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Increased Mortgage Activity from FHB

ABS data shows loans to owner-occupiers rose by 5 percent in December and were higher by 18 percent than a year before. New FHB loans rose by 6 percent month-on-month and were up 38 percent a year ago than the same month. After the easing of APRA's loan conditions and interest rate cuts in 2019, increased mortgage activity was spurred on by owner-occupier and first-home buyers.

“It represents the largest volume of FHB loans since December 2009,” says HIA economist Angela Lillicrap, “This strong borrowing data is consistent with other leading indicators, including new home purchases and construction approvals which indicate that the housing market reached a turning point mid-2019,” she says.

“This confirms our expectations that the market reached a relatively shallow trough in 2019.” Across the country, lending to owner-occupiers for new dwellings increased in the December quarter for all states and territories except for Tasmania. The biggest increases were in the ACT (up 40%), South Australia (16%), Queensland (13%) and the NT (7%).

Is A Mortgage Cheaper Than Rent?

According to Ms. Eliza Owen CoreLogic’s Head of Australian Research “according to reports, more than a third of Australia's assets 33.9 percent find a mortgage repayment less than weekly rental repayments. Most of these 20 percent were in the Queensland region, namely the Gold Coast and the Sunshine Coast. “

At a greater capital city level, Darwin was the region where mortgage serviceability cost less than renting in most cases. 77.6 percent of Darwin homes are estimated to have lower mortgage repayments than rental costs. The phenomenon occurs on the other end of the spectrum only 7.1 percent of all Sydney properties.

Source Here: Increased Mortgage Activity from FHB

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Housing Supply Issues Emerge

According to property advisory firm Charter Keck Cramer, Sydney, Melbourne, and Brisbane will suffer a shortage of new housing by 2022, as the construction of new high-rise dwellings dwindles. "By the end of 2021, all the East Coast capitals are facing a significant shortage," says national director of research and strategy Rob Burgess.

Last year, 6,300 new units were launched by Melbourne which needs about 50,000 new dwellings a year to keep up with its growing population.

The new apartment releases from Metropolitan Sydney last year amounted to 5,700, well down from the 16,300 releases in 2018. While Sydney is larger than Melbourne, it has slower population growth, which means it needs about 40,000 new homes each year and 60 percent would traditionally be apartments.

“Sydney faces a very significant supply issue pushing into 2022,” Burgess says. Brisbane, which ended its slump in the development cycle of apartments faster than the two southern cities, even experienced a fourth straight year of fewer new unit openings, though the investment property loan rates downturn slowed.

Instead, the market slowdown pushed back many completions and this year will likely to mark the peak with 19,900 completions, Mr. Burgess said. "We're headed for record completions in Melbourne," he said.

"Part of the reason for that is that once the market started slowing down, the marketing and sales cycles stretched out significantly. What had been a marketing campaign lasting six or eight months was forced into a program of 12 to 14 months."

Original Post Here: Housing Supply Issues Emerge

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Boost Increased Land Sales

The number of Australians buying land has increased significantly as buyers benefit from affordability. House prices were falling across the country but particularly in Sydney and Melbourne. Cuts in the RBA's cash rate and relaxing APRA's funding limits have made servicing a loan simpler. Tax cuts and other economic initiatives have helped to restore confidence to the wider housing market and helped boost land sales.

According to the latest data from the Housing Industry Association, land sales rose 46 percent across the nation in the six months to the end of the quarter of September 2019. The increased demand for residential land has not yet had any material effect on the prices of land. The capital cities saw a quarterly increase in the land median value of 0.7 percent and the regions increased by 0.6 percent. During the period the 10,563 lots sold were much higher than the quarter of March 2019, when sales were the lowest on record.

The return has yet to have an impact on land prices, although Eliza Owen of CoreLogic says it may not belong until demand drives higher prices. “Demand for land and dwellings has rebounded strongly since June last year, which is also reflected in a 6.7% rebound in national dwelling values over the past seven months,” she says.

The rebound in the housing & property investment market follows the outcome of the Federal Election, a relaxation in lending standards, tax cuts, and interest rate reductions.

ReadMore Here: Boost Increased Land Sales

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Vacancy Started to Fall

Is rental property a good investment? Great news for property investors, vacancy rates have been falling, and rents are rising across most nationwide markets. A new study by SQM Research shows that the national vacancy average is 2.1 percent tighter than the rate of 2.5 percent in December 2019 and slightly lower than the rate of 2.2 percent a year ago.

The figures suggest there is a shortage of homes available for rent in most major markets. In January, all cities reported reductions in vacancy rates, with the exception of Hobart, which remained steady at 0.6%, the lowest of all capital cities.

Adelaide (1%) and Canberra (1.4%) have very tight rental markets, while Perth, Brisbane, and Melbourne all have vacancy rates a little above 2%. Darwin recorded 3.2 percent of the highest vacancy rate, followed by Sydney 3.1 percent.

Managing Director of SQM Research, Louis Christopher said, "Following on from December, January’s vacancy rates are also affected by seasonality. We will have a clear picture of the rental market when the numbers for February are released. However, we do believe that rental vacancy rates have now peaked in Sydney, Brisbane, Perth, and Darwin. And assuming a stable economy, these cities are likely to record gradually lower vacancy rates as 2020 progresses.”

The capital city average for house rents has risen by 1.6 percent over the last 12 months. Rents for both houses and apartments in Sydney, Brisbane, Perth, Adelaide, and Hobart have risen in this period. Rent for both Sydney and Darwin homes and units, however, remains lower than they were a year ago.

Post Source Here: Vacancy Started to Fall

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Clearance Rates Continue To Rise

Auction clearance rates continue to increase for the same duration last year, according to CoreLogic, with the latest national average of 79 percent well above the strike rate of 51 percent. Last week, 1,555 homes were taken to auction across the combined capital cities, returning a 78.6 percent preliminary auction clearance rate.

By comparison, last week there were 1,167 auctions, returning a preliminary clearance rate of 69.4 percent, before changing to a final clearance rate of 67.7 percent. Auction rates were smaller with 1,450 homes heading under the hammer across the combined capital cities over the same week last year, delivering a final auction clearance rate of just 51.2 percent.

Melbourne cleared 79 percent of its 717 auctions and 80 percent were sold of Sydney's 578 properties auctioned. Canberra had the highest 90 percent success rate, although under the hammer there were only 48 houses.

62 percent of the 104 properties in Brisbane were cleared at the auction, a huge improvement on the 29 percent a year earlier. Adelaide unloaded 75 percent of the 82 properties under auction, while Geelong also achieved a good 90 percent result.

The outcomes were positive in regional areas, including the Central Coast 55 percent, the Mornington Peninsula 63 percent, the Hunter Valley 69 percent, Wollongong 61 percent and the Gold Coast 52 percent.

The clearance rates of the combined capital cities were around 75 percent in 2016 and 2017 until they started to fall, dropping from December 2018 to January 2019 to around 40 percent. Home equity loan on investment property prices have grown over the last year apart from a fall over the Christmas holiday season.

Post Source Here: Clearance Rates Continue To Rise

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Housing Construction Boost Growth

The Reserve Bank predicts that this year Australia's economy will grow by about 2.75 percent and next year by 3 percent, reflecting a positive outlook for the country given the bushfires and coronavirus.

Reserve Bank Governor Philip Lowe says dropping unemployment by rebuilding would counterbalance the harmful effects of the bushfires and the virus. He says the economic hit from the catastrophic bushfire season and the virus threat that unfolds will only weigh temporarily on domestic growth.

The Bank's outlook was for demand growth to accelerate slowly, accompanied by moderate growth in disposable household income and housing market recovery. In most capital cities and areas of regional Australia, increases for housing prices had picked up in recent months. Prices had increased very strongly in Sydney and Melbourne in recent months. Higher housing prices and the associated increase in housing turnover were expected to support consumption and property investment.

He states that coming to an end was the downturn in global growth that started in 2018 and that global growth is expected to be slightly stronger this year and next than it was last year.

He credits the expected growth to low interest rate trends, recent tax refunds, continuing infrastructure spending, a better resource sector forecast and, later this year, an estimated improvement in residential construction. Mr. Lowe also points out that the Australian dollar is around its lowest in recent times and will help exporters.

Read Full Article Here: Housing Construction Boost Growth

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FHB Loans All Time High

According to new ABS reports, first-home-buyer home loans rose to their highest level in December since late 2009. Master Builders chief economist Shane Garrett reports home loan volumes to FHBs rose 6.2 percent to mark a total of 9,606 a month. The last time they reported a higher monthly average was precisely 10 years ago-back in December 2009.

“The great news is that FHB has expanded its activity even more since the beginning of this year, The latest First Home Loan Deposit Scheme is already a big success and, once it is released, the official data will reveal bigger gains for FHBs.”

“There is a great opportunity for people to buy or build their first home at the moment. Apart from the assistance offered by the new First Home Loan Deposit Scheme, interest rates are at their lowest in many decades and house prices have stabilised after dropping back from the highs reached in recent years,” Shane Garrett said.

The owner-occupier market share of FHB was strongest in Western Australia throughout December 43 percent, led by Victoria 41 percent, Northern Territory 38 percent and ACT 33 percent respectively.

Figures from last week also suggest other parts of the housing market are well recovered. Loans from property investors grew for the third consecutive month and reached a 14-month peak during December, says Garrett.

Learn More Here: FHB Loans All Time High

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Housing Market Quick Recovery

For record-high values projected in a few months for Australian housing, 2020 is poised to see the fastest record-breaking industry rebound. And it's powered by the owner-occupiers, CoreLogic says. The Australian dwelling market has quickly recovered 6.7 percent, says Eliza Owen of CoreLogic, since national dwelling values bottomed out 8.4 percent below their peak in June 2019.

“This compares to an average recovery time of 11.7 months in previous cycles. This is remarkable when considering the relatively long time it took for the market to bottom-out. If growth rates continue at the January trajectory, Australia’s dwelling market will make a full nominal recovery by April, marking a 10-month recovery period,” she says.

Owen says the ABS housing finance data shows rather more development in this recovery from first home buyers, upgraders and down-sizers. Owner-occupants accounted for 59 percent of new residential investment during the last upturn from 2012 to 2017 but this has increased to 71 percent over the past seven months.

Since the start of the upswing in June last year, demand from property investors has grown relatively slow. Rules such as a 10 percent limit on investment financing growth and a 30 percent limit on interest-only lending, favored by investors have influenced investor housing demand since 2014 but these policies have been abolished by the beginning of 2019.

If pressures on affordability generate more competition in rental markets, the investor population could increase in the coming year, off the back of rising rents. That would be amplified as low mortgage rates make an investment property more interesting.

See More Here: Housing Market Quick Recovery

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Auction Clearance Rate Confirms Recovery

Clearance rates in the starting weeks of 2020 were higher than a year ago, reflecting the buyer confidence recovery seen in the very last part of 2019.

Nicola Powell, Domain senior research analyst says: “The market is beginning to load it up forward and we are going to start seeing lots of new listings coming up between now and Easter. Last weekend’s clearance rates really illustrate the confidence that has come back into the market.”

Powell says credit conditions were tough and supply was over-supplied twelve months ago, but a marked improvement in standards has allowed property investors to return to auctions.

“It says that vendors are really confident going into their auction, confident that they have enough buyers to create that competitive auction environment, last year, there were fewer buyers in the market, it was harder to get a loan and we were seeing an elevation of stock,” she says.

The latest clearance results include 83% in Canberra (compared to 52% for the same time last year); 80% in Sydney (57% a year ago); 74% in Melbourne (56% a year ago); 60% in Adelaide (52% a year ago); and 37% in Brisbane (21% a year ago).

Post Source Here: Auction Clearance Rate Confirms Recovery

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New Listings Positive Start

Real estate markets in major cities are gaining steam with buying interest and rising offerings, despite solid price gains in the last few months. SQM Research figures show listings that rebounded in January across all capital cities. Listings were down 10.0 percent compared to a year ago.

SQM Research managing director Louis Christopher says: “We saw a real surge in new listings in January, one of the stronger increases in the supply of homes for sale that we’ve seen for several years.”.

Listings in Hobart rose by 5 percent relative to December as sellers moved to take advantage of the price increase reported in recent years. New stock in Sydney has grown by 5 percent; Perth's listings increased by 3.2 percent; Brisbane listings increased by 3 percent; Melbourne stock levels increased by 2.7 percent; and Adelaide's 2.6 percent increase.

Yet listings in all capital cities were lower year-on-year, led by Sydney and Darwin, both down 25 percent. Christopher says “the month of January traditionally records small falls in investment properties listed for sale as the market is still in a summer holiday mode, however, the positive start in new listings shows vendors are now keen to sell and we could see further increases in the coming months.”

Article Source Here: New Listings Positive Start

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Housing Market Continued Optimism

Continued optimism in the housing market and declining unemployment are the likely reasons behind the Reserve Bank's decision last week to keep the official cash rate on hold.

RBA Governor Philip Lowe says, “The overall outlook is also being supported by the low level of interest rates, recent tax refunds, ongoing spending on infrastructure, a brighter outlook for the resources sector and, later this year, an expected recovery in residential construction.”

“There are continuing signs of a pick-up in established housing markets. This is especially so in Sydney and Melbourne, but prices in some other markets have also increased. Mortgage loan commitments have also picked up, although demand for credit by investors remains subdued. Mortgage rates are at record lows and there is strong competition for borrowers of high credit quality. “ says Mr. Lowe

Mortgage Choice CEO Susan Mitchell says "the reduction of the nation's unemployment rate – which dropped to 5.1 percent in December was a reason why the RBA postponed the rate cut. Also in 2019, the CPI grew by 1.8 percent, which was better than expected.

“Another factor the RBA may have chosen to hold the cash rate this month is that consumer confidence is declining,” she says. “The new consumer sentiment survey from the Westpac-Melbourne Institute showed that consumer confidence had plummeted over January due in part to the devastating bushfires.

“The low level of confidence is consistent with generally lacklustre reports on consumer spending and Board members. But, pleasingly, the Index points to ongoing confidence in the housing market.” At its board meeting in December, the RBA board said it was prepared to further relax monetary policy, indicating a cut in the cash rate is just a matter of time.

See More Here: Housing Market Continued Optimism

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New Building Approvals Improved

Building approvals in the 12 months to December increased by 2.7 percent, the first increase in Eighteen months, the ABS reports. The outcome was better than expected analysts had forecast a 1.4 percent fall.

The growth was generated by apartments and townhouses in the private sector, which increased by 4.9%. Houses in the private sector grew by only 0.3%. Housing approvals improved 6.1 percent for Victoria 4.7 percent for NT, 1 percent for ACT, 0.5 percent for NSW and 0.5 percent for SA. Drops in Tasmania, WA and Queensland were registered.

Construction approvals gradually stabilized in 2019 due to the cash crunch and speculation about property taxes ahead of the Federal Election after dropping 20 percent in 2018.

Housing Industry Association economist Angela Lillicrap says: “The market did improve in the final months of 2019, suggesting that the building industry will not continue to constrain economic growth in 2020. New home building has stabilised at relatively strong levels.”

Ms. Lillicrap said while continued growth in house prices will assist in bringing property investors back to the market and support higher building activity in 2020, restrictions on foreign investors mean it will be unlikely to result in the same boom as experienced in the previous cycle.

See More Here: New Building Approvals Improved

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House Prices Grew with Population Increase

Migrants coming to capital cities and major regional centres help boost house prices by as much as $6,500 annually, a university study shows. The report entitled The Impact of Immigration on Housing Prices in Australia reveals that house prices also grew by 0.9 percent in cities where the new migrant population increased by 1 percent each year.

“House prices would have been around 1.4% lower per annum, and units 0.8% lower, if there had been no immigration from 2006 to 2016. Chinese and Indian immigrants have high rates of homeownership.” said the report authors, senior lecturer at Monash Business School Daniel Melser, and RMIT University student Morteza Moallemi.

“Interestingly, the effect of immigrants on different property types is different – there is a bigger impact on houses than units or apartments,” Melser says.

Economist Esther Rajadurai says immigration offers several economic benefits, such as spending that boosts economic growth and government revenue. In effect, this helps offset slow growth and declining wages.

However, Reserve Bank of Australia Governor Philip Lowe said there was a link between expensive property prices and high immigration levels. 'Infrastructure investment is the best housing policy,' he said. 'There's very little we can do to increase the supply of well-located land but there's one thing you can do - build great public transport.' He argued building better transport links would make suburban and regional areas attractive to buyers and property investors, spreading demand more evenly across cities and the country, and thereby moderating prices.

See More Here: House Prices Grew with Population Increase

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Property Market Increased Sentiment

According to ME Bank Quarterly Property Sentiment Survey, the ' fear of missing out ' is driving the property market for the first-home buyer. Approximately 51 percent of homebuyers say they will purchase in 2020. This compares with just 39 percent of property investors expected to buy this year.

“The recent property price recovery has likely nudged first-home buyers to get in while they can as though it’s ‘now or never’ – and has created a sense of FOMO,” ME’s general manager Andrew Bartolo said. “Low-interest rates and commentary in the market for the support of first-home buyers may have also contributed to an increase in home-buying intentions.”

The report reveals an increase in sentiment towards the property market for the third quarter in a row, rising to net positive 21 percentage points up 3 percentage points from Q4 2019, and 14 percentage points from Q2 2019 when the survey first began.

“Considering a combination of market factors including the buzz of home value growth, a solid spring selling season, plus rate cuts and signs from the RBA that rates will stay lower for longer, it’s no surprise overall property sentiment has improved,” said Bartolo.

Investors were less confident but Steve Jovcevski, a property expert at the Mozo financial comparison site, expects an improvement in investor interest in 2020. “APRA dropped the serviceability ratio just a few months ago, so it does take time to flow through the market and for investors’ confidence to return,” he says.

Source Here: Property Market Increased Sentiment

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Highest Quarterly Growth in the Regions

House prices, according to the latest CoreLogic data, are rising in both the major cities and the regional areas. In January, all of Australia's city and regional markets, excluding Regional South Australia, reported house price growth. It covers Perth and Darwin who have suffered a decline in the last few years. Melbourne 1.4 percent, Sydney 1.5 percent and Regional Tasmania 1.3 percent were the markets grow the most in January. Hobart and Regional Western Australia both rose around 1%.

The quarter to quarter figures showed similar results, showing some stability in the turnaround. Corelogic head of research Tim Lawless said, “Seasonal effects provide some explanation for the slowdown. The CoreLogic seasonally adjusted hedonic index implies the time of year shaves about 1 basis point of growth from the December reading and 2 basis points from the January reading.  

“Factoring in the seasonal effect, the latest results indicate a reduction in the speed of growth across most markets, especially for Sydney and Melbourne where affordability constraints are once again becoming more pressing. As advertised stock levels rise over the early part of the year, we could see some further dampening of growth rates.”

The highest quarterly growth was in Sydney and Melbourne but in the past three months, Hobart, Brisbane, Canberra, Regional Victoria, Regional Queensland, and Regional Tasmania all grew by between 2% and 4%. Except for Darwin and Brisbane, unit prices also fell across the board. The loan market mortgage broker with the largest unit price uplift were all regional markets South Australia, Tasmania, and Victoria while Hobart achieved the highest price growth for apartments among capital cities.

Read Full Article Here: Highest Quarterly Growth in the Regions

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FHB Scheme Applicants Mostly Single

Most of those eligible for the latest First Home Loan Deposit Scheme from the federal government are single and older than 35. Of the first 3,000 applicants, new data from the National Housing Finance and Investment Corporation show 25 percent are aged 35 or older; some are aged 40s and 50s.

And the large majority of applicants 60 percent are single. Many have earnings well under the thresholds, giving hope to those on lower incomes to purchase their first home. “The average income for applicants with pre-approvals is well below the threshold for both singles and couples, allowing those on a modest income to buy their first home,” says NHFIC’s chief executive officer Nathan Dal Bon.

Mr. Dal Bon said the additional 25 lenders had been selected from around the country and offered a range of choices to the first home buyers. “More places are now available to help first home buyers purchase a modest home sooner.”

The scheme helps qualifying first-time homebuyers on low and middle incomes to buy a property with as low as 5 percent deposit, acknowledging that saving a deposit can be difficult. Some Scheme lenders have committed First Home Loan Deposit Scheme web pages that provide additional details on how to apply, while first home buyers can apply through the mortgage broker as well.

The median taxable income to date is around $68,000 for singles and $108,000 for couples. This is far below the selection criteria which specifies that individual applicants cannot earn more than $125,000 in taxable income and that couples can not earn more than $200,000.

Article Source Here: FHB Scheme Applicants Mostly Single

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Multi Generation Household Increasing

Several generations of Australian families are increasingly living under the same roof together. Social demographer Mark McCrindle says the lifestyle choice is based on several factors.

“Younger generations either leave later or move back to their parent's house,” he says. “Then on the parents ' side, they live longer and the older parents sometimes move in with the middle-aged kids, forming the three or, in some situations, four generations under the one roof.”

“And it’s not because of an increasing birthrate, because that’s declined a little bit over the last few years, it’s because of the increasing number of people per household. Younger generations are either leaving home later or returning to the parental home,” he said.

Owing to affordability constraints, the trend of generations Y and Z living with the family for longer periods now involves Baby Boomers, who share their household expenses with their adult children not only to save money but to sustain their lifestyle. One out of five Australians now live in a multigenerational household so property advisors and real estate agents take note.

McCrindle says less than 10 percent of Australians are now moving to retirement homes from their home. Getting many generations to split the home's running costs provides a mutually beneficial situation because each party pays less than they would if they leased their own, he says.

Read Full Article Here: Multi Generation Household Increasing