BCNW JAN 2022 Report

January report.

Our purpose.

To create a place where we can facilitate our people’s growth.

Our values.

Family.

Our colleagues are our broader family, assist when needed and when in need.

Mutuality.

Realising potential.

Respect our colleagues and our clients as you would like to be respected.

Unlock your full potential, encourage and support your colleagues.

Embrace change.

Strive for excellence; be open minded and willing to embrace change.

Health and energy.

Work towards being well balanced within yourself.

January report.

From our corporate director.

Dean O’Brien Melbourne’s Median House Price reaches $1 Million for the first time.

January home price data surprises the market. Since the new year there has been a lot of media reporting a reserve in 2022 on property prices, however the January data released

by Corelogic on 1 February shows the National Home Price Index grew by 1.1% across the country which is an increase of 10 basis point over last month. Brisbane and Adelaide carried the national with 2.3 and 2.3% growth respectively.

Melbourne performed better than it did in December reversing a drop in home prices to record a 0.2% increase, which means Melbourne has now hit a median house price of over $1 Million for the first time. Although Melbourne for the second month in a row was the National’s worse performing capital city. The Regional Victoria market again out shone Melbourne with an overall 1.6% growth in home prices bringing the rolling 12 month growth to 23.9% whereas Melbourne has only recorded 14.9% growth.

The trend in new listings coming onto the market will be an important factor in home price growth 2022. Real estate listing supply in 2021 finished on a high with Melbourne the only state above the 5-year trend in the supply of listings, January supply for Melbourne seemed at this stage to be subdued over previous years and this could have an effect on home prices in the early part of 2022.

Looking at the next slide on rental performance you’ll see that rental growth yield improved for Melbourne property investors from 2.7% yield to 2.8% rental yield in January. Although rental prices in Melbourne have improved from where they were in early 2021, there is still a lot of room for improvement. National rents are up 9% over the last 12 months whereas Melbourne is sitting at only a 5% increase. Regional Victoria remained steady at 3.6% yield for all dwelling types over January, however Regional Victoria still provides the worse rental yields for property investors out of all the states and territories with Australia.

In other news, the Australian Stock Market in January recorded its worst start to a new year in 14 years, which should give property investors confidence to invest in a stable Victorian property market. The Reserve Bank of Australia meet for its February meeting and announced its intentions to remain patient leaving the cash rate unchanged for at least another month. The commentary that came from the Bank was that it still believes the recent rise in inflation is only temporary and will resolve itself once the supply chain issues are back to normal.

That’s all for this month, remember the information provided is of a general nature you should always seek independent legal, financial, taxation or other advice in relation to your unique circumstances.

Regards, Dean O’Brien

We sell more.

A snapshot of last months sales.

Average sale price.

Sale price.

High.

Low.

$919,672

$2.8M

$482K

Number of suburbs sold in.

20

Sale Price

Address

Suburb

3761 Ballarto Road

Bayles

4

2

2

$704,000

2 Selby Court

Berwick

3

2

2

$900,000

16 McNabb Street

Berwick

4

2

2

$1,300,000

7 Brewster Street

Berwick

5

3

3

$1,275,000

38 Thornley Drive

Berwick

4

2

2

$1,200,000

15 Lightwood Court

Berwick

4

2

2

$1,110,000

5 Ros Way

Berwick

4

2

2

$1,165,500

39 Eucumbene Drive

Berwick

5

4

2

$1,215,000

2 Willunga Court

Berwick

3

1

3

$685,000

7 Lawton Grove

Berwick

4

2

2

$1,050,000

106 Skyline Way

Berwick

4

2

2

$1,010,000

86 Skyline Way

Berwick

4

2

2

$1,180,000

14 Stradbroke Close

Berwick

4

2

2

$790,000

7 Cormorant Close

Blind Bight

3

1

2

$680,000

14/235 Scoresby Road

Boronia

2

1

1

$571,000

3/28 Bambury Street

Boronia

3

1

2

$715,000

19 Royal St Georges Chase

Botanic Ridge

3

2

1

$620,000

24 Protea Street

Carrum Downs

3

2

2

$615,000

13 Strathcona Avenue

Clyde

3

2

2

$750,000

17 Carberry Drive

Clyde North

4

2

2

$850,000

We sell more.

Address

Sale Price

Suburb

31 Pamplona Way 20

Clyde North

4

2

2

$700,000

Observatory Street

Clyde North

4

4

2

$940,000

13 Littleshore Crescent

Clyde North

4

2

0

$1,040,000

79 Heybridge Street

Clyde North

3

2

2

$615,000

61 Fiorelli Boulevard

Cranbourne East

3

2

2

$650,000

7 Fernisky Drive

Cranbourne East

3

2

6

$720,000

17 Bibury Street

Cranbourne North

2

1

1

$482,000

7 McMahon Avenue

Cranbourne North

4

2

2

$740,000

92 Courtenay Avenue

Cranbourne North

3

2

1

$660,000

17 Hamilton Drive

Cranbourne North

3

1

2

$587,500

11 Fig Court

Cranbourne North

3

2

2

$726,000

1444 Western Port Highway

Cranbourne South

5

4

8

$2,801,000

6 Beech Place

Hallam

3

2

2

$608,000

8 Charles Street

Koo Wee Rup

3

1

2

$705,000

24 Sybella Avenue

Koo Wee Rup

2

1

2

$580,000

7 Annie Avenue

Lang Lang

4

2

2

$750,000

30 Bellbird Court

Langwarrin

4

2

5

$2,120,000

7 Highview Court

Lysterfield

4

3

6

$1,900,888

17 Gull Way

Narre Warren South

3

2

2

$674,700

10 Shay Close

Narre Warren South

4

2

2

$820,000

1a Pomegranate Way

Pakenham

28 Macquarie Circuit

Pakenham

4

2

2

$675,000

14/1 Nepean Highway

Seaford

3

2

2

$785,000

16 Smithfield Square

Wantirna

6

2

2

$1,175,000

Land

$625,000

We lease more.

A snapshot of last months leases.

Average weekly rent.

Average monthly rent.

$448

$1,946

Rental price p/w.

High

$750

Low

$276

Number of suburbs leased in.

22

Leased price p/w

Leased price p/m

2

$430

$1,868

2

2

$450

$1,955

4

1

4

$430

$1,868

Berwick

3

2

2

$450

$1,955

12 Sarah-Louise Place

Berwick

4

2

2

$500

$2,173

2/15 Maryn Close

Berwick

2

1

1

$330

$1,434

31B Glenview Rise

Berwick

3

2

2

$530

$2,303

159 Soldiers Road

Berwick

4

2

2

$440

$1,912

2 Salisbury Court

Berwick

4

2

2

$650

$2,824

240 Scoresby Road

Boronia

3

1

2

$410

$1,782

24 Cinnabar Lane

Botanic Ridge

3

2

2

$420

$1,825

15 Maintop Ridge

Botanic Ridge

4

3

2

$750

$3,259

108/165 Middleborough Road Box Hill

1

1

1

$350

$1,521

17 Foote Way

Clyde

3

2

2

$410

$1,782

17 Hollybush Avenue

Clyde

4

2

2

$525

$2,281

96 Athenaeum Avenue

Clyde North

4

2

2

$470

$2,042

2 Carisbrooke Way

ClydeNorth

4

2

2

$430

$1,868

26 Ventasso Street

ClydeNorth

3

2

2

$450

$1,955

29 Trainers Way

ClydeNorth

4

2

2

$480

$2,086

3/15 Fairfield Street

Cranbourne

2

2

1

$380

$1,651

Address

Suburb

88 Sasses Avenue

Bayswater

3

1

3/306 Canterbury Road

Bayswater North

3

5 Slingsby Avenue

Beaconsfield

10 Redmore Court

We lease more.

Leased price p/w

Leased price p/m

Address

Suburb

36 Duff Street

Cranbourne

3

1

4

$276

$1,200

5/7-9 Tucker Street

Cranbourne

2

1

1

$350

$1,521

10 Tattle Grove

Cranbourne East

3

2

2

$450

$1,955

32 Dan Morgan Drive

Cranbourne East

4

2

2

$430

$1,868

98 Scotsdale Drive

Cranbourne East

4

2

2

$470

$2,042

23 Austin Street

Ferntree Gully

3

1

1

$400

$1,738

1 Coley Court

Hampton Park

2

1

1

$370

$1,608

15 Princess Maria Place

Hampton Park

3

1

2

$340

$1,477

5 Tinks Road

Narre Warren

3

2

0

$400

$1,738

77 Shinners Avenue

Narre Warren

4

2

2

$475

$2,064

11 Pirra Place

Narre Warren

3

2

2

$450

$1,955

27 Browtop Road

Narre Warren

4

2

2

$440

$1,912

27 Garryowen Crescent

Narre Warren

3

2

2

$430

$1,868

13 Bordeaux Grove

Narre Warren South

4

2

2

$560

$2,433

19 William Clarke Wynd

Narre Warren South

3

2

2

$430

$1,868

28 Manchester Boulevard

Officer

3

2

2

$390

$1,694

9 Shelley Street

Officer

4

2

2

$450

$1,955

8 Pinot Way

Pakenham

3

2

1

$390

$1,695

13 Terry Street

Pearcedale

3

1

1

$410

$1,782

59 Harris Gully Road

Warrandyte

3

2

2

$700

$3,042

8 Ti-Tree Crescent

Seaford

3

1

1

$380

$1,651

3/1 Mcleod Street

Springvale

3

1

1

$400

$1,738

1/384 Mountain Highway

Wantirna

3

2

1

$445

$1,934

10 Ormiston Close

Wantirna

4

2

2

$610

$2,651

PropTrack Property Market Outlook 2022 Housing in Australia: A recap & outlook

Demand for properties for sale remains heightened and in excess of the supply of properties available for sale. The recent lift in new listings should go some way to allow more of these buyers to find a home.

After that, the question will be... How large is the next wave of buyers?

We believe this next wave is likely to be big, but not as large as the current one, so that should result in a better supply and demand balance.

We expect a smaller wave of buyers because prices have increased rapidly pricing some buyers out. However, this isn't such an issue for those buying and selling in the same market. The removal of COVID-19 restrictions means that buyers may be less likely to dedicate as much of their income to housing.

In fact, potential buyers may decide that their current home is sufficient.

Unsurprisingly, the cost of housing across the combined capital cities was much higher than the combined regional markets, with median house prices sitting at $896,000 and $590,000 respectively, and median unit prices at $622,000 and $480,000 respectively.

While there has been no movement in variable mortgage rates – they’ve fallen if anything – the lift in fixed-rate mortgages signals rates will increase and borrowers don’t have the security of locking in low rates for several years.

Changes by the Australian Prudential Regulation Authority around credit availability has been mild to date, however, they are now tightening credit availability and reducing borrowing capacities.

In turn, this will likely contribute to a slowing of demand for housing and means that prices can’t be bid-up as rapidly as they have been over the past year.

Slowing of overall demand for housing is likely to lead to a better balance between the supply of homes for sale and the demand for them.

This is expected to lead to a slower rate of price growth over the coming year. It is also expected to result in properties starting to take longer to sell, as potential buyers have more choice and less competition, meaning they don’t have to move as quickly to secure a property and may not have to pay as much of a premium.

Will pricing peak in 2022?

We expect prices will continue to climb over the year, but that the rate of price growth will slow.

Paying a premium for property in Sydney Sydney is overwhelmingly the most expensive housing market in the country. The gap between median house and unit prices in the city compared to other regions has widened over recent times.

Looking only at median house prices, Sydney has a 52% price premium over Melbourne, a 105% premium over Brisbane, a 139% premium over Adelaide, a 190% premium over Perth, a 95% premium over Hobart, a 157% premium over Darwin, and a 46% premium over Canberra.

The Sydney price premium relative to Melbourne and Canberra is elevated but not extreme relative to the long-term average, with differences of 39% and 36% respectively. The rapid increase in Hobart property prices over recent years is seeing the Sydney premium much lower than it has been historically, with a long-term average premium of 106%.

Elsewhere, the Sydney premium is extreme, close to historic highs and well above long-term averages, with a premium of 63% relative to Brisbane, 86% to Adelaide, 61% to Perth, and 75% to Darwin.

Brisbane and Hobart have the strongest price growth forecasts among the capital cities thanks to their low supply of stock for sale, heightened demand and relatively lower prices compared to Sydney and Melbourne.

On the other hand, Perth, Sydney and Melbourne have the lowest price growth forecasts for the year.

Perth has shown a stronger slowdown in price growth already relative to other capital cities, while the more expensive property prices in Sydney and Melbourne may increasingly see demand shift to more affordable housing markets.

Property prices In December 2021, the national median house price was recorded at $775,000 and the median unit price was $590,000.

Article Source : www.realestate.com.au

The significant premium for properties in Sydney relative to prices in other parts of the country potentially indicates that there will be a reversion to historical averages over the coming years.

This is likely to be seen in slower price growth in Sydney compared to other regions, rather than dramatic price falls.

Homeowners and potential homeowners are likely to increasingly seek out better value housing outside of Sydney, especially if moving forward there is less of a need to be in the office as regularly as pre-pandemic.

It may also drive new migrants to Australia to settle in other parts of the country.

Inner-city living also became relatively less attractive to many while COVID lockdowns and other restrictions were in place, as the economy reopens and the CBD springs back to life, this trend may reverse somewhat.

Price changes in 2021 Over the 12 months to December 2021, dwelling prices across the country increased by 23.8%. Although that represents a rapid increase in property prices, the rate of growth on a monthly and quarterly basis started to slow over the second half of 2021.

House prices have recorded stronger price increases over the past year than units, with increases of 26.8% and 13.4% respectively. Regional housing markets have continued to experience a more rapid rate of price growth over the past year (30.0%) than capital city markets (21.7%).

Nevertheless, price growth has been strong across the country.

Throughout the combined capital cities, the gap between price growth for houses (25.2%) and units (10.8%) is significantly wider than it has been in regional areas, where house prices are 31.1% higher over the year and unit prices are up 24.0%.

Across the capital cities and rest-of-state markets, we have seen an unusual situation where prices have increased across the board, with dwelling prices more than 10% higher year-on-year in most regions.

Annual change in dwelling prices, combined capital cities vs combined regional areas

House price premium relative to units There are some significant median price premiums for houses compared to units. The premium is currently the widest on record in Sydney (85%), Melbourne (54%), Brisbane (68%), Adelaide (67%), and close to historic highs in Perth (31%) and Canberra (73%).

In Hobart and Darwin, the premium for houses is elevated relative to the long-term average but not yet close to a historic high differential.

With investors returning to the market and credit tightening having commenced, we may see a pick-up in demand and price growth for units relative to houses over the coming years. Especially given their prices are now significantly lower than the price of a house.

Other factors such as the reopening of international borders and the return of migrant workers and international students may add to demand.

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Property price rises are often framed in the context of deteriorating affordability, it should be noted that most people purchasing property already own a home.

For these buyers, the rise in prices has increased equity in their property and allows them to use that equity to upgrade, invest or renovate.

Flexible work arrangements and the experience of lockdowns have had an ongoing impact on lifestyle wants and housing needs, with many seeking larger homes, more space and proximity to the office has become less of a necessity.

Price rises, particularly those in excess of household income growth, make it more difficult to enter the housing market.

Article Source : www.realestate.com.au

Lockdowns created new listing supply volatility The number of new property listings coming to the market is typically volatile and seasonal, which was again the case during 2021. However, lockdowns during the year exacerbated this volatility.

With inspecting properties difficult or even impossible during lockdowns, many vendors decided to not list their properties at those times. This led to a flurry of new listings hitting the market in late 2021 as lockdowns ended. These conditions, coupled with heightened demand for properties, created a sense of urgency for the large volume of active buyers in the market.

The lack of new stock entering the market led to large year-on-year declines in the total number of properties listed for sale.

Strong sales volumes expected in 2022 Looking at properties listed on realestate.com.au, there were 40.1% more sales nationally in 2021 than there were in 2020.

The chart highlights that despite elongated lockdowns in New South Wales, Victoria and Canberra, monthly sales volumes in 2021 were consistently higher than the year before.

Throughout each of the individual capital cities and rest-of-state areas, there was a rise in sales in 2021 compared to 2020.

While new listing volumes surged in October and November, the seasonal slowdown hit in December.

New listings were 16.6% higher year-on-year in October, 35.3% higher in November, and slipped slightly, although remained positive, in December to be 11.3% higher year-on-year.

Combined capital city new listings were 10.4% higher year-on-year in December and combined regional market new listings were 12.3% higher.

The largest year-on-year increases in sales were in regional Northern Territory (75.1%), Melbourne (70.5%) and regional WA (46.6%), while Hobart (12.7%), regional Tasmania (14.7%), and regional Victoria (21.4%) recorded the smallest, albeit significant, rises.

The only capital city or rest of state regions in which new listings were lower year-on-year in December were Melbourne (-9.4%), Adelaide (-11.5%), and Hobart (-7.0%). The largest year-on-year increases in new listings were in Canberra (48.2%), Darwin (30.8%), and Perth (27.5%).

December is a highly seasonal month for new listings.

However, new listings in December were the highest they have been for a December since 2015.

The lift in sales, driven by the low mortgage rate environment, also shows up when looking at total listings volumes, which trended much lower over the year as the additional stock available for sale was purchased. There were far more buyers active in the market than sellers, with demand outstripping supply.

However, that now appears to be changing, with supply lifting as demand eases a little from its recent highs.

While sales volumes probably won’t see an equivalent uplift over the coming year, the amount of equity homeowners have, coupled with the threat of lockdowns having been largely removed, will lead to an increased preparedness to list properties for sale.

This suggests that while fewer properties were listed for sale over the month compared to November 2021, there was also a greater preparedness to list than what is usually seen in December.

It’s also positive to see that new listings are higher than a year ago across most regions, indicating higher levels of vendor confidence, not only in areas emerging from lockdowns but right throughout the country.

More new supply means more choice for buyers – and less urgency from buyers to snap up properties as they come to market.

This indicates we are likely to witness strong sales volumes again in 2022.

Article Source : www.realestate.com.au

Buyers can expect more choice in 2022 With the ongoing volatility in new listings and the heightened levels of demand over the past year, total listings recorded substantial year-onyear falls.

For potential buyers, this means that the total pool of stock available for sale has reduced dramatically and contributes to the sense of urgency to inspect and submit offers for new listings as they come to the market.

Should new listings supply continue to sit at elevated levels over the coming months, some of that urgency is likely to ease.

In December 2021, the drop in new listings led to a fall in total listings too, down to an historic low and to a level 16.2% lower than they were a year earlier.

The 16.2% year-on-year decline in total listings was the largest fall for a December since 2007, which really highlights the high levels of demand and the ongoing tightening of supply of properties for sale.

Buyer demand peaked in August 2021 with a more balanced market expected in 2022 The engaged buyers per listing metric on realestate.com.au looks at the number of people who are showing a high level of interest in a property on a per listing basis.

With the increase in the number of new listings hitting the market and a moderation of search volumes, the number of engaged buyers per listing remains elevated but has trended lower over recent months.

Highlighting just how strong demand has been, the average engaged buyers per listing has been at elevated levels throughout 2021, reaching as high as 12.3 in August.

However, the 10.6 engaged buyers per listing in November and December is the fewest since May 2021. Despite the fall over recent months, the number of engaged buyers per listing in December was 20.0% higher than a year earlier.

Combined capital city total listings fell by 5.4% year-on-year, while across the combined regional markets there was a 26.2% fall, with total listings at historic lows across both.

The average number of engaged buyers per listing fell year-on-year in Sydney (-3.9%) and Darwin (-6.0%) and recorded only a minimal increase in Perth (1.1%) and Melbourne (1.4%).

While there have been large year-on-year falls in total listings nationally, Sydney (6.5%), Melbourne (0.4%), Perth (2.8%) and Darwin (21.2%) had more properties for sale in December 2021 compared to December 2020.

The largest year-on-year increases occurred in regional SA (75.1%), regional Queensland (48.0%) and regional WA (40.3%). It should be noted that the number of engaged buyers per listing fell over recent months across each capital city and rest-of-state region.

The greatest year-on-year declines in total listings were recorded in regional South Australia (-35.4%), regional Queensland (-28.0%) and regional NSW (-27.2%).

With more stock being listed for sale over recent months and sales volumes remaining elevated, it is unsurprising that there has been a reduction in engaged buyers per listing.

This year, we expect vendors to recommence listings their properties for sale affording potential buyers some much-needed choice and balancing out overall demand for housing.

While seasonally we do see falls at this time of year, this fall is larger than what we typically see and is reflective of a moderate overall decline in demand for properties.

For vendors, this means that they may have to adjust their price expectations. An increase in stock, should it continue, will also likely contribute to a slowing of price growth in 2022.

While demand remains at historically elevated levels, we are anticipating that there will be a moderation in demand for homes in 2022.

Article Source : www.realestate.com.au

Median days on site unlikely to remain at historic lows The median time on site for properties sold during December 2021 – 31 days – increased slightly from an historic low of 30 days in November.

On the flip side, investor purchasing is increasing and that should add to the stock of rental properties in the market. It is much more difficult to forecast trends in regional areas and smaller capital cities, where rents have been rising rapidly and vacancy rates remain tight.

Median days on site in December were at historic lows in Melbourne, regional SA, regional WA and regional Tasmania. At the same time, every capital city and rest-of-state region in the country has experienced a decline in days on site over the past year.

While we continue to expect rental rises, it's reasonable to anticipate some of those tenants will move into homeownership and perhaps some will migrate back to the cities away from regional markets as we reach ‘COVID normal’.

The regions with the shortest days on site in December were Canberra (22), Hobart (23) and Adelaide (24), while the longest days on site were recorded in regional NT (99), regional WA (79), and regional SA (60).

Overall, we’d expect regional rents to continue to rise but at a slower pace over the coming year.

Change in rents Over the 12 months to November 2021, median advertised weekly rents increased by 4.7% nationally, taking them to $450. There is a substantial divergence between growth in rents for houses and units, with house rents nationally rising 7% over the year, while unit rents were unchanged.

There are also sizeable differences in rental growth between the combined capital cities and the combined regional areas.

Capital city dwelling rents were unchanged over the year, house rents 6.7% higher but being offset by no change in unit rents. Combined regional market rents were 10.5% higher over the year, with house rents 10% higher and unit rents increasing 8.6%.

January typically sees a lift in days on site, which we would expect again this year. Thereafter, we would expect that days on site will fall.

If the rate of price growth and demand slows as expected, and we continue to see strong new listing volumes in the new year, then days on site is unlikely to remain at the historic lows we’re currently seeing.

A better balance between demand and supply should emerge to remove some of the urgency from the market.

Over the past year, rental rates in Melbourne have fallen (-2.4%), while they were unchanged in Sydney and rose by 2.2% in regional NT. All other capital cities and rest-of-state areas experienced rental growth in excess of 5%.

The largest increase in rents over the year has been in Darwin (22.7%), Perth (14.7%), and regional WA (14.3%).

While national rental growth appears quite low, you can see that the two largest rental markets, Sydney and Melbourne, are dragging down the national performance, with growth much stronger elsewhere.

The rapid rise in rents over the year outside of Sydney and Melbourne is reflective of the reduction in supply at the same time as an increase in demand.

Rents to rise in 2022 The direction of the rental market is difficult to predict. What we do know is the domestic and international borders are reopening, along with major capital cities.

This should see demand for inner-city apartment rentals lift and lead to improvement in Sydney and Melbourne’s rental market demand, days on site and rental growth.

We also know that first home buyer borrowing is reducing. Fewer firsttime buyers in the market should also lead to greater demand for rental accommodation.

Article Source : www.realestate.com.au

Rental yields remain attractive to investors As of December 2021, gross rental yields for dwellings nationally were recorded at 4%, down from 4.3% a year earlier. Unsurprisingly, rental yields for houses (3.8%) are lower than those for units (4.1%), with house yields falling from 4.1% a year earlier and unit yields down from 4.4%.

Across the combined capital cities, gross rental yields fell from 4% a year ago to 3.8% currently, while across the combined regional areas, yields reduced to 5% from 5.3% a year ago.

Most capital cities and rest-of-state regions recorded a decline in rental yields over the year. The exceptions have been regional SA, where they are unchanged, Perth, where they have increased to 5.1% from 5%, regional WA, where they have risen from 6.4% to 6.9%, and Darwin, where they have risen from 6.2% to 6.3%.

The lack of rental stock in regional areas becomes apparent when looking at this data, with the number of leases across the combined regional markets 16.4% lower over the year, while across the combined capital cities the fall has been a more moderate 2.9%.

Melbourne (12.3%), Hobart (1.4%), and Canberra (1%) were the only capital city or regional areas with more leases compared to 2020.

The largest declines in lease volumes year-on-year were recorded in regional SA (-31.2%), regional WA (-29.9%) and Darwin (-23.4%).

The lowest gross rental yields are currently found in Sydney (3.3%), Melbourne (3.5%) and regional Victoria (4.3%), while the highest yields are in regional NT (7.0%), regional WA (6.9%) and Darwin (6.4%).

While yields have fallen, so too have interest rates, which are now at historic lows. Given this, it is little surprise that the current rental yields and potential for price growth are proving to be quite attractive for investors, who are now returning to the market.

New rental listings trended lower throughout 2021 Throughout most of this year, the number of new rental listings was lower than at the same time the year prior. The low volume of new stock coming onto the market talks to tight vacancy rates in most areas of the country, seeing few tenants leaving their current rentals and resulting in fewer landlords seeking new ones.

The number of new rental listings in December 2021 fell to its lowest levels since April 2010, to be 13.2% lower year-on-year. Combined capital city new rental listings were 14% lower year-on-year in December 2021 and combined regional market new listings were 10.3% lower.

New rental listings in December were higher year-on-year in Darwin (12.1%) regional NT (13.4%) and Canberra (5.8%) but lower elsewhere, with the largest year-on-year declines in regional WA (-26.9%), Melbourne (-19.3%), and regional SA (-18.9%).

Lease volumes expected to increase Each month we count the number of properties listed for rent on realestate.com.au that we have been advised have leased.

Throughout 2021, the number of properties leased nationally was 6.7% lower than the year before. Importantly, a big driver of the fewer leases has been the fact that the supply of stock for rent has reduced.

Article Source : www.realestate.com.au

We know rental markets are particularly tight in regional areas, however, year-on-year new rental listings are now seeing more moderate declines.

This is likely reflective of the significant declines a year ago (-20.3%) and the tight conditions resulting in very little being made available for rent.

In capital cities, new listings remain lower year-on-year, but we would expect more stock to come to market over the coming months due to the reopening of domestic and international borders, and the increase in purchasing by investors.

The largest declines in total rental listings year-on-year have been recorded in regional WA (-30.3%), Melbourne (-25.8%), and Hobart (-23.5%).

A key driver in the decline in total rental listings nationally has been some significant declines in oversupplied markets.

Melbourne-Inner accounted for 11.5% of total rental listings in December 2021, down from 15.7% a year earlier, while Sydney-City and Inner South accounted for 5.3% of national rental listings a year ago, which has now fallen to 5.0%.

While the reduction in rental listings is positive for landlords, as rental properties have been snapped up, the share of national listings in these regions was much lower in February 2020 before national lockdowns, at 6.5% in Melbourne-Inner and 3.8% in Sydney-City and Inner South.

Total listings in Melbourne-Inner are currently 35.7% higher than they were in February 2020, while they are now just 0.8% higher in Sydney-City and Inner South.

While rental listings are now falling and should fall further with international borders reopening, there is a long way to go to see supply return to normal levels in Melbourne-Inner.

Total rental listings trending lower The total number of rental properties available for rent across Australia has been trending lower over recent years.

The number of total listings fell by 19.3% year-on-year in December 2021 to reach its lowest volumes since April 2004.

We can see from our data that a relatively high share of properties that were previously rental properties have been sold over the past year.

While investor lending has started to recover, the level of buying by investors is well below its peak, which as a result has reduced overall rental supply.

Across the combined capital cities, total rental listings have fallen 20.5% year-on-year, while across the regional areas of the country, total listings are 13.6% lower. It should be noted that 82% of total rental listings nationally are in the capital cities, leaving less than 20% of supply for regional Australia.

Every capital city and rest-of-state area across the country, except for Darwin (18.8%) and Canberra (2.1%), have recorded a fall in total rental listings year-on-year, highlighting the ongoing tightening of rental supply.

Article Source : www.realestate.com.au

Most capital cities and rest-of-state regions recorded a fall in days on site over the past year, with Darwin, regional Victoria, regional Tasmania and regional NT the exceptions.

Hobart has the lowest median rental days on site at 14 days, followed by regional NSW, regional Queensland and regional Tas (each 15 days). Melbourne (27) and Sydney (25) have much higher days on site than elsewhere. Darwin is the next closest, sitting at 22 days.

With travel restrictions being reduced, we would expect interest in rental properties in Sydney and Melbourne to continue to recover in 2022.

Elsewhere, rental supply remains low and with fewer first homebuyers expected in 2021, it is reasonable to expect competition for stock from engaged renters will remain strong.

However, the increase in investor purchasing and the subsequent increase in rental supply may reduce some of the tightness in rental markets.

Article Source : www.realestate.com.au

Median days on site at historic lows for rentals The median rental days on site remained at an historic low of 21 days in December 2021. With the supply of stock for rent low and demand for rental properties high, it is no surprise to see days on site remaining at record lows.

The most interesting thing is how low the national days on site metric is considering properties are taking much longer to rent in Sydney and Melbourne than they typically do.

At the same time in 2020, rental days on site was slightly higher at 23.

Rental days on site was at historic lows in December in Brisbane, Adelaide, Perth, Hobart, Canberra, regional NSW, regional Queensland, regional WA, and regional Tasmania, while it was close to historic lows elsewhere outside of Sydney and Melbourne.

New homes market The new homes market was a surprise strong performer during 2021.

While the year started very positively thanks to the HomeBuilder grant, many – including us – expected things to slow after the scheme ended.

If anything, things were only just heating up. Enquiries for new homes reached a record high in September and remains at elevated levels.

HomeBuilder undoubtedly created a large pipeline of residential construction, most of which is directed at detached houses as opposed to units. We’ve also seen apartment developers adjust to the changing buyer types. A lot of the new stock being built is smaller in scale and focused more on owner-occupiers than investors.

A major reason we believe demand for new homes held up so well throughout 2021 was the ongoing lockdowns leading to a lack of new established listings coming onto the market. With lockdowns now seemingly over, this looks set to change in 2022.

Some major sources of demand for new homes are first homebuyers and non-citizens purchasing their first property in Australia.

First homebuyers saw a surge in buying in 2020 and early 2021 on the back of state and federal government grants. However, prices have risen, those incentives have been removed, and first-time buyer borrowing has reduced, which seems unlikely to lift in the short-term.

International borders are re-opening and that will reinstate demand from non-citizen purchasers, although most migrants don’t purchase straight away and there has been a break in potential buyers, which will probably weigh on demand from 2022.

Given these factors, we expect that demand in the new homes market will slow over 2022.

Housing finance Owner-occupier (subsequent purchasers) Owner-occupiers upgrading or downgrading are overwhelmingly the largest source of housing demand in the market, and it seems unlikely that will change in 2022.

While owner-occupiers are expected to remain the largest source of demand in 2022, housing finance data in late 2021 showed that the value of lending to them had fallen from its peak.

Although this may be related to the lockdowns, given the November 2021 data showed a rebound, the growth seemed to stall in those states that weren’t in lockdown.

Investors The value of lending to investors is the one segment that continues to climb. Since its low point in May 2020, the value of monthly investor lending has now increased by 139%, and the total value has now breached its previous historic peak, which was reached in April 2015.

While the overall value of lending is getting back close to the peak, the overall share of lending to investors is anything but. In November 2021, investor lending accounted for 32.1% of total new lending, with the share up from 22.9% a year earlier but much lower than its peak of 46% in April 2015.

The trajectory of investors in 2022 will be revealing. While investor lending is rising, their share of total new lending is nowhere near the heights reached when investor-targeted macroprudential controls were introduced in late 2014.

In saying that, if the share of new lending continues to rise along with credit growth to investors, we may see the reintroduction of credit controls. For investors, we are seeing ongoing shortages of rental stock, particularly outside of inner-city areas.

Although yields have fallen, they remain higher than those on offer for a lot of asset classes and there is also the potential for further price increases.

While we may not see investor lending rise as rapidly as it has been, it is reasonable to expect that borrowing for investors will continue to climb in 2022.

Refinancing Despite some month-to-month volatility and a recent lower trend, the value of refinances on a monthly basis sits close to historic highs.

Since the pandemic began, a lot of people have been fixing mortgages, which should result in strong ongoing refinance activity over the coming year. Further to this, lenders have started lifting fixed mortgage rates, which should encourage more borrowers to choose variable rates going forward.

While fixed mortgage rates are rising, variable rates continue to fall due to extreme competition in the market. In turn, this should see many borrowers looking to refinance away from their more expensive mortgage rates and switching to cheaper variable options.

Despite any slowing, many people continue to look at taking advantage of the lower interest rates.

Moving forward, an increasing number of people looking to capitalise on low borrowing costs would have already done so.

Other factors, such as now having more choice in how to spend incomes and perhaps some serviceability changes limiting the ability of owneroccupiers to borrow as much as they could previously, is likely to lead to slower growth over 2022.

Owner-occupier (first homebuyers) First homebuyers made the most of the HomeBuilder grant and other state government incentives that were available recently, which saw lending and participation rise substantially.

Since these incentives have been removed, we have seen lending to first homebuyers drop significantly.

A major factor in the drop in borrowing is that prices have increased at a much faster pace than wages.

For anyone trying to enter the market for the first time, it has been difficult, if not impossible) for their savings to keep pace with the increases in prices.

Given these factors, it seems extremely unlikely that first homebuyer participation will lift over the coming year, although it should be noted in an historic context it remains quite high.

If anything, we would expect first homebuyers to play an even smaller role given the pull-forward buying that occurred when government incentives that were available in 2020 and early 2021, coupled with the deteriorating affordability facing those looking to buy.

Article Source : www.realestate.com.au

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