households are uninsured or underinsured, we are simply mismanaging the affordable housing challenge.
Reframing affordability
A key action that can be taken is to frame housing affordability in terms of whole-of-ownership-life costs. This means we move away from defining affordable housing in terms of the initial capital cost and instead consider the total cost of owning a house over the term of ownership.
This approach explicitly encapsulates the risks of under-insurance and higher interest rates.
This is the approach used when funding infrastructure and major utilities assets. When planning major infrastructure, cost-benefit analyses must now consider the whole-of-life costs. This is to account for enthusiastic infrastructure advocates deferring costs through to increased maintenance obligations so the capital costs remains low, and hence the project becomes more attractive.
It’s the same for housing development. Therefore, the same approach needs to be adopted for home ownership.
Mark Gibbs is chair, Green Cross Australia, Queensland University of Technology and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/mark-gibbs-199704" target="_blank">here</a>.
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Affordable housing is not just about the purchase price

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GUEST OBSERVER
Dwelling approvals came in weaker than expected in Aug, with a fall in units dragging total approvals down 6.9% vs expectations of a 2% dip.
That said, the decline comes off a higher base with the Jul gain revised up from +4.2% to +7.9%. The net result is that the level of approvals in Aug is only 1% lower than the consensus forecast implied off the old base.
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It's becoming an all too familiar refrain for monthly housing data, but volatility continues to cast major doubts over underlying trends. Some sort of slowdown is underway with approvals passing a clear peak back in Mar. The extent of the slowdown is proving difficult to pinpoint though.
Current trend figures show declines running at a 5–10% annualised pace but only a month or two ago the decline appeared to be running more in the 10-15% range. The monthly volatility is such that this trend pace could easily move again once another month's data is incorporated.
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The detail shows the Aug decline was concentrated in ‘unit’ approvals which were down 11.4% following a 14.6% surge in Jul. Our estimates indicate that, within this segment, 'high rise' approvals have driven all of the Jul-Aug variation with the smaller 'low rise' sub-segment showing a more consistent downtrend throughout.
Private sector houses posted a surprisingly strong 4.9% gain in Aug, a relatively big move for what is usually a more stable segment. Note that private sector houses held flat throughout the most recent surge in approvals (since late 2014) which has entirely driven by units.
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The state breakdown shows the Jul-Aug volatility centred on NSW where unit approvals spiked 98% in Jul, reversing 66% in Aug to be back below their Jun level.
Three month averages smooth the state level volatility somewhat. For 'high-rise' they show continued strength in NSW but signs of a fairly sharp downturn coming through in Vic (we have noted in previous bulletins that this is likely being accentuated by a pull forward in approvals associated with the new Vic state government levy introduced in July).
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For non-high rise, the state figures suggest strengthening approvals in NSW vs a moderation in Vic, flat-lining approvals in Qld and declines in WA.
The value of renovation approvals pulled back sharply in Aug, down 7.9%mth, with the 3mth rolling average growth rate slowing abruptly from 9.3% in Jun to –1.7% in Aug.
The value of non residential building approvals also fell 10% in Aug although that followed a similar-sized gain in Jul and is well within the range of volatility for this segment. Approvals are still on a reasonable rising trend.
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Overall, the Aug detail is a little less downbeat than the surprisingly weak headline number would suggest. The main takeaway though is that a downturn of some sort is underway, the extent of which remains highly uncertain.
Matthew Hassan is senior economist with <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>. 
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Watch for a lift in the 'drop-out' rate between unit approvals and construction: Westpac's Matthew Hassan

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GUEST OBSERVER
The Queensland real estate market continued its steady pace throughout 2015, with a new record median house price in Brisbane of $610,000 ending the year with a flourish.
The market has recorded a steady sustainable growth rate of about two percent over the past eight quarters and this has led the southeast corner into firmer territory following the post GFC slump of 2011/2012.
Compared with the southern states, Queensland’s market has been relatively stable and has resisted the volatility shown in those markets.
As Sydney and Melbourne’s markets have strengthened considerably over the year, investors have been attracted to Brisbane and the Gold Coast where affordability and ROI factors have remained steady.
The apartment market in Brisbane’s inner city has remained in healthy territory, despite concerns that an oversupply was imminent. Vacancy rates have remained steady with data revealing vacancies in the inner city were around 2.5 percent to 2.7 percent.
Outside of the southeast corner, the state’s regional centres struggled to gain meaningful ground, although small gains were seen in some towns.
Tourist cities performed strongly. The Gold and Sunshine coasts recorded buoyant market conditions with investor activity picking up in both regions.
Cairns and Fraser Coast also continue to show promising signs of firming market conditions, with average days on market and vendor discounting improving on a year ago for their respective unit markets which had struggled following the GFC.
Regional centres still continue to be impacted by the resources downturn, but many now look to have reached the bottom of the market.
Local agents in Gladstone, Mackay and Townsville say the softer market conditions has started to entice more local buyers, with market confidence slowly but surely improving.
First home buyers are taking advantage of the low interest rate environment and in regional centres are gaining confidence with increased housing affordability.
House sales activity in the strengthening markets of southeast Queensland continued to improve over the June quarter.
Back in the capital city, increased prestige sales and strong buyer demand in the $500,000-plus price contributed to the lifting median house price in Brisbane.
Brisbane surrounds also showed improving buyer demand, with Ipswich and Logan recording double digit growth in sales activity over the quarter and over the year to June.
Toowoomba’s house market appears to have taken the foot off the accelerator with sales volumes tapering off for a second consecutive quarter. Given the various projects in the pipeline, such as the going ahead of the second range crossing, local agents anticipate the region will continue to record consistent growth in its real estate market.
The year ahead
In the regional centres, sales activity is mixed, however the general feel on the ground is that the bottom of the market has been met.
I believe the sales activity is encouraging. With any market recovery there is always a concern that things will take a backward step from time to time, however, that is not the case in Queensland as this consistently steady improvement across the state shows.
Our regional centres, where the impact of the GFC and mining downturn continue to be felt years later, are defiantly consistent and this is fantastic news for our state. Queensland property is an encouraging story of economic resilience and even though some of our regional centres are struggling, we are seeing signs of a return to equilibrium.
The southeast corner remains the powerhouse of the state’s real estate market, with Brisbane LGA recording a new high median house price of $610,000.
The market in the southeast corner is performing well and this will eventually be felt throughout the rest of the state.
 
Antonia Mercorella is the CEO of the Real Estate Institute of Queensland – the first woman in its almost 100-year history and the youngest person to take on the role. She can be contacted <a href="https://blog.realestateview.com.au/author/antonia-mercorella/" target="_blank">here</a>.
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