Consumers Optimistic On Prices
A third of respondents to a new survey by finder.com.au expect property prices to keep rising – while 20% think they will drop (including 10% who think the drop will be significant).
According to finder.com.au money expert Bessie Hassan, the estimated increases would make the average Australian house price about $645,000 by 2021.
She says the likelihood of falling house prices is quite low.
Generation Y are the most optimistic that house prices will become more affordable, with 13% expecting prices to drop 5% in the next five years.
Respondents from Western Australia and South Australia expect property prices to drop significantly in the next five years, while those in Victoria are the most optimistic that prices will rise.
Investment Loans Up in May
Housing finance rose in May as loans to investors picked up 3.9%, their biggest monthly gain in a year, the latest ABS figures show.
Investment finance rose to $11.7 billion in May from $11.3 billion in April, the first increase in three months.
While tightened credit conditions have slowed housing finance, investor borrowing is showing signs of stabilising, UBS economist George Tharenou says.
Tharenou says home loans have moderated over the last year and the latest data indicates investor loans have stabilised. Price growth should cool over the coming year, but is unlikely to collapse.
CommSec economist Savanth Sebastian agrees that a soft landing is under way.
Home Building Rebounds
The national construction industry returned to growth in June, with the Housing Industry Association’s Performance of Construction Index increasing 6.5 points to 53.2 – the highest rate of expansion in 10 months.
The residential sub-sectors of house and apartment building were the standout performers both in current activity and in new orders, suggesting they are on track for continued expansion. While the commercial and engineering construction sub-sectors improved, both recorded a drop in new orders in June.
Housing Industry Association chief economist Harley Dale says new residential construction remains the powerhouse of the economy.
“At the same time, non-residential construction has some spark to it, but the breadth of recovery is still proving elusive,” he says.
SA Backs Foreign Investment
South Australian Treasurer Tom Koutsantonis says there won’t be higher stamp duty or land tax for foreign investors in the State Budget.
In Victoria, foreign buyers of residential property will pay 7% extra in stamp duty, while the land tax rate will rise 1% in 2017.
In NSW, foreign investors will pay an extra 4% stamp duty surcharge from July and 0.75% extra in land tax from 2017.
In Queensland, foreign buyers will face an additional 3% stamp duty surcharge from October.
While the NSW government estimates it will generate an extra $1bn in revenue over four years through its tax rises, Koutsantonis says South Australia does not want to jeopardise foreign buyer activity in the state.
Australia’s Cheapest Rental Cities
Data analytics group CoreLogic’s June rental review indicates some landlords have to reduce their rents in certain areas to keep their renters because of an apartment glut and slowing population.
While the combined capital city rental rates fell for both houses and units in June, half of the nation’s capitals recorded a rise in rents: Sydney (0.4%), Melbourne (1.7%), Hobart (4.6%) and Canberra (1.9%).
Over the past 12 months, large rental falls in Perth (-8.6%) and Darwin (-16.2%) have pulled the combined capital average lower, with rents in Brisbane (-0.3%) and Adelaide (-0.4%) also down slightly.
For house renters, Hobart remains the cheapest capital city with a median weekly rent of $358, followed by Adelaide at $372.
The cheapest units can be found in Adelaide ($315) and Darwin ($325).