Real Estate

Smallest cities drive growth in national housing values

CoreLogic’s national Home Value Index (HVI) was up 0.7% in March, a subtle increase on the 0.6% lift recorded in February.

The uptick in the monthly rate of growth was primarily driven by stronger conditions in Brisbane, Adelaide, Perth and the ACT, along with several regional areas, offsetting a slip in values across Sydney and Melbourne. of the year has seen Australian dwelling values rise by 2.4%, adding approximately $17,000 to the value of an Australian dwelling. A year ago, values were rising at more than double the current pace, up 5.8% over the three months to March 2021 rate of growth peaked at 7.0% over the three months ending May 2021.

Sydney’s growth rate is showing the most falling from a peak of 9.3% in the three months to May 2021, to of 2022. Melbourne’s housing market has seen growth slow from 5.8% in April last year to just 0.1% over the past three months.

CoreLogic’s research director, Tim Lawless, says while the monthly rate of growth was up among some cities and regions, there is mounting evidence that housing growth rates are losing momentum.

“Virtually every capital city and major rest of state region has moved through a peak in the trend rate of growth some time last year or earlier this year,” Mr Lawless said.

“The sharpest slowdown has been in Sydney, where housing prices are the most unaffordable, advertised supply is trending higher and sales activity is down over the year.

“There are a few exceptions to the slowdown, with regional South Australia recording a new cyclical high over the March momentum is returning to the Perth market where the rate of growth is once again trending higher since WA re opened its borders.”

With the softening in market conditions, the national annual growth rate (18.2%) has fallen below the 20% mark August last year, after reaching a cyclical high of 22.4% in January 2021.

Mr Lawless said the annual growth trend will fall sharply in the coming months, as the strong gains recorded in early 2021 drop out of the 12-month calculation.

National housing turnover is also easing, with preliminary transaction estimates tracking 14.3% lower than the same period in 2021, but still 12.2% above the previous

“Nationally, the volume of housing sales is coming off record highs but there is some diversity across the capital cities in Our estimate of sales activity through the lower than a year ago in Sydney and 27% lower in Melbourne, while stronger markets like Brisbane and Adelaide have recorded a rise in sales over the same period.”

Regional Australia continues to show some resilience to a slowdown with housing values across the combined regional areas rising at more than three times the pace of the combined capital cities through Regional dwelling values increased 5.1% in the three months to March, compared with the 1.5% increase recorded across the combined capital cities. The rolling regional dwelling values has consistently held above the 5% mark since February 2021.

Australian Bureau of Statistics (ABS) regional population growth help explain the strong housing conditions outside of the capitals. The number of people living in regional areas of Australia increased by almost 71,000 residents, while residents living in the capitals fell by approximately 26,000 (mostly due to a sharp drop in Melbourne and, to a lesser extent, Sydney).

Trends in property listings continue to help explain the divergence in housing growth trends.

Advertised inventory, at a national level, is tracking 30% below average over the four weeks ending March 27. However, a more detailed analysis of each capital city highlights in the total number of homes available to purchase.

In Melbourne, total advertised supply was 8% above the previous towards the end of March, while the number of homes available to purchase in Sydney had virtually normalised to be 7.5% higher than a year ago and only 2.6% average.

Higher stock levels across these markets can be explained by an above listings coming on the market in combination with a drop in buyer demand.

“With higher inventory levels and less competition, buyers are gradually moving back into the driver’s seat. That means more time to deliberate on their purchase decisions and negotiate on price,” Mr Lawless said.

In contrast, advertised stock levels in Brisbane and Adelaide remain more than 40% below average levels and around 20% to 25% down on a year ago. It’s a similar scenario across regional Australia, where total advertised housing stock was 22% below last year’s level and 43% year average. Such low inventory levels along with persistently high buyer demand continues to create strong selling conditions in these areas, supporting the upwards pressure on prices.

Rental trends are becoming increasingly diverse across Australia. At a macro level, rents are still rising at well above average rates. While annual rental growth has eased from a recent peak of 9.4% in November last year to 8.7% over the 12 months ending March 2022, the has rebounded through year, from 1.9% in Dec 2021 to 2.6% in March 2022.

The rebound is partly seasonal as rental trends tend to be stronger of the year, but there are other factors at play including stronger conditions across the medium to high density rental sector.

The rate of growth in unit rents has strengthened to reach a cyclical high of 3.0% rising at a materially faster pace than house rents (2.4%). The stronger rental conditions across the unit sector demonstrates a remarkable turnaround in rental conditions across higher density markets, where rents fell sharply months of the pandemic.

Residential real estate purchases by foreign investor attract $250,000 penalty

order for breaches of Australia’s foreign investments rules has been issued by the Federal Court of Australia, attracting $250,000 in penalties.

The foreign investor has been penalised for purchasing multiple properties in outer Melbourne without receiving permission from the Foreign Investment Review Board (FIRB).

The Australian Taxation the purchases using its extensive data sources as part of a multi-faceted compliance approach to detect foreign investors in breach of and Takeover Act 1975 (FATA).

In July 2020, after a compliance investigation, the ATO relation to six breaches of the FATA by Mr Vijay Balasubramaniyan, who purchased four properties without permission and simultaneously owned two established properties at once, in contravention of the FATA.

“We welcome this penalty decision under the FATA. This serves as a clear deterrent to other foreign investors who believe they can operate outside of the law.” ATO Assistant Commissioner Keir Cornish said. report a breach of the foreign investment real estate rules by completing a tip-off form on our website or by calling 1800 050 377.