Most Cities, Regions Creating Gains

CoreLogic’s latest quarterly Pain and Gain report shows that the best capital gains are to be found in Hobart, Regional Victoria and Canberra. The report, which compares the prices of properties sold in the September Quarter with their previous sale, found that 98% of houses sold in Hobart were sold at a profit. Regional Victoria and Canberra tied in second place with a 96.9% strike rate, followed by Melbourne at 96.6%, and Regional Tasmania with 96.4%. Around 95% of Brisbane houses sold at a profit, as did 92% of Adelaide houses. At 92.1%, Sydney lagged behind Regional New South Wales at 94.3%. Apartments were less profitable than houses – nationally 80.2% of unit sales made a profit. The best performing apartment markets which delivered results above the national averages include: Hobart (98.5%); Regional Tasmania (96.3%); Regional Victoria (94.2%); and Regional NSW (92.1%). The apartment markets in Sydney (87%) and Melbourne (85%) performed moderately. Only 63% of Brisbane units and 48% of Perth units sold for a profit.

Sales Momentum Moves Into 2020

Spring proved to be a busy season with more homes being auctioned in the last Quarter of 2019 than the previous three. Expectations from both property analysts CoreLogic and SQM Research are for the property market to gather momentum in 2020. The Quarterly Auction Report shows that in Quarter 4 the number of listings for sale rose and clearance rates averaged a success rate of 70% across the combined capital cities. The strongest results were recorded in Sydney (75%) and Melbourne (73%). This was an improvement on Quarter 4 of 2018 when nationally, only 44% of homes sold under the hammer. Outside of the capital cities, Geelong returned the highest clearance rate (63%), Wollongong recorded (53%) and the Hunter region (54%). Louis Christopher, managing director of SQM Research says: “I think we’re going to see more sellers come to the market this year overall because they are now more confident that they’re going to get their target sale price with the increase in buyer demand”.

Borrowers Return To The Market

Mortgage lending rose 25% in NSW, 19% in Victoria, 17% in each of Qld and SA, and 2% in WA during the last Quarter of 2019. Mortgage brokers attribute the increase to easier lending conditions and renewed buyer confidence. Brokers say they processed $15.4 billion in home loan applications during the quarter – 19% more than for the same period in 2018. David Bailey, chief executive Australian Finance Group, says interest rate cuts and easing of rate buffers, which check borrowers’ capacity to make repayments if interest rates rise, have encouraged borrowers back into the market. The Federal Election result and removal of threats to changes in negative gearing for property investors have also helped improve market sentiment. Non-major banks were responsible for 47% of loan applications, the highest since 2007. The average mortgage size for the final quarter of 2019 was $539,000 compared to $508,000 for the same period in 2018.

Multi Generations The New Norm

Increasingly, several generations of Australian families are living together under the same roof. Social demographer Mark McCrindle says there are several reasons for the lifestyle choice. “Younger generations are either leaving home later or returning back to the parental home,” he says. “Then on the parents’ side, they’re living longer and sometimes the older parents are moving in with the middle-aged children, creating the three or, in some cases, four generations under the one roof.” The practice of generations Y and Z living with the family for longer periods due to affordability constraints now includes Baby Boomers, who are sharing their household expenses with their adult children to not only save money, but to maintain their lifestyle. McCrindle says fewer than 10% of Australians now move out of their home into retirement homes. Having several generations sharing the running costs of the home creates a win-win situation because each party is paying less than they would if they were running their own rental, he says.

Older Aussies Apply For FHB Grant

Many of those applying for the Federal Government’s new First Home Loan Deposit Scheme are single and aged over 35. New figures from the National Housing Finance and Investment Corporation show of the first 3,000 applicants, 25% are aged 35 or older; some are aged in their 40s and 50s. And the vast majority (60%) of applicants are single. Many have incomes that fall well below the thresholds, giving those on lower incomes hope for buying their first property. “The average income for applicants with pre-approvals is well below the threshold for both singles and couples, allowing those on a modest income to buy their first home,” says NHFIC’s chief executive officer Nathan Dal Bon. So far, the median taxable income is about $68,000 for singles and $108,000 for couples. This is well below the selection criteria which dictates that individual applicants cannot have a taxable income of more than $125,000 and couples cannot be earning more than $200,000.