Tag archive: NSW

Rental Affordability Continues to Decline, AHIG Report Finds

Renters in NSW, Victoria and Queensland continue to suffer from the increasing gap between their household incomes and the median rents, a new report has found.

The 2018 Affordable Housing Income Gap Report revealed that while property prices and median rents across Australia increased by 82 and 76 percent respectively between 2006 and 2016, household incomes grew by just 40 percent.

“Over the past two decades, housing affordability in Australia has deteriorated at an extraordinary rate,” the report said. “Recent research by the Everybody’s Home campaign shows it is now generally accepted as fait accompli that home ownership is beyond the reach of average income earners and a significant proportion of the population has all but given up on the “Australian Dream”.”

Melbourne is the worst capital city for renters, as median rents were up 75 percent while incomes grew by merely 43 percent. Brighton and Brighton East were the least affordable suburbs to rent in the city, requiring 42 percent of an average renter’s weekly income to pay the median rent. Melton was the most affordable with 21 percent.

In Sydney, Woollahra led as the least affordable suburb with 44 percent of income required to pay median rent. Regional NSW did not fare better. Byron’s median rent at $590 was worth 48 percent of income, while Port Macquarie real estate took 34 percent of income for the median rent of $390.

Queensland had the most modest growth in prices. The increase in rents of 61 percent over the decade was also partially offset by the steady income growth of 40.5 percent. Eatons Hill was the least affordable locality in the Greater Brisbane area, while the localities of postcode 4184 were the most affordable.

Find the report here.

Sydney Rental Vacancy Rates Hit Record High

Rental prices in Sydney are expected to continue slipping as vacancy rates reach a 13-year high.

A report by property analysis firm SQM Research found that 2.8 per cent of Sydney’s rental properties were empty in June, increasing by 0.3 per cent from May and almost a full percentage point from a year ago.

SQM’s managing director Louis Christopher said the figures could be attributed to the rising supply of new apartments and the easing population growth due to people’s move to cheaper cities and regions.

“Sydney rents are now down for the year and it is likely rents will continue to slip as there is still a lot of supply coming in the pipeline,” said Christopher in the report.

“I believe Sydney will shortly record a fall in its population growth rate due to a relatively recent steep rise in interstate migration towards Queensland.”

The buyers’ market is also cooling, with home prices falling by 4.9 per cent over the past year. According to CoreLogic, this is caused by stricter loan terms, increase in number of listings, and declining activity from local and offshore investors.

“I think this is the only time in my career that I can say with certainty that Sydney is now a buyer’s and a renter’s market, simultaneously,” said Christopher.

AGL to Build $400 Million Gas-Fired Power Plant in NSW

AGL will build a $400 million gas-fired power plant near Newcastle, NSW to replace the ageing Liddell coal-fired station.

The energy company said it is assessing sites for a 252-megawatt facility development, due for completion in the end of 2022.

“AGL is committed to supporting the orderly transition of Australia’s electricity generation capability to modern, clean and reliable energy supply,” said AGL chief executive Andy Vesey.

“That’s why we gave seven years’ notice of when we intend to close the Liddell power station at the end of 2022 and we are pleased to commit today to build the power station near Newcastle.”

AGL also said there were plans to “assess the potential” to develop a further 500 megawatts of gas-fired generation capacity, pending commercial and industrial demand.

The company’s announcement to the Australian stock exchange followed pressures from the federal government to sell Liddell power plant instead of closing it. Rivalling company Alinta has expressed interest in acquiring the power plant to keep it open until 2029.

Federal Environment Minister Josh Frydenberg said Liddell’s closure would still bring blackout risk, even with the replacement plan. “That’s why it’s really important that the executives of AGL consider on its merits this offer that comes from Alinta,” Frydenberg said.

The Australian Energy Market Operator (AEMO) said there would be a potential shortfall in capacity of 850 megawatts if Liddell was to be closed, but it also said AGL’s replacement plan “would deliver sufficient dispatchable resources to fill the identified 850MW resource gap”.

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.