April 2022

Real Estate Round Up #45

Moving towards the Federal election

Possibly partly in light of the upcoming election, and possibly partly as a justified victim of out of control property value increases, this month the industry had a renewed focus on the realities of renting. Domain starts off with news from their latest rent report and summary of the costs of renting over both the quarter and year. The report itself contains both quarter on quarter, and year on year statistics which show that although Sydney’s (house) rental prices between December 2021 and March 2022 (QoQ) were flat, there has still been almost a 10% rise from March last year. This is stated in the report as ‘the steepest annual increase in 13 years’. Sydney’s flat QoQ result was the only outlier with every other capital showing positive increases in both QoQ and YoY for both units and houses. The largest QoQ increase was Perth (4.3%) followed by Brisbane then Hobart, and the largest YoY increase was Canberra (16.7%), then Brisbane and Perth.

The initial story makes the point that although increasing rents are good for investors,

“…they’re too often proving disastrous for tenants, cleaving a wider gulf in Australia between the haves – who own property – and the have-nots, who are forced to fork out for the higher rents.”

A case in point is the Darlington couple who purchased their first home after taking over 7 years to save up a deposit (longer than it likely took many baby boomers to completely pay off their mortgage fifty years ago). The buyer made the point that as they were buying to live in the property, a flat property value increase in the future would be a better outcome in the broader context:

“Staying flat means housing becomes more affordable for everyone in the country. I would be much happier to live in the Australia that has more affordable housing than to reap the windfall as a lucky investor.”

Buy property… or get married?

With the largest YoY increases, and as ‘the nation’s most expensive capital city to rent‘, Allhomes published an article that Canberra renters are completely giving up on the prospect of buying their own home. Many people are seeing no option but to renting units, despite really needing a house.

As noted in Domain, Others are having to choose between whether to buy a house, or get married. It seems that doing both is increasingly off the cards unless, as the article suggests, perhaps eloping is the key here.

In a similar vein to the initial Domain story, Core Logic shows similar data that renting prices are getting out of control, and names the most expensive and most affordable suburbs nationally to rent in. Of these, Vaucluse remains the most expensive Australian suburb to rent a house, at $2,394 per week, which is more than double the 2nd most expensive; that of Brighton (Melbourne) at $1281 per week. Sydney also takes the gong for the priciest unit rental median for Point Piper ($1096/wk).

This article in domain shows some of the great homes for lease around the country… if you have the cash. There are certainly reasons that a person may prefer to lease than buy at these types of prices, but they’d definitely be exceptional. Some of these reasons might include the transitional nature of the reason they are living there, or perhaps they are not able to fulfil the citizenship / foreign investor requirements to purchasing. Whatever the reason, if you have the money to burn, you might be hard pressed find nicer places to do it in.

In their bids to secure voters, and encourage/squeeze renters into buying property, several sources including All Homes, and the Real Estate Conversation report that both sides of politics have committed to expanding the First Home Loan Deposit Scheme, and Home Guarantee Scheme. This will definitely help thousands more get into their first home, but what effect will it have on affordability? Answers to that appear… mixed.