August 2022

Real Estate Round Up #49

Longer downturn in property values predicted… or is it?

Off the back of interest rate rises, and according to the The Herald, this month Sydney recorded the steepest falls in property values in 3 years, as a general consensus seems to be punters have an increasing fear of overpaying. The article notes that while units and houses have both overall decreased in value, unit falls are milder. Dr Nicola Powell, Domain’s chief of research and economics, says that this is because “their more affordable price point attracted greater demand”.

The Herald also published an article by Tawar Razaghi that predicts this current downturn will be different to previous ones as this is the first time since the 1990s that rates cannot be said to be rock bottom any longer. The article cites a number of economists who all say similar things: Property values are about to head down hill big time.

On the other hand, this article in The Real Estate Conversation states the chances of a sustained downturn are weakening.

Regardless of what any downturn does, this article states it seems we are still willing to pay massive premiums for waterfront properties, compared to inland properties. The article shows that Sydney tops the international list with the highest percentage of difference between waterfront and non-waterfront properties. Can’t help wondering what will happen to all those lovely waterfront homes if Antarctica starts to melt properly. The Conversation says that that if the Aurora Subglacial Basin in Antarctica melts, global sea levels will rise by 5.1 metres.

Speaking of which, this article discusses timely directions to develop your home in, in order to future proof it and increase its value. Some things to think about include EV charging, the increasing risk of extreme weather, working from home, and/or possible pandemics. Domain discusses a trend of a decade ago that seems to be disappearing. Builders are saying requests for home cinema are dissipating in favour of an increasing interest in spare bedrooms, studies and office space.

However, this sort of thinking is far away from the minds of many renters who struggle to get their homes over 18 degrees for large chunks of the day during winter, and then bake in summer with difficulties keeping the place cool. Calls arise for standards to be implemented for rental properties.

In the same league, the ABC reports aged and disability advocates are urging state housing ministers to increase their level of catering towards those with a disability or advanced age, but a number of states have already put this in the too-hard basket. According to the ABC article, if you thought renting was hard, try being disabled and looking for an appropriate rental property with a minimum standard of accessible features such as a step-free entrance, or a wheelchair accessible shower.

Very rare: Accessible bathrooms in rental accommodation

Federal Govt changes

The Federal Govt’s Climate bill got a look-in on the Real Estate Conversation. The article notes there are multiple ways the real estate sector can contribute to emissions reductions. This includes resilience and preparedness to protect against extreme weather events.

The Real Estate Conversation also reports there is also a new (as of last month) Help to Buy Federal Government program in which the Government can pay up to 40% of the purchase price in a co-ownership agreement that you can slowly pay off. The article reports that this works out considerably cheaper in the month to month payments than a comparable 80% mortgage.

Lastly, no blog would be complete about construction industry woes coming to a head. An article on the ABC has top tier construction companies predicting more builders to go out of business over the next year or more, and interviewees suggest that greed is the culprit. A few days after this article was published Oracle homes in Brisbane did indeed collapse (though there is no mention that greed was the issue here). CEO of Australian Construction Association noted that contractors have seen prices increase by up to 70% with their own contracts on fixed prices.