July 2024
Terry Ryder
Australia’s Leading Independent Property Analyst
Growth Exacerbates Shortages
One of the core reasons the national shortage of dwellings is so serious is that it coincides with a record increase in the nation’s population The latest data shows that Australia’s population grew 651,000 in 2023, the highest number in the nation’s history – and 84% of that growth was attributed to overseas migration. The record level of population growth last year did NOT cause the shortage of dwellings, including the under-supply of rental homes The seeds of that shortage were sewn years earlier by bad government policy and have been exacerbated by bad governance every year since However, that very high level of population growth last year has made a serious problem more dire Australia now has a population of 27 million, up 2 5% in 2023 All states and territories recorded population growth last year, although many were net losers of population to interstate migration It was overseas migration and natural increases that allowed the weakest jurisdictions to record increases, despite losing population from people leaving to live elsewhere in Australia
Some of the winners on population growth include Victoria had the highest rise in population numbers, increasing by 186,491 Queensland had by far the largest net gain from interstate migration and overall added 141,378 people to its population
Western Australia recorded the biggest population increase in percentage terms last year rising 3.31%, followed by Victoria (up 2.78%) and Queensland (2 62%)
NSW made the biggest gains from overseas migrations but was the biggest net loser from internal migration
ValuesKeepRising
The growth of Australian property values continues with the latest figures showing an almost 8% increase in the past financial year According to CoreLogic that means values are up by about $58,000 in the past 12 months to $794,000 On a quarterly basis, housing values are up by 1 8%, similar to results in the March quarter (1 9%) and December quarter (1 8%) PropTrack says national home prices reached a new peak in June, marking 18 months of consecutive increases It uses a different methodology than CoreLogic and says house prices increased nationally by 0 15% to $854,000 in the month of June According to PropTack capital city markets were stronger, up 0.2% compared to regional areas which are up by just 0 02% It says the unit market continues to perform well with price growth of 0 32% across the combined capital city areas and 0 34% in regional areas during the month. PropTrack senior economist, Eleanor Creagh, says national home prices have cycled through 18 consecutive months of growth to hit a fresh peak in June despite the pace of growth slowing as winter begins “Although the number of homes hitting the market this year has lifted, strong population growth, tight rental markets and home equity gains continue to bolster demand,” she says CoreLogic research director Tim Lawless says there is persistent growth despite an array of risks including high interest rates, cost of living pressures, affordability challenges and tight credit policy “The housing market resilience comes back to tight supply levels which are keeping upward pressure on values,” he says
WhereLendingisHighest
Buyers are continuing to target the Perth market, despite analysts expressing concerns it has reached its peak
The Commonwealth Bank’s State & Territory Quarterly Perspective (June 2024) says Western Australia recorded the strongest total lending in the past 12 months, which was up by 39% with investor lending also up by 70 5% New South Wales was next with total lending up 31 8%, followed by Queensland up 28 5%, Victoria, 17 5%, ACT, 9 8% and Tasmania 0 2% The report says investor lending is also strong in Queensland (46 4%), South Australia (44 6%), and NSW (43 9%) In Victoria, which introduced higher taxes for investors last year, investor lending was only up by 16.6% - the weakest level in Australia The report says despite recent demand and price increases Perth’s housing market remains more affordable than other capital cities It also says affordability has improved in Melbourne as it has built more homes than other states and has higher levels of property listings Price growth in Brisbane led the report to label it as the “second worst in the country” (behind Sydney) in terms of affordability
Affordability also eased off in parts of Adelaide with homes more expensive to buy relative to income than in Melbourne
OverseasInterestSoftens
Overseas buyer interest softened in the second half of 2023 according to the latest figures from the Foreign Investment Review Board. Approved housing purchases by overseas buyers dropped to 2954 between July and December 2023, compared to 3196 in the same period the previous year The data shows that purchases by buyers based in China, Hong Kong, Vietnam, Singapore, Indonesia, South Africa and the UK are now less than half the previous year’s totals SQM Research managing director Louis Christopher says the softening could be in part a result of cuts to migration numbers “Over and above that, we’ve got a number of states now, particularly Victoria, where taxation has increased on property investors My expectation is that we’ll see a softening in the numbers once the full FY2024 results come out,” he says Other government data shows foreign buyers spent $4.9 billion on Australian property in FY2023 across 5360 transactions Victoria was most popular with overseas buyers in FY2023 accounting for 1461 new homes, 458 established homes and 321 vacant land sales Queensland was second, with 436 new homes, 403 established homes and 282 vacant land sales In New South Wales there were 396 new homes, 165 established homes and 95 vacant land sales
Profit Making Properties Hit New High
The number of properties sold for more than buyers originally paid for them has hit a high
The latest Pain and Gain report shows that 94 3% of sellers achieved a profit in the March 2024 quarter, which was the highest rate of profit-making sales in 14 years Although more sellers are achieving a profit the report shows the median rate of profit dropped slightly during the quarter by 1 1% to $265,000
In all, more than 85,000 resales achieved $28 5 billion in gross profits, down from the $30 6 billion achieved in the December quarter The lift in profit-making sales is in line with home values rising by 1 9% in the three months to May House sales (97 1%) were more profitable than unit sales (89%) during the quarter with the gap between house and unit profits having roughly tripled since March 2020 Brisbane and Adelaide (98 4%) had the highest level of profit-making resales, followed by the ACT (95 6%), Hobart (94 1%), Perth (93 6%), Sydney (91 6%), Melbourne (90 8%) and Darwin (71 3%)
The best-performing regional markets for profits were the Sutherland Shire (98 2%) and Blue Mountains (98%) in NSW, the Yarra Ranges (97 4%) and Greater Dandenong (97%) in Victoria and the Scenic Rim (98 4%) and Somerset (99%) in Queensland