November 2022

Real Estate Round Up #52

Predicting a return to growth in 2023, The Real Estate Conversation reports that Buyers Agency Australia has looked in its crystal ball to prophecise a ‘stabilisation or fall in interest rates’ during or near to February, that this will lead to modest growth in property values, and that the South East Queensland market will be the one to watch. This is generally a view also of John McGrath, who makes a similar prediction as well.

The Real Estate Conversation also reports on new data from Ray White that demonstrates the previously reported incline in knockdown rebuilds. The 12 months to June 2022 recorded a new record for the number of demolitions at over 27,000 homes. According to the article, a primary outcome of knockdown rebuilds is that they (en mass) can improve affordability in an area, especially if density levels are increased, or they can just generally improve an area having nicer homes around if they are replaced 1:1. On the other hand, increased density can negatively impact street parking and existing residents.

Declining prices on the up

Core Logic reports that the regional housing market has effectively made like a bubble and is the process of bursting, with some areas that had seen very strong growth through COVID now declining in value at similar rates. The article writes that properties are transacting faster in the 12 months to October 2022 than the previous 12 months, but that they are on the market on average for a few extra days for the 12 months to July.

In support of this occurance, Domain has also published a list of national suburbs that are cheaper to buy now than they were 5 years ago. Despite this, with rising interests rates it can be just as hard for first home buyers to get their foothold, as discussed in another Domain story. The SMH and ABC have published similarly themed stories that list the Sydney suburbs where the average property values have fallen below pre-pandemic levels. Both stories seem to be based on what looks like the same CoreLogic data, respectively here and here. The SMH one came out first, but the ABC one also includes Melbourne’s data. 1 of the listed suburbs in both stories was Forest Lodge, which they show as having a -20% drop in values in the last 12 months, but it seemed that the vendor of this property didn’t get the memo, having sold a well maintained Victorian era townhouse for $2.93 million. As the selling agent is quoted as saying, “It just shows good quality homes around the inner city are still performing well.”

Few forced sales despite interest rate hikes

While interest rates are increasing at the sharpest rate since the early 1990s, Core Logic reports that there is little if any sign of ‘panicked selling or forced sales’ indicating mortage serviceability stress. Good news for… someone, though this might be difficult to sell to those watching their repayments go up and up and their savings go down, such as Jessica Irvine. Writing for the SMH, Irvine aims to pull out all the stops and have a big Christmas… based on the understanding it may well be the last she can afford for a while if her savings continue to be depleted by rising mortgage repayments.

Things are not getting easier for renters – quite the reverse it seems, with this interactive story by the ABC showing a few examples of how difficult the renting makret has become across the country. Featured stories include a freelance writer in North Melbourne facing a $255 per week rental increase, an engineer in Perth competing against 30-40 other applications, a retail worker in Hobart moving into the shed of her parent’s property, a government ranger in Brisbane unable to find a place despite a salary over $100k, a single mum in Campbelltown handed an eviction notice after 16 years – and has to be out 4 days before Xmas. In one of the stories a pensioner is forced to move several hours from her home town of Merimbula. Tree changers and new private holiday rentals are being blamed for her landlord selling her home, which is corroborated by this story in domain which writes that landlords are more likely to sell to reap capital gains than due to dissatisfaction with rental law reforms.