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Median house prices in all but two of Australia’s capital cities decline in March quarter

House prices have fallen 7.8 per cent nationally in the past year, dropping in all but two capital cities, a new report has found.

Domain Group’s quarterly Domain House Price Report, released on Monday, shows that prices held up in just Hobart and Adelaide in the first months of 2019, while Hobart remained the only state capital to record a rise in unit prices.

“We are seeing a geographically broader downturn impacting more of our capital cities – even Canberra and those that have held strong to this point,” Domain senior research analyst Nicola Powell said. “Buyer confidence is low, with the ability to get finance impacting buyers across the country. It’s not just an issue for first-home buyers; all borrowers have been impacted.”

The Sydney and Melbourne markets remain in the throes of the steepest downturn in more than two decades, Dr Powell noted.

Sydney house prices were down 3.1 per cent over the March quarter, and 11.5 per cent year-on-year, recording a median price of $1,027,962.

The harbour city’s house prices have fallen 14.3 per cent from their mid-2017 peak, with Dr Powell tipping Sydney’s median could drop below $1 million in coming months, a low not seen since June 2015.

For the first time in three years, the price of a unit in Sydney dipped below $700,000, Dr Powell added.

Source: Domain House Price Report.
MEDIAN HOUSE PRICES
Capital CityMar-19QoQYoY
Sydney$1,027,962-3.1%-11.5%
Melbourne$809,468-2.4%-10.4%
Brisbane$563,666-1.1%-0.3%
Adelaide$542,4740.0%2.0%
Canberra$722,440-0.9%-2.0%
Perth$529,997-2.5%-5.2%
Hobart$478,2473.1%7.0%
Darwin$514,546-0.1%1.5%
National$748,217-2.2%-7.8%

Melbourne house prices fell for the fifth quarter running, down 2.4 per cent in the most recent period and 10.4 per cent year-on-year, with Dr Powell saying the downturn had filtered through from the high-end market and was being felt across the city.

With a median of $809,468, Melbourne house prices were now sitting 11 per cent lower than their highs of 2017. While unit prices held firmer, Dr Powell said they had “dropped for four consecutive quarters, pulling prices back 8.3 per cent from the peak notched a year ago”.

Despite the figures, Dr Powell noted that Domain had seen a rise in views for online listings in Sydney and Melbourne, indicating there was still considerable buyer interest, despite the slowdown.

The view Hobart town waterfront and residential district in a background (Tasmania).
Hobart again recorded strong price growth over the quarter. Photo: iStock

Hobart bucked the national trend, again recording strong growth, with house prices up 3.1 per cent in the March quarter and 7 per cent over the year, to $478,247. The city was the only capital to record growth over both the quarter and the year for houses and units, continuing its streak as the best performing city for capital growth.

“In the space of a year-and-a-half, Hobart has gone from the most affordable city in which to purchase a unit, to more expensive than Adelaide, Darwin and Perth,” Dr Powell explained. “If the pace of growth continues, Hobart unit prices are likely to overtake Brisbane’s in the coming months.”

Source: Domain House Price Report.
MEDIAN UNIT PRICES
Capital CityMar-19QoQ
Change
YoY
Change
Sydney$696,935-2.0%-6.5%
Melbourne$466,892-2.9%-8.3%
Brisbane$372,852-3.7%-5.2%
Adelaide$312,459-2.1%-1.3%
Canberra$426,719-3.2%-1.7%
Perth$347,596-1.1%-5.6%
Hobart$363,4182.6%8.4%
Darwin$313,462-2.6%-1.7%
National$526,130-2.3%-6.3%

Coming in behind Hobart as the second-best performing capital, and one of just three to record an increase over the year, Adelaide’s house prices grew 2 per cent to $542,474. Unit prices fell from the record high achieved last quarter, down 1.3 per cent to $312,459.

Dr Powell said Adelaide homeowners had enjoyed close to six years of steady price growth, and it was now the third-most affordable city in which to purchase a house, overtaking Perth’s median for the first time since 1993.

Adelaide, AUSTRALIA - Nov 21, 2018: Victoria Square historical centre of South Australian Capital city with old iconic building and new construction sites high view urban cityscape of Central Business District
Adelaide’s median house price has overtaken Perth’s for the first time since 1993. Photo: iStock

“House prices remain higher than Hobart, but galloping Hobart prices mean the price gap is at a 12-year low,” she said.

After six years of continuous growth, the nation’s capital is feeling the pressure with house prices in Canberra experiencing their steepest annual fall in a decade, down to $722,440. Despite the 2 per cent drop, Dr Powell said conditions in Canberra were anticipated to resemble a “short softening, rather than the correction currently unravelling in Sydney and Melbourne.”

She said the upcoming election was likely weighing on local confidence, but higher stock levels and difficulties securing finance were also to blame for the slower market activity. “I think this is an illustration of a market that would otherwise be growing if it wasn’t for the restrictions to credit,” she said.

cdm15-canberrasuburb_xexpmm
House prices in Canberra have seen their steepest annual fall in a decade.

It was a similar story in Queensland, where Brisbane house prices stalled for the first time since mid-2012, down 0.3 per cent over the year to a median of $563,666. Unit prices fell 5.2 per cent in the 12 months to $372,852.

Dr Powell said houses had outperformed units in Brisbane for the past six years. “Unit prices are 9.6 per cent below the mid-2016 peak, with buyers now able to reap the benefits of purchasing at 2013 prices,” she said, citing oversupply as a keen contributing factor.

“Although listing volumes are shrinking, it has not been enough to translate into price growth yet,” she added.

Property prices in Perth and Darwin continued to reflect the fact they are cities trying to claw their way back from the slump following the mining investment boom, Dr Powell said. At $529,997, Perth’s median house price had fallen 5.2 per cent in 12 months and is now 14 per cent lower than its 2014 peak.

Dr Powell said that while Darwin’s house price median edged 1.5 per cent higher over the year to $514,546, property prices continued to be affected by weak economic conditions.

“A recovery in Darwin’s housing market largely hinges on the government’s attempts at boosting the population, jobs growth and an improvement in the availability of housing credit,” she said.

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Perth house prices slide despite initial signs of market recovery

Perth’s median house price has dropped 5.2 per cent in the past year despite early indicators of encouraging signs of a market recovery, new figures show.

House prices fell 2.5 per cent during the March quarter to $529,997 compared to a median of $559,296 in March 2018, according to the latest Domain House Price Report, released on Monday.

Unit prices fell 1.1 per cent during the quarter and 5.6 per cent year-on-year to $347,596.

Domain senior research analyst Nicola Powell said despite the signs of a recovery during the first quarter of this year, house and unit price falls have gathered pace.

“House prices are now 14 per cent, and unit prices 16.6 per cent, below the 2014 peak,” she said. “The market recovery is going to be delayed in Perth on the back of the more restricted lending environment.

“If we had (the same) lending (conditions) before the tightening of conditions, I think we would be seeing more signs of recovery now, but that isn’t the case.

Source: Domain House Price Report.
MEDIAN HOUSE PRICES
Capital CityMar-19QoQYoY
Sydney$1,027,962-3.1%-11.5%
Melbourne$809,468-2.4%-10.4%
Brisbane$563,666-1.1%-0.3%
Adelaide$542,4740.0%2.0%
Canberra$722,440-0.9%-2.0%
Perth$529,997-2.5%-5.2%
Hobart$478,2473.1%7.0%
Darwin$514,546-0.1%1.5%
National$748,217-2.2%-7.8%

“You are seeing borrowers being assessed at around seven per cent interest – basically their assessment for a loan is much higher than current mortgage rates. I think, for some buyers, it means that they can’t get finance, or those that can get finance, their loan size is being reduced.”

Property analyst and valuer Gavin Hegney said the March quarter data was equivalent to a rate of an annual decline of 10 per cent.

He said there was an oversupply of just less than 10,000 properties for sale in Perth, which was concentrated in the lower end and outer suburbs, with properties selling well below replacement costs.

Perth, WA, Australia - November 30, 2017: Unidentified people, shops and buildings in Murray street in the capital from Western Australia
Prices for Perth houses and units slid again over the March quarter. Photo: iStock

“The numbers also show the banking royal commission and its impact on reduced lending capacity had a greater impact on the West Australian market than any other state in Australia,” he said.

“Particularly, given the fact we really haven’t seen growth in equity in homes, in probably between five years, and in some suburbs, the past 10 years.”

Peard Real Estate chief executive Peter Peard said sales levels were low and down about 40 per cent from a few years ago.

Source: Domain House Price Report.
MEDIAN UNIT PRICES
Capital CityMar-19QoQ
Change
YoY
Change
Sydney$696,935-2.0%-6.5%
Melbourne$466,892-2.9%-8.3%
Brisbane$372,852-3.7%-5.2%
Adelaide$312,459-2.1%-1.3%
Canberra$426,719-3.2%-1.7%
Perth$347,596-1.1%-5.6%
Hobart$363,4182.6%8.4%
Darwin$313,462-2.6%-1.7%
National$526,130-2.3%-6.3%

Subdued buyer confidence, a lack of pay increases and declining property equity were among the combination of factors contributing to the state of the market, he believed.

“For summer, there has been pretty ordinary sales activity compared to historical years where it has been more buoyant at that time,” he said.

“Although in the top end there is a bit of movement even though values in that market are right down. (But) it is always good to buy and sell in the same market, whether it is good or bad.”

Dr Powell said buyers continued to have the upper hand.

“Improved affordability is providing the ultimate silver lining for prospective homeowners, allowing a purchase to be made at 2011 prices,” she said.

“Perth’s recovery is being hindered by a more restrictive lending environment at a time when local confidence is subdued under weak economic conditions. A sluggish economy is being dragged down by high unemployment, a tight consumer purse, and weak population growth.

“That said, Perth has seen extraordinary growth in the number of views per listing, figures have risen from the recent post-mining boom lows. The rise in views per listing provides a timely gauge of the change in buyer interest, which has been tracking higher since September last year.”

Mr Hegney said there was buyer interest in the more affluent suburbs of Perth, where purchasers were more confident in their jobs and of obtaining finance.

“What the banking royal commission tended to do is take out the upgrader market,” he said. “So when the top end starts to recover you normally would see the upgrader market start to recover and then it would flow through to the lower end of the market, but the timing of the reduced borrowing capacity meant the upgrader market never really started.”

This news article was first published in www.domain.com.au. Here is the link to the original article.

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Warriewood, the budding suburb on the northern beaches that escapes the attention of tourists

The northern beaches attract sun-lovers of all persuasions, from born-and-bred surfers to thrill-seeking backpackers and bikini-clad glam-squads.

It’s impossible to escape the tourists at some of the area’s most famous destinations, including Manly and Palm Beach. But in between the tourist traps are the quiet achievers; suburbs loved by locals that fly under the radar compared to their star-studded neighbours.

Warriewood is one such neighbourhood. About 25 kilometres north of the Sydney CBD between North Narrabeen and Mona Vale, Warriewood has been quietly going about its business, building a reputation as a family-friendly place with parks, wetlands, a beautiful beach and newly renovated Warriewood Square shopping centre.

Neighbourhood Warriewood_
The suburb is about 25 kilometres north of the CBD between North Narrabeen and Mona Vale. Photo: Steven Woodburn

Another drawcard? More affordable real estate than its fancier beach buddies.

The Dictionary of Sydney records that the northern beaches was once dotted with lagoons and swamps, including Narrabeen Creek flowing through the middle of Warriewood and Mullet Creek at the suburb’s southern boundary.

Logging made way for farming, then market gardening. In the mid-1900s, there were so many glasshouses that the suburb was known as Glass City. Nurseries slowly replaced fruit and vegetable growing until the 1990s, when the land was subdivided for housing.

Neighbourhood Warriewood_
Housing in Warriewood didn’t truly take off until the 1990s. Photo: Steven Woodburn

“When I went to school, all along Warriewood Road was farmland,” says Marco Cimino, an agent at LJ Hooker Mona Vale. “It’s only in the past 18 years that it’s really started to change.”

Properties range from chic new builds along the coastline to established homes, new apartments and contemporary townhouses or homes in master-planned estates.

A typical two-bedroom apartment with two bathrooms and two car spaces costs about $750,000,” he says. “Townhouses range fromabout $1 million to $1.1 million. Houses can go from $1.35 million to $1.6 million, depending on size and location, to over $6 million on Bruce Street.”

Neighbourhood Warriewood_
House hunters from the north shore are often drawn to Warriewood for its leafy pockets. Photo: Steven Woodburn

Cimino says investors and young families are the main buyer groups. He has also noticed house hunters from the north shore and West Pennant Hills joining local upgraders. “Some like the leafy aspect; it reminds them of the area they’ve come from.”

Anthony Marchese moved to Warriewood in 2007 after North Manly became too hectic for his young family.

“That was before a lot of the construction,” he says. “It’s such a family-friendly area now, with lots of dog parks, beaches, bike tracks, running tracks and easy access to shopping and schools, which ticks all the boxes for young families.”

Neighbourhood Warriewood_
A variety of pristine outdoor settings makes Warriewood popular among families. Photo: Steven Woodburn

He has already upgraded once within the suburb and wouldn’t mind moving even closer to the beach.

“It’s pretty hard to find another suburb we’d want to move to.”

Two homes in the area

26 Shearwater Drive

26 Shearwater Drive Warriewood NSW
26 Shearwater Drive, Warriewood NSW. Photo: Supplied

This two-storey home on 312 square metres has bright, modern interiors, easy-care gardens, multiple decks and a nature reserve across the road. Each bedroom has built-in wardrobes, the main with a walk-in.

Expressions of interest close May 3, with LJ Hooker Mona Vale seeking offers of about $1.5 million.

109/5 Mallard Lane

109.5 Mallard Lane Warriewood NSW
109/5 Mallard Lane, Warriewood NSW. Photo: Supplied

This north-facing apartment in the Oceanvale complex will appeal to downsizers and young families.

Communal amenities include lap, plunge and children’s pool, a gym, sauna, barbecue area and playground.

 

This article was first published in www.domain.com.au. Here is the link to the original article.

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Ripple effect: How new developments influence the Canberra property market

What’s going to happen to the market when all these new developments have finished being built?

There’s no doubt that the residential building and construction industries have been pillars of strength for Canberra, by injecting millions of dollars to the local economy and providing a strong employment base.

We are a city that continues to progressively build upwards, with apartments driving Canberra’s new dwelling construction since 2010. Over the numerous years of development, a new residential landscape has been carved out across the territory.

A range of factors have influenced the increase in apartment construction – from constrained land supply, affordability considerations, rapid population growth, urban infill, the desire to be connected to employment hubs and amenities, as well as a growing cohort of residents who have embraced apartment living.

Screen_Shot_2019-04-26_at_9.43.23_am_eiwd3r
Building approvals in Canberra. Photo: Frank Maiorana

Development continues to provide the heftiest boost, accounting for just over 60 per cent of building approvals in the year to February, while house and townhouse approvals have each contributed a more modest one-fifth.

The year of 2018 produced a record high, with almost 4500 units approved. Apartments have hit the market in numbers unseen before, the majority being high-rise (towers with four floors or more). The previous multi-unit approval peak was mid-way through 2011 with just over 3500 approved. Townhouse development has fallen from the mid-2017 peak of almost 1600 approvals, sliding to 1325 approved in the year to February.

This hive of residential construction activity contributed $1.084 billion to the local economy during 2018, the third-highest value on record.

Our city has experienced a hive of construction activity that could be exacerbated when all development approvals come to fruition. Heightened development can have an impact – from prices to rents – outcomes that can be seen as both a positive and a negative, depending on which side of the fence you fall.

Growth in apartment prices has been non-existent for a number of years, growing at a mere 4.5 per cent over five years. The median unit price is 1.7 per cent lower over the past year, now at $426,719  – the same as recorded in 2016.

A large influx of supply can exacerbate declines in values, which have a domino effect on both households and developers financially. Declining apartment prices pose a significant risk to buyers who are yet to settle, particularly if the value is lower than the contracted price.

You could be a current apartment owner who is facing little-to-no capital growth, or a wishful home owner who is now faced with improved affordability.

Over the financial year to date, the highest volume of building approvals has been in areas that have strong links to transport, infrastructure and amenities – the suburbs of Belconnen, Gungahlin, Kingston and the CBD, with pockets of increased development stock being influenced by the type of buyer purchasing a new development and planning, which affects developers’ decisions and the supply response.

The top four suburbs for multi-unit development approvals are dominated by tenants rather than owner-occupiers. There is no doubt Canberra’s rental market is tight, as it is presently the second-most competitive Australian city, with vacancy rates at the low of 0.3 per cent and tenants faced with rising rents. The slice of the supply concentrated in rental dominated-areas will be welcomed by tenants, providing additional stock to ease rental price growth, and improve the vacancy rates.

Canberra is changing before our eyes with apartments likely to continue to provide new housing, as land supply and population growth motivate prospective home owners to purchase an apartment or perhaps townhouse.

This article was first published in www.domain.com. Here  is the link to the original article.

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Town home prices get $875,000 wipeout in Australia’s weakest real estate market

Sydney and Melbourne prices may have begun to plummet but they would have to fall considerably further to be anywhere close to the largest in the country.

Sales data from the past five years has revealed Australia’s biggest real estate money pits remain concentrated in regional areas and are thousands of kilometres from the nation’s capitals.

Western Australian resource towns had the biggest drops in home values since 2013, with prices falling by up to $875,000 in some areas.

The towns with the biggest price drops included Newman in the iron ore rich Pilbara region in the northwest of WA and Derby in the Kimberley region.

Median house prices in these areas more than halved over the five-year period, shrinking from over $600,000 to under $200,000, the CoreLogic data showed.

Homes in WA mining towns were affected by the end of the mining boom. Picture: AFP Photo/BHP Billiton

Even bigger losses were recorded in the WA coastal hub of Port Hedland and sister town South Hedland.

The typical value of a home in the port 1523km north of Perth was $1.27 million in 2013 but has since shrank to about $395,000.

South Hedland houses had a median price of $865,000 in 2013. Now the median is $195,000.

By contrast, house prices in Sydney’s worst performing suburb — inner west suburb Annandale — fell 2.9 per cent over the five years, with the median unit price shifting from $770,000 to $747,500.

Port Hedland is about 1500km north of Perth.

International shifts in demand for iron ore were partly behind the falling values in resource towns, but a growing trend of fly-in, fly-out workers also depleted demand for the local homes.

Property prices and rents were further impacted by the rise of mining camps for local workers that bypassed the local housing markets of some mining communities.

Many of the camps were constructed by mining companies precisely because local rents and home prices had been skyrocketing, making the usually high cost of construction worth the investment.

Falling home values have dealt a particularly devastating blow to property investors who bought into resource towns during the height of the mining boom.

The owners of a four-bedroom house on Port Hedland’s Styles Rd have been trying to offload their property since 2013, but even after slashing more than $500,000 off the price have still been unable to sell.

They bought the property for $1.08 million in 2008. If they sold for their current listing price of $749,000 they would still lose $331,000.

Selling properties in northwest WA has become a challenge.

The tense sales environment has evaporated real estate empires seemingly overnight.

Property investor Ryan Crawford had amassed 40 properties spread mostly across the Pilbara region by 2013, which he reported at the time as having a combined value of $32 million-plus.

Much of his property portfolio has since been foreclosed by banks, according to the West Australian. Part of the Crawford property empire was sold at a fraction of the buying prices, with documents filed in the Supreme Court in 2017 showing the proceeds fell short of what was owed.

This article was first published in www.realestate.com.au. Here is the link to the original article.

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What I wish the previous tenants told me before I moved in

Since moving back to Sydney two years ago, I’ve moved three times with my partner, and in that time there are a few things we wished previous tenants could have told us before we chose our rentals.

I like to think of it as crowdsourcing info, if you will, because as a tenant you have a measly 15-minute window to figure out if it’s the place you want to live in for the next six to 12 months among a sea of other properties that you are racing around the city to get to on the same day.

There’s only so much you can assess in that short-time span and it’s usually the plainly obvious — trying your best to measure up if the place is big enough to fit in your furniture from the last rental and whether the property’s condition is up to scratch to live in, because up until recently minimum standards in rentals were not a thing.

A rental review would go some way in helping pick up the inconspicuous problems.

In our first rental, we moved into a new build and, as you’d expect, everything was brand spanking new. It also had lots of extras included from a dryer to a dishwasher to ducted airconditioning, so we couldn’t really fault anything at first sight.

It wasn’t until we moved in that the shine wore off really quickly. While our apartment was finished, the thousands of others in neighbouring blocks weren’t and we were basically living on a construction site for six days of the week. Constant noise and dust was part and parcel of our six-month lease.

It’s easy to pick up the obvious during rental inspections but there’s plenty you discover only after you move in. Photo: Paul Rovere

New builds are also notorious for squishing a lot into not a lot of space. They’re often described as shoebox apartments but we preferred to describe it as more of a dungeon with only one opening in the entire apartment, which looked onto hundreds of neighbouring balconies.

The lack of windows in the kitchen, bathroom and laundry dimmed our spirits and it was only when we moved into our next two rentals did we realise the importance of direct sunlight and a natural breeze.

Which brings me to our second rental. It was by far the best we’ve ever had but hindsight is 20/20, right? It was a huge upgrade from our first in every way.

We were on the top floor of a red double-brick block of nine apartments and it felt like we were sitting among all the surrounding gorgeous gum trees.

We had a window in every single room — a bizarre luxury after our first place — meaning we could heat and cool down the apartment without the need for aircon for almost the entirety of summer because of the amazing cross-ventilation.

I could go on, but there were a few things we would have appreciated knowing even in this place. Parking was an absolute nightmare both in our garage and on the street, something that hadn’t crossed our mind until moving day.

We also quickly found out we had rowdy, chain-smoking neighbours, whose balcony was adjacent to ours with a nice, clear view into our home and who had a penchant for partying throughout the week. But I guess you can’t have everything.

BGR080924.000.000.16003910_fyu8cn
Most size up a rental but it’s the inconspicuous problems like noise or water pressure that are hard to pick up during inspections. Photo: Ben Rushton

Our third rental has also had its fair share of surprises. The first and most noticeable issue is the outrageously loud traffic, which dies down considerably on a weekend – incidentally, when you normally check out a rental. You can’t hear over your Netflix at nighttime and the noise causes a murmuring through the windows in what should be the dead of night.

The other peculiar thing about this rental is the weak water pressure, which doesn’t allow two taps to run at once because it turns into little more than a trickle. It has left us coordinating when we take showers and do the laundry or washing up in the kitchen.

Funnily enough, we did remember to test the kitchen tap on inspection day and thought it ran well enough. But we didn’t get to running two taps from two different rooms at once because the apartment was packed with other prospective tenants and we were in a rush to get to our umpteenth back-to-back inspection of that day.

But I’m sure the previous tenants would have experienced the same water pressure issue. I wish they’d been able to tell us and I plan to tell whoever succeeds us in living at our current place.

This article was first published in www.domain.com.au. Here is the link to the original article.

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Which party wins the property election?

Property is shaping up to be a key federal election issue, with negative gearing and capital gains tax concessions standout differentiators between the ALP and the Coalition.

Image of Parliament House with reflection in water

Property is set to be a big issue at the federal election.

It would be business as usual under a Coalition government – prices would stabilise and rental levels would stay close to what they are now.

However, under the ALP, prices would drop and rents rise. Ultimately, the best party will depend on where you are in your property journey.

Investors

The ALP’s proposal to change negative gearing would be generally bad news for “mum and dad” investors, particularly those looking for their first investment property. Although existing negatively geared properties can remain so, from 1 January, the ALP would allow only new properties to be negatively geared.

The challenge for many investors is that they rely heavily on negative gearing to make a low yielding investment attractive. Many investors are also not keen on new homes, preferring to invest in existing properties.

For investors who already own large portfolios, the ALP changes could be good news, provided they are not wanting to use negative gearing to expand their portfolios further. With rental levels rising, they could make higher returns on their investment. The challenge is if they want to sell – the pool of potential buyers for second hand properties will be smaller under the ALP.Nerida Conisbee’s Federal Budget wrap

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Read more: Reserve Bank keeps rates on hold as 2019 election looms

Renters

With fewer people investing in property, the number of rental properties will drop under the ALP. Although some people will be able to move from being a renter to buyer due to a drop in prices, most will not. This means rents will increase. And, given renters tend to be younger, poorer and more likely in housing stress, even small increases can be problematic.

The other challenge for renters is that over time they will be pushed to areas where a lot of new housing is being developed. This is because the ALP policy encourages investors to buy new. Most new housing in Australia is either apartments in the inner city or new homes on the urban fringe. Finding a rental in middle ring suburbs will become more difficult.

REAL ESTATE STOCK

Renters could experience challenges if investment activity dropped under negative gearing reforms. Picture: James Ross

First home buyers

First home buyers will be the main beneficiaries of an ALP government, whose proposed policy is reflective of the challenges this market was having at the time it was announced. First home buyers and investors tend to target similar sorts of properties in similar locations. A slow market also appears to make them more active, perhaps because it gives them more time to make decisions.

We have already seen how much first home buyers have benefited from investors pulling back – they are now at their most active level in more than six years. The ALP changes will continue to help them.Nerida’s 2019 property predictions

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Upgraders and downsizers

Contrary to what is often reported, price falls aren’t particularly bad for upgraders and downsizers. Price falls mean they often achieve a lower price for their existing home, but they similarly buy at a lower price. As such, an ALP or Coalition government are pretty similar for people in this category.

Developers

One of the aims of the ALP policy changes is to stimulate development of new houses. If investors do switch from buying existing homes to buying new, then it will be good news for developers.

Build-to-rent apartment complexes provide a lot of rental housing overseas but barely exists in Australia. A proposed cut by the ALP in the managed investment trust tax rate from 30% to 15% would assist more developers, and large property companies, in developing rental housing.

There will be winners and losers from either the ALP or the Coalition policies on housing. A Coalition win will largely mean it is business as usual, but an ALP victory will lead to significant changes in our housing markets.

This article was first published in www.realestate.com.au. Here is the link to the original article.

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Population growth outstripping jobs: Major challenge for Melbourne’s fringe suburbs

As Melbourne’s population swells, an urgent push to create a network of 20-minute cities on the urban fringe is facing significant challenges.

The growth of local jobs, though outstripping the national average, is not enough to keep pace with the growing population forcing many of those living on Melbourne’s outer edge into cars to spend hours on congested roads getting to work.

Councils, including the City of Casey in the outer south-east and City of Melton in the outer-west, are working feverishly to set aside land to attract big business to the areas and help people to live closer to where they work.

Traffic congestion Melbourne
Those living in the outer suburbs are being caught in traffic congestion. Photo: Paul Rovere

Although there are some success stories, proper infrastructure is needed to attract businesses to fringe suburbs, National Growth Areas Alliance executive officer Bronwen Clark said.

“The main barrier [to businesses setting up] is the lack of supporting infrastructure,” Ms Clark said.

“While there are traffic jams and lack of access to freight terminals and ports there’s no advantage to them being there.”

The Victorian Planning Authority is working closely with local councils to plan for the use of land for both housing and employment opportunities. It wants one job created for each home built in growth corridors, chief executive Stuart Moseley said.

This meant using the land efficiently for a variety of housing types as well as business opportunities such as incubators that help local businesses establish and grow.

Between 2011-2016 in Casey, 15,000 more houses were built. Over the same time, 16,000 local jobs were created. In Melton between 2011-2016, 8000 homes were built and 8000 jobs created.

“The biggest growing jobs were in healthcare, retail and education,” Mr Moseley said.

The Casey area has more than 50 activity centres (a mix of commercial, retail and residential land) that provide jobs. The council wants major employers to move to the region to help local businesses grow. That need is about to get more urgent.

In just over 20 years, the population is expected to hit nearly 550,000, but the area lacks proper public transport to the city and within the area.

“Although Casey has over 83,000 jobs, 92,000 residents leave the municipality to travel to work,” said the council’s director of city planning and infrastructure Peter Fitchett. 

“Casey has the highest car ownership rate per household in Victoria where over 60 per cent of households own two or more cars and households average 10 trips per day, with 83 per cent of trips made by car,” he said.

Berwick Waters Estate
Berwick Waters Estate. Photo: Eddie Jim

The council has campaigned for better public transport and with other south-eastern councils including neighbouring Cardinia, is pushing for major projects of regional importance. They include a tri-government approach to jobs hubs in the suburbs.

“Casey has a number of activity centres … that are home to thousands of jobs, but without adequate transport connectivity and a clear jobs strategy, support for these activity centres is hindered,” Mr Fitchett said.

A lack of connected public transport is also a big problem in the outer west of Melbourne, particularly in Melton where the council also wants significant improvements to public transport. It covers the booming growth suburbs of Caroline Springs, Plumpton, Rockbank and part of Truganina.

It has pushed for the electrification and duplication of the V/Line service through Melton to allow for more frequent trains. It also wants to become part of the planned suburban rail loop. 

The council wants a local hospital to serve the growing area and to offer jobs locally. By 2051, the Melton area is expected to be home to just under 480,000.

An aerial shot of Plumpton
An aerial shot of Plumpton in Melbourne’s outer west which is one of Melton’s booming suburbs. Photo: Lensaloft Photography

“We have a very young population, so the challenge for us, moving forward, is to keep young people here instead of them moving to places like Ballarat, Geelong and Bendigo,” said council’s city design, strategy and environment manager, Laura-Jo Mellan.

Long travel distances to university or jobs mean a move to the regional cities, where the commute is shorter, is becoming attractive to young people.

As in many fringe areas, Melton has more working residents than there are local jobs, with 73 per cent (or 43,814 residents) travelling outside the area for work.

Ms Mellan said one of the biggest challenges for Melton and other city-fringe councils was having to compete for infrastructure and larger businesses to offer jobs closer to home.

This article first appeared in www.domain.com.au. Here is the link to the original article.

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Booming west best in Australia for population growth: HIA report

Melbourne’s outer suburbs are Australia’s fastest growing regions.

Suburbs in the Victorian capital dominate the Housing Industry Association’s building and population hotspots, led by Rockbank in the outer northwest.

HIA chief economist Tim Reardon said 12 of the top 20 national hotspots, based on residential building work approvals and population growth, were in Melbourne.

The same part of Rockbank seen above, as it was in December 2014. Picture: Nearmap

“The majority of the growth is in the fringe of Melbourne as the city expands, although inner city suburbs such as Southbank and Docklands are also enjoying strong growth as they change to accommodate higher density living,” added Mr Reardon.

“This is not surprising given the significant investment in infrastructure and the region’s growing professional services sector.”

The Rockbank-Mt Cottrell area in the City of Melton had 59.4 per cent population growth during 2017/18 and $224.2 million in building approvals.

“Major infrastructure projects including upgrades to the train station and train lines as well as a new six-lane arterial road connecting the area are expected to maintain the momentum to keep the area as a hotspot next year,” Mr Reardon said.

Construction is booming on Melbourne’s fringes. Photo: Paula ShearerDifferences between building in new or established estates

“Last year’s number one hotspot, Mickleham-Yuroke (in Melbourne’s outer north), has slipped to second place and Pimpama in Queensland’s Gold Coast dropped into third place.”

Cranbourne East in Melbourne’s outer southeast, Wollert in the northeast and Beaconsfield-Officer also in the southeast were also in the top 10 HIA hotspots for growth.

Point Cook, Southbank, Truganina, Tarneit, Docklands, Cranbourne South and Werribee were the other Melbourne areas in the top 20.

For the purposes of the report, a ‘hotspot’ was a locality, technically a Statistical Area Level 2 — or “SA2” — which satisfied two conditions: with in excess of $150 million in residential building work approved in 2017/18 and with an annual population growth rate in excess of the national rate of 1.6 per cent.

New homes are being built at a rapid rate in the outer suburbs.

The Rockbank and Mickleham regions had far greater population growth than anywhere else, at 59.4 per cent and 52.2 per cent respectively, while Cranbourne had 21.2 per cent.

The rest of the Melbourne areas had growth below 20 per cent, down to Werribee at No. 20 with growth of 9 per cent.

This article was first published in www.realestate.com.au. Here is the link to the original article.

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Properties in Melbourne’s inner city, outer fringe risk lower valuations than buyers paid

Home buyers in Melbourne’s inner city and outer fringes risk paying too much for their properties as the housing market weakens, experts say.

But the risk is lower for buyers looking at suburbs in between, or the prestige market, as both purchasers and vendors adjust to the market’s new normal.

Residential property valuers focus on recent similar sales when estimating the worth of a home in a falling market.

But purchases made off the plan can take two years to be built, leaving brand-new properties worth less than the buyer agreed to pay.

“Off-the-plan apartment sales are quite often problematic,” Herron Todd White Melbourne managing director Tony Kelly told Domain.

“You’re agreeing to buy something today at a price that you’re not going to be able to get your hands on for two years.

“At the moment there’s been instances, and it’s been that way for a while, where it’s worth a little bit less than what they agreed to 12 or 18 months ago.”

A drop of 10 per cent was not uncommon, while other units could be worth up to 20 per cent less, but higher-end or better-known buildings were more likely to hold their value, he said.

Melbourne's changing skyline around the corner of Lonsdale and LaTrobe streets. Apartments are going up everywhere amid concerns of a property bubble. Photo: Penny Stephens. The Age. 23RD JUNE 2015
Some new apartment valuations have been lower than their contract prices. Photo: Penny Stephens

House-and-land packages on the urban fringe also risk being worth less than buyers paid, he said.

He noticed builders advertising incentives such as $50,000 in upgrades for $10,000, or developers offering cash back for land purchasers, to make sales without discounting the sticker price or devaluing the neighbours’ new homes.

But in middle suburbs valuations were stacking up, compared to the prices buyers paid.

A “reasonably quick” fall in the market, when compared to the GFC, helped vendors and buyers adjust expectations so properties were trading at the new lower level, he said.

Some city-edge suburbs escaped any ripple effect from the CBD apartment boom.

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Values for houses on the CBD fringe in Richmond and East Melbourne have escaped the issues with apartments in the nearby CBD. Photo: Josh Robenstone

WBP Group valuer Steve Demchinsky, who focuses on the inner ring of Melbourne, has seen valuations for houses in East Melbourne and Richmond matching up to the prices paid as buyers seek land close to the city.

Even within the CBD, owner-occupier grade product performed better than investor-style units.

“There have been some instances of a softening of demand, particularly for compact apartments,” he said.

But older, larger two-bedroom apartments are “ticking up in value”, while new three-bedroom units “have experienced quite an increase in demand, and are often supported [by their valuation],” he said.

In the eastern suburbs prestige market, AVA Property director Trevor Crittle said, valuations were closer to prices paid now than around the market’s peak.

“The ultra-top end, the $10 million-plus, there’s probably a shortage of good quality stock so there is a bit of a premium paid sometimes for those properties,” he said.

“But they tend to generally stack up on a valuation point of view.

“They’re actually more stacking up in our end now than 18 months ago when the market was crazy … especially Chinese buyers [who] were paying really big dollars.”

Even as land prices fall, buyers are paying a slight premium for brand new luxury houses with large basements and high-end fit-outs because construction costs were rising during a two-year build timeframe, he said.

This article was first published in www.domain.com. Here is the link to the original article.