ABCC stripped

Apart from sky rocketing building costs, cost of living, and interest rates, probably the biggest news of interest this month is the paring back of the Australian Building and Construction Commission (ABCC). The Federal Government announced the ABCC would be stripped back ‘to the bare legal minimum’ in preparation for its complete shutting down. Michelle Grattan, writing for The Conversation, says that the ABCC has been something of a political football with strong arguments from both flavours of Government regarding its pros and cons. In terms of property values, one can only hope there will be a reduction in building costs as a result, and perhaps a long term increase in the speed (and quality?) of construction projects.

Rate Hikes

Earlier in the month, the other ABC reported that new rate hikes were passed on in full to homeowners by the big banks, meaning standard variable rates for one or more banks had risen to as much as 5.8%. The article writes that adding together the May, June and July interest increases, the total increase in monthly repayments for a $500,000 mortgage would have been $333 however, a later article predicts that some households could soon be paying an extra $1000 per month.

With rate increases always being inevitable at some stage, The Reserve Bank is confident home owners can take this in their stride. Having said that, one can’t help but wonder if they are looking purely at numbers, rather than the actual people this will affect. A history of the RBA interest rate decisions can be found here. Perhaps with this type of math-based perception in mind, since these rate increases, the Federal Government have announced a review of the RBA’s charter.

Buyer’s market? The slowdown we had to have?

According to Core Logic the downturn in values is spreading more broadly with over 40% of unit and house markets declining in value, though there is still a long way to go to wipe out the increases of the last 12 months. Whether the Sydney market can be said to be moving towards a buyers market is a moot point, and justly, Domain adds a question mark to what might have otherwise have been a tongue in cheek inducing statement.

As an accelerator for the slowdown, an increasing cost of living is also starting to bite with increases across the board in supermarkets and at the pump. Domain reports that mortgage brokers are seeing a rising Cost of Living impact on the serviceability calculators when working out how much a person can borrow. Nerida Conisbee, Chief Economist of the Ray White Group, questions in The Real Estate Conversation whether this is ‘The slowdown we had to have?’ The article concludes that “Overall the market isn’t free falling and we are continuing to move into a much more normal market than what we have experienced over the past two years.”

However, other contributing factors may be as Domain reports, include that the cost of building a new home has exploded. Especially with rising interest rates, but even before that. This article goes into some depth and itemises the increase in costs for individual items such as glass, timber, concrete and more. As the article says, ‘Almost every category of building materials has become more expensive.’

Things are no rosier for rentals, with Domain writing that things are very much a landlords market at the moment.

Home Ownership falling

Based on census data, A story in the SMH writes that home ownership across most age groups has halved between 2001 and 2021, with triple the number of retirees now having a mortgage. The conversation presents a deep analysis of the census data as well

Increasing Insurance risks

Last but not least, the CSIRO has published its regular decadal megatrends report, which forecasts increasing insurance costs due to climate change related disasters, and puts a number of $30 billion on protecting communities from rising sea levels.

The herald also questions whether homes are really ready for increasing temperatures, and separately that adding sustainable assets to your home such as solar panels, solar hot water, energy storage can add over $100,000 value at sale time.

Whew! Quite a heavy month!