Tag archive: housing market

News: Rising House Prices Put Pressure on Sydney and Hobart Renters

Increasing house prices in Australia are putting pressures on renters as rental affordability in Sydney reached a record low.

The latest report from Rental Affordability Index found that despite the stability in some parts of the country, low- and moderate-income households are still largely priced out of all metro markets.

Sydney and Hobart are found to be the most expensive cities for renters while Melbourne and Perth are the most affordable. Sydney renters spend an average of 29 per cent of their household income on accommodation, while those in Hobart spend 28 per cent.

 

City Per cent of household income Six-month trend
Sydney 29 -3.8 per cent
Hobart 28 -5.4 per cent
Adelaide 25 -0.7 per cent
Brisbane 25 -0.3 per cent
Melbourne 24 -0.1 per cent
Perth 21 +6.2 per cent

Source: National Shelter, Community Sector Banking, SGS Economics and Planning

 

“Lots of frustrated renters can’t get into home ownership and they stay in the rental market,” said Adrian Pisarski, executive officer at Australia’s peak housing body National Shelter.

“Those people tend to rent down as low as they can so they can save a deposit to meet the gap in terms of housing purchase, and what that does is displaces lower income households in the rental market.”

The index found that despite the negative conclusions, rental affordability has remained stable in most parts of Australia.

“What we found overall nationally is that rental affordability has not improved, it hasn’t declined overall either, except in Sydney and Hobart, where it is worse than it was six months ago,” Pisarski said.

“For most of the rest of the country [it] is pretty stable, but having said that, rental affordability is very bad across the nation.”

Tenants NSW senior policy officer Ned Crutcher said renters, who made up one-third of households in the state, were largely ignored by the government. “Rents are going up and wages are not. On top of that, renters have very little security of tenancy – they can be kicked out at any time,” he said. “This stuff keeps people awake at night.”

Australian Housing Market Has ‘Peaked’, According to UBS

The Australian housing prices boom has reached its peak, investment bank UBS said.

“After housing activity rose consecutively for over four years, its longest ever boom, we are now calling the top and think that housing activity has already peaked,” UBS economists Scott Haslem, George Tharenou and Jim Xu wrote in a note.

“Mortgage rates are rising, and sentiment of home buying collapsed to a [near] record low… Hence, we are ‘calling the top’, but stick to our forecasts for [dwelling construction] commencements to ‘correct but not collapse’ to 200,000 in 2017 and 180,000 in 2018.”

National house price growth is currently at 13 per cent, the highest in seven years, but UBS expected the growth to fall to 7 per cent this year, and 0-3 per cent next year. “We see a moderation ahead amid record supply and poor affordability, with the new buyer mortgage repayment share of income spiking to a decade high,” UBS said.

While house prices will still be out of reach from first home buyers, the bank said more rental options will be available following completion of units this year, allowing rents to rise more slowly than incomes.

The bank also warned that while the risks for housing slump are low, considering strong population growth and stable employment, the country’s record household debt and high housing prices could still cause trouble.

News: NSW Housing Investment Sets Record High

Housing investment in New South Wales continues to grow as current levels are getting close to record highs, new Australian Bureau Statistics reports revealed.

Latest ABS data found that the value of residential lending in the state reached $7.19 billion in November 2016, the highest on record for the year and a significant 25.5 per cent increase from the previous month’s $5.7 billion.

The November value was also the second highest on record for NSW, with the highest being $7.36 billion in June 2015.

Investor loans constituted 56.7 per cent of all approved residential lending in NSW over the month, making it the highest market share nationally, followed by Victoria’s 45 per cent.

NSW’s residential investor lending represented 56.1 per cent of all approved lending in Australia in November. “This is clearly a record result, eclipsing the previous high of 48.8 per cent reported over March 2016,” said Andrew Wilson, chief economist at Domain Group.

“The strong Sydney market remains a magnet for investors with demand set to continue to rise attracted by continuing solid price growth and a tight rental market with rising rents consolidating gross yields.”

Wilson expected the NSW market to continue its growth, prompted by the possibility of better investment property taxes and rate cuts after 2015’s hike in mortgage rates.

“Residential investors have stormed back into the market since May 2016 driven by the prospect of possible changes to the tax treatment of investment property and interest rate cuts,” said Wilson.

“NSW generally and Sydney specifically remain the epicentre for what has re-emerged as unprecedented activity from this group.”

Cameron Kusher, head of research at CoreLogic said while NSW and Victoria might seem promising, investors should be mindful of the long-term risks.

“It’s clear that demand for mortgages from the investor segment is picking up, particularly in New South Wales and Victoria, which are proxies for Sydney and Melbourne respectively,” said Kusher. However, he added that investors should also think about the risks from long-term value growth phase as well as the historically low rental earnings.

News: Sydney’s Housing Market Second Most Unaffordable in the World, New Survey Found

Sydney’s housing market has been rated as the second most expensive in the world, according to the 13th Annual Demographia International Housing Affordability Survey: 2017.

Sydney, which is only topped by Hong Kong, beats other cities including San Jose (fifth most expensive) and Los Angeles (eighth).

The survey rates housing markets based on the World Bank-recommended “median multiple” principle, which divides median house price with median household income. A score of 5.1 and above is categorised as “severely unaffordable”.

10 Least Affordable Housing Markets

1            Hong Kong                       18.1

2            Sydney, NSW, Australia 12.2

3            Vancouver, Canada        11.8

4            Santa Cruz, CA, USA        11.6

5            Santa Barbara, CA, USA  11.3

6            Auckland, NZ                   10

7            Wingcaribbee, NSW, Australia    9.8

8            Tweed Heads, NSW, Australia    9.7

9            San Jose, CA, USA            9.6

10          Melbourne, VIC, Australia           9.5

The report found that 47 of Australia’s 54 markets are categorised as “seriously unaffordable” or “severely unaffordable”. The report’s co-author, Hugh Pavletich said the contrast between Australia’s land size and its housing prices indicates a “decentralisation” issue.

“State and local governments have lost the control of their costs and their capacity to finance infrastructure properly,” said Pavletich.

“Sydney house prices are about 12.2 times annual household incomes which is grossly excessive… What housing should be in normal markets is at or below three times household earnings, so Sydney is four times what it should be.”

The newly-sworn in NSW premier, Gladys Berejiklian said in her first press conference that housing affordability would be one of her policy priorities.

“I want to make sure that every average hard-working person in this state can aspire to own their own home,” said Berejiklian.