Rental vacancy rates fell across most capitals in July, indicating strong competition among tenants for available homes is likely to keep upward pressure on rents.
Vacancy rates for units in Melbourne have fallen from 2.5% in July 2016 to 1.7%, while houses remain stable at 1.4%. Both houses and units in Sydney remain stable at 2.1% and 2.2% respectively.
The Brisbane rental market remains more tenant-friendly with July vacancy rates for houses steady at 2.7% and units down slightly over the month to 3.1%. Rental accommodation in Hobart and Canberra remains scarce with rates in those cities below 1%.
Perth has improved, the house vacancy rates there shrinking from 4.3% in July 2016 to 3.5% and the unit rates
decreasing from 5.0% to 4.1% over the same time.
REA Result Up Despite Listings Fall
Revenue for the online real-estate advertiser – REA Group – for FY2017 rose 16% to $671.2 million, driven by a 14% climb in revenue for its Australian division – which includes realestate.com.au,
The News Corp-controlled company said the 2016-17 result was achieved despite a fall in residential listings during the year and a decline in new dwelling commencements.
Listings had increased slightly in July 2017 compared to a year earlier when July performance was affected by the federal election.
But chief financial officer Owen Wilson said new dwelling commencements had declined throughout the second-half of 2016-17 and would remain low during 2018.
Low Wage Growth Cuts Spending
Reserve Bank governor Philip Lowe has identified low wage growth as one of the key risks to the Australian economy, He says that, along with high debt and energy prices, it’s crimping consumer spending.
Many people are getting used to lower growth in their real wages and see this as more than just a temporary development, he says.
“At the same time, the household sector is also dealing with
higher levels of debt relative to income,” he says. “Higher electricity prices are also affecting household budgets.
“Many workers feel an increased sense of uncertainty and they feel less secure. It is possible that these effects will pass and that the normal relationship between tighter labour markets and higher wages will reappear. It is also possible that the current environment turns out to be quite persistent.”
Completed Units Lift Loan Numbers
The latest figures from the Australian
Bureau of Statistics show a 0.5% monthly increase in the number of home loans.
New home construction rose 3.6% to record loan growth in all eight states and territories. It reflects construction completion amid the high levels of new dwellings development — especially apartments — that peaked last year.
Housing Industry Association senior economist Shane Garett says the finance figures reflect the delay between the pre-sales and settlements.
Mortgage Choice chief executive John Flavell says the boost in loans for both owner-occupiers and investors is “somewhat surprising”
given bank changes to investment pricing and policy.
ANZ notes that the investor segment is up 1.6%, following falls in the previous four months.
Building Starts to Fall Over 3yrs
The wave of cranes will disappear from capital city skylines over the next three years with high-rise apartment construction to halve and overall building to decline 17%, according to BIS Oxford Economics.
National building starts reached peak levels over the past two years, with $107 billion of work started across the commercial and residential sectors in FY2016 and a similar level achieved in the financial year just completed.
The peak levels are 22% above those at the end of the resources boom in FY2013, the
researcher found.
Reserve Bank governor Philip Lowe says the “current high level of residential construction is forecast to be maintained for some time before gradually easing”.
BIS expects residential building starts will fall by 31% over the next three years.
Quote of the week
“Overall, we expect 2017-18 will be the peak in high-density residential completions, but that part of the market will slump in the subsequent two years. By contrast, a milder decline is forecast for detached houses. The saving grace is that the floor in residential commencements is likely to be higher than in previous busts.”
Robert Mellor, managing director of BIS Oxford Economics.
