As the seasons change and the market evolves, we bring you the latest insights and updates to keep you ahead in the property game. This week, we’re diving into the shifting dynamics of the housing market, uncovering opportunities in once-booming suburbs, and highlighting the pressing issue of housing affordability in Australian capital cities. Plus, we’ll explore the significant risks posed by natural disasters to millions of homes across the country. Stay informed and empowered with our carefully curated articles and market analysis.

Renewed Confidence Fuels Market Activity

Homeowners are increasingly listing their properties for sale, driven by optimism that interest rate hikes have ended and robust buyer demand. PropTrack’s recent data reveals a significant increase in new listings, marking the best May for active listings since 2020.

Key Highlights:

• Capital Cities Surge: New listings in capital cities rose by 6.5% in May compared to April, and 18.5% higher than May 2023.
• Seasonal Strength: Post-Easter timing adjustments, new listings in May showed a 12.6% year-to-date increase over the same period in 2023.
• City-Specific Growth: Sydney, Melbourne, and Canberra led the growth, with new listings up between 30% and 42%. All capitals, except Hobart, saw year-on-year increases.

PropTrack’s Senior Economist, Paul Ryan, attributes the rise to renewed market confidence amidst stable interest rates and favourable conditions. Despite higher rates, sellers are leveraging the equity in their homes for upgrades, particularly in Sydney and Melbourne.

Interest Rate Outlook:

• The Reserve Bank of Australia (RBA) is expected to maintain the cash rate at 4.35% in its next meeting.
• ANZ Bank has forecasted that the RBA will delay rate cuts until February 2025, extending its previous November timeline.

Mr. Ryan notes that extended rate cut timelines are unlikely to dampen market optimism, given the strong fundamentals and steady buyer and seller confidence.

Regional Market Insights:

• Combined regional markets saw a 7.5% monthly increase in new listings and a 10.4% annual rise. Only regional WA and NT recorded year-on-year declines.
• Total listings, both new and old, were up in most capital city markets except Brisbane, Adelaide, and Perth, where demand remains high.

Price Trends:

• PropTrack reported a 0.3% national home price increase in May, led by smaller capitals. However, the pace of price growth has slowed as the market enters its quieter season.
• Brisbane’s median dwelling price reached 837,000, the second highest in the country and the highest since 2009.

Mr. Ryan anticipates that demand will continue to outstrip supply, leading to ongoing price rises, albeit at a slower pace, due to affordability constraints and extended rate cut expectations

Windows of Opportunity In Once-Booming Suburbs

Shifting Market Dynamics In Some Suburbs Are Offering New Opportunities

Home values are on the rise across Australia, yet some suburbs that experienced exceptional growth have seen prices become more affordable over the past year. PropTrack’s latest data has revealed the suburbs where prices have declined after previously surging, presenting a unique window of opportunity for buyers.

Key Insights:

• Price Swings: Suburbs that saw prices soar by hundreds of thousands of dollars in one year have experienced significant declines the following year.
• Supply and Demand Shifts: Coastal hotspots and previously high-demand suburbs are seeing changes in supply and demand dynamics, contributing to price adjustments.

Capital City Suburbs with Big Price Swings – Houses

Suburbs like Glenorie in Sydney’s northwest have experienced marked price swings, reflecting the shifting preferences and financial considerations of buyers post-pandemic. The semi-rural suburb saw median house prices rise by 450,000 in the year to May 2023, only to drop by 290,000 the following year.

Regional Suburbs with Big Price Swings – Houses

Regional areas have also seen significant fluctuations, with towns like Tocumwal in NSW experiencing a dramatic 42% increase in median sale prices, followed by a 22% decrease.

Capital City Suburbs with Big Price Swings – Units

Inner-city suburbs such as Milton in Brisbane and Point Frederick on the Central Coast have seen unit prices drop substantially after peaking last year.

Regional Suburbs with Big Price Swings – Units

Suburbs like East Toowoomba in Queensland saw unit prices soared by 57.6% before experiencing a stark correction. These price swings often reflect changes in the types of properties sold and varying market conditions over the 12-month period.

Australian Capital Cities Are World’s Least Affordable Markets to Buy a Home

Overview

Australian capital cities are among the world’s most unaffordable housing markets for middle-income buyers. A study by the Chapman University Frontier Centre for Public Policy’s Demographia International Housing Affordability report highlights the severe affordability crisis across major Australian cities.

Key Findings:

• Global Comparison: The study analysed 94 cities across eight countries, using the “median multiple” metric, which compares median incomes to median house prices.
• Most Unaffordable Markets: Hong Kong, Sydney, and Vancouver top the list of most unaffordable markets. Conversely, Pittsburgh, Rochester, and St. Louis in the US are the most affordable.
• Australian Cities: Sydney, Melbourne, Adelaide, Brisbane, and Perth all rank in the least affordable 25% of the surveyed markets.

Affordability Crisis:

The report notes that housing costs in high-income nations are outpacing income growth, driven by land use policies that restrict housing supply and increase land prices. The study introduces a new category, “impossibly unaffordable,” for markets with a median multiple of 9.0, highlighting the extreme difficulty faced by middle-income households.

Urban Planning Impact:

Urban planning policies aiming to limit urban sprawl and increase city density are cited as significant contributors to the affordability crisis. These policies have skewed land values and house prices against the middle class.

Remote Work and Pandemic Impact:

In the US, a significant portion of the recent housing price surge is attributed to the shift to remote work during the pandemic. In Australia, the annual construction of 210,800 dwellings falls short of the needed 240,000 homes to match demand.

Singapore’s Success Story:

The report contrasts the situation in Australia with Singapore’s successful housing policies. The Singaporean government, through the Housing and Development Board (HDB), transformed a once unaffordable market for local Singaporeans. Over 90% of Singaporean citizens now own their homes, primarily living in HDB housing. The Singaporean government’s commitment to high-quality, accessible, and affordable public housing has set a benchmark for addressing housing affordability.

Australian Housing Market Challenges:

• Supply and Demand Imbalance: Australia needs to increase annual housing construction to meet demand and alleviate the affordability crisis.
• Income vs. Housing Costs: Middle-income owners in Australia need to spend around 60% of their gross income to purchase a median-priced property, underscoring the severe affordability issues.

Policy Recommendations:

To address housing affordability, the study recommends policies that free up land for development and increase the housing supply. Learning from Singapore’s approach, Australia could adopt measures to create a property-owning democracy, making homeownership attainable for a broader segment of the population.

Millions of Australian Homes at Risk from Natural Disasters – New Research Reveals

New research from Domain’s 2024 Perils Report has revealed that millions of Australian homes are at significant risk of natural disasters, with most homeowners unaware of the dangers, potentially rendering their properties uninsurable.

Domain CEO, Jason Pellegrino, highlighted the urgent need for Australia to create sustainable and liveable communities in response to the changing climate.

Mortgage Risks

Mr. Pellegrino emphasised: “Australians are struggling. Affordable housing is becoming increasingly out of reach, we are facing unprecedented cost-of-living pressures, and more frequent and extreme weather events are significantly devaluing our homes. Our greatest concern is that many Australians are living on perilous land just to have a place to call home.”

Alarmingly, the research indicates that only 29% of Australians are aware of their property’s risk of natural disaster, and a mere 20% know where to find information about these risks.

Mr. Pellegrino stressed the importance of integrating conversations about the housing and climate crisis, as they cannot be addressed in isolation. He stated: “Ultimately, we all share collective responsibility for our future, and this forum is about starting a conversation on how to better use our land.”

Report Findings

Domain’s Chief of Research and Economics, Dr. Nicola Powell, highlighted the report’s findings on the vulnerability of Australian communities and the need for collective action. She recalled the devastating Black Summer of 2019/20 and the fatal bushfires that ravaged much of the country.

The report indicates that 5.6 million Australian homes are at risk of bushfires, nearly half of all properties.

Volume and Proportion of Properties at Risk of Bushfire

Dr. Powell noted: “The unfortunate reality is that as the risk of bushfires increases, the value of these homes decreases. Queensland has the highest proportion of at-risk properties due to flooding, while New South Wales faces the largest expected losses in property damage, amounting to over half a billion dollars per year.”

Despite these risks, there is a troubling trend of continued construction and residential development in flood-prone zones.

While these findings are concerning, the report also highlights opportunities for change, encouraging proactive measures to mitigate risks and ensure the safety and sustainability of Australian communities.

Thank You for Reading This Week’s Property Edge!

We hope you found this week’s insights valuable and informative. The property market is ever-changing, and staying updated is key to making informed decisions. Whether you’re a buyer, seller, or investor, our goal is to provide you with the knowledge and tools to navigate the market successfully.

Remember to stay safe, stay informed, and stay ahead. If you have any questions or topics you’d like us to cover in future editions, please feel free to reach out.

Until next time, happy investing!

Warm regards

The Property Lovers Team

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