In this week's episode, Dave, Cate and Pete take you through:
1. Heat in the market is dissipating
Anecdotally, we're seeing some behaviours such as vendors holding out for better prices that are not always being achieved, supporting the fact that the heat is coming out of the market to some degree. As touched on during recent Podcasts, we don't expect prices to be growing at quite the same rate of knots as the first four months of this year across most part of Australia.
2. Smaller capital cities have been the outperformers of the last 12 months.
The latest property index results for April from CoreLogic reveal that Adelaide, Hobart, Darwin and Canberra have outperformed Sydney, Melbourne and Brisbane over the last year. We know that the larger capital cities took the biggest hit during the covid-downturn due to lockdowns and halting of international travel. It's worth noting that while Darwin and Perth are doing well, they are still behind their peak medians reached in 2014 and still have far to go. And many of the regions around our nation have also outperformed the two biggest cities, but Sydney in particular is making up ground rapidly and we expect these numbers to evolve over the next three to six months.
3. What tales are the vacancy rates telling?
Looking at the vacancy rates for Melbourne and Sydney, you'd think that they are in dire straits. What's increasingly evident is that the markets of the largest capitals are operating at two speeds and there is a large disparity between vacancies for houses versus units. Much of the higher vacancy rate will be due to medium to high density apartments and student accommodation. This is another example of why you need to dig beneath the data, as it can't always be taken at face value, and generalising data can hide important detail.
4. The swinging pendulum - investors vs home buyers
Investor mortgage numbers have recorded an increase, suggesting that the pendulum could be swinging back towards an investor market. First home buyers are starting to reduce, as prices get more unaffordable for new entrants to the property market. This latter point is one of the drivers for government initiatives that have been announced in our most recent federal budget.
5. Property incentives from the budget announcement
The trio talk through the 4 key property market incentives and schemes announced in the federal budget, including their merits, insights gleaned and likely impact on the property market. They include:
· New Home Guarantee (increase demand and price) - additional 10,000 places allowing first home buyers to build a new home or buy a newly built home on as little as 5% deposit, with the government acting as guarantor on the loan, freeing the buyer from lender's mortgage insurance.
· First Home Super Saver Scheme (increase demand and prices): first home buyers will be able to release up to $50,000 as part of voluntary contributions under this scheme (increased from $30,000).
· Family Home Guarantee (increase demand and prices) - a scheme allowing for 10,000 single parents over the next 4 years to purchase a home with a deposit of just 2%, with the government providing a guarantee of 18%.
· Downsizer Super Scheme (Increase supply) - allowing those age 60 and above to contribute $300,000 into super when selling the family home. This will not only bolster retirement savings, but also free up critical housing stock.
6. RBA reiterates its commitment to maintaining a low cash rate
The RBA have consistently communicated since mid 2020 that rates will remain low until inflation hits the target band ...