Price Growth

<html><body>While Victorian building approvals slowed during the pandemic, they are already starting to improve, according to m3property Victorian managing director, Luana Kenny.

Ms Kenny expects the inner city apartment market will struggle at least until international students return and borders reopen.

But also that most parts of Melbourne and regional Victorian towns are poised for further price growth, she told the Australian Property Institute and REIV State of the Market seminar.

“The owner occupier market remains incredibly robust as demand outstrips supply but as workers return to the CBD and hospitality opens up, we’ll see a rise in tenants seeking properties in the city.

“It is likely major apartment developments will remain on hold until we see how the economy recovers but as Australia is viewed as a safe place, it is expected foreign students will return which will bring life back into the CBD and city fringe precincts,’ she forecast.

Demand for units in Melbourne’s inner and middle ring suburbs has been good as a result of a strong owner occupier market, she said.

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Most parts of Melbourne and regional Victorian towns are poised for price growth, she told the Australian Property Institute and REIV State of the Market seminar.

jchancellor

Owner occupiers to drive Victorian apartment sales momentum

<html><body>Unit price growth was up 2.1 percent nationally over the past year with the strongest growth recorded in regional Victoria, according to the latest data from the realestate.com.au website.

The national unit median price stands at $500,000.

It is at $560,000 across the combined capitals and at $385,000 across Australia's regions.

Unit prices were up 0.6 percent national over the quarter, and up 0.1 percent during February, according to the Home Price Report.

House price growth of 0.4 percent continued in February to outpace unit growth. Over the last 12 months, national houses price growth sat at 6.9 percent, more than triple that of unit price growth of 2.1 percent.

Victoria's regions saw 11.4 percent annual growth for unit values to a $320,000 median price. It was up 2.9 percent quarterly and 0.8 percent in February.

Melbourne's unit median sat at $590,000, up 2.3 percent annually.

Hobart's unit market was the nation's second strongest in 2020, up 8.3 percent to a $400,000 median.

Sydney was the dearest capital for units at at $730,000, up just 0.1 percent over the year, the weakest rise among the capital cities.

Brisbane was the second weakest with a rise of 1.5 percent to its $395,000 median.

Darwin's median unit price was the cheapest of the capitals at $320,000, followed by Adelaide at $346,750.
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Annual unit price growth was up 2.1 percent nationally with the strong growth in regional Victoria

Annual apartment price growth up 2.1% nationally: Realestate.com.au

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GUEST OBSERVER
Latest dwelling price figures from the Australian Bureau of Statistics indicate that the gap between the growth rates in the eight capital cities has widened.
Over the year to June 2015, the ABS Residential Property Price Index rose by 9.8%, with a 4.7% increase occurring during the June 2015 quarter itself. Annual house price growth was 10.5%, with prices in the attached dwelling segment increasing by 7.5% over the same period. 
The variation in dwelling price growth across Australia’s capital cities is remarkable.
On the one hand, price growth is very robust in both Sydney and Melbourne, while prices have actually eased back a little in cities like Perth and Darwin.
The wide divergence of dwelling price growth across the capitals is indicative of the mixed economic conditions across Australia. It highlights the challenges in prescribing ‘one size fits all’ policy responses to the housing market.
The strength of dwelling price growth in Sydney is receiving much attention. However, the upturn in Sydney prices follows a decade which saw the city lag far behind the other seven capitals in terms of price growth. 
Price pressures ultimately represent the inadequate response of supply to much stronger demand conditions. We need to see more flexibility in the planning process and in the release of new residential land in order to take the heat out of prices. 
In the year to June 2015, dwelling price growth was strongest in Sydney (+18.9%), followed by Melbourne (+7.8%) and Brisbane (+2.9%). The pace of dwelling price growth was more modest in Canberra, (+2.8%), Adelaide (+2.7%) and Hobart (+1.5%). Over the same 12 month period, dwelling prices actually declined in both Perth (-1.2%) and Darwin (-1.8%). 
Shane Garrett is senior economist for HIA and can be contacted <a href="https://hia.com.au/en/BusinessInfo/economicInfo/EcoGroup.aspx" target="_blank">here</a>.
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jchancellor-FAypfDUnLy

Dwelling price growth across capital cities remarkable: HIA's Shane Garrett

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Events in the world’s two largest economies look set to dominate proceedings in 2016. 
The scale of the slowdown in China and the speed of further US interest rate rises will determine the performance of property markets across developed and emerging markets alike over the next 12- 18 months. 
Last year we correctly anticipated that Sydney and New York would outperform in 2015 rising by 5%-10%. 
Sydney has exceeded expectations, prime prices in the city look set to end 2015 15% higher. 
At 5%, price growth in New York has been strong but mitigated to some extent by the strength of the US dollar which has curtailed foreign demand. 
By the end of 2015, we expect the strongest and weakest performing prime markets to be separated by around 20 percentage points, in 2016 we forecast this figure will slip to 15 points as price growth converges. 
Whilst luxury price growth looks set to converge, monetary policy globally is likely to follow a divergent course. 
The US and UK will be tightening monetary policy whilst the Eurozone, Japan and China are expected to either loosen policy further through additional stimulus measures or are likely to stick to the status quo in policy terms.
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This year our Risk Monitor assesses the likelihood and impact of ten key scenarios on each of our cities. 
As we take the pulse of city markets in December 2015, it is perhaps no surprise that the Fed’s recent rate rise and the impact of terrorism/geopolitical tension on the world’s top cities, are currently considered the highest risks to luxury city markets. 
In previous years, the Eurozone and its potential break-up was the top threat to economic and property market stability but jitters over its demise have subsided as the ECB has announced an extension to its QE programme. Instead, emerging markets and the risk of potential deflationary cycles represent the major headwinds for the global economy. 
For most cities, low income growth and a slowing domestic economy are considered the lowest risks to luxury markets. 
There is a chance that the recent 0.25% US rate rise and resulting strong dollar could spark a new wave of safe haven capital flows from emerging markets to first tier luxury residential markets. However, with new supply in several markets expanding (Hong Kong, London, Miami, New York) we think it’s unlikely we will see prices respond in the same way they did post-Lehman. 
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Of the ten cities analysed in our forecast, only three are expected to see prime prices decline in 2016; Hong Kong, Singapore and Paris.
In both years, Sydney is expected to come out on top, although the pace of price growth is expected to slow from 15% year-on-year in 2015 to 10% in 2016. Australia’s economic slowdown, weaker stock market performance in recent months and the introduction of foreign investment fees explain the lower rate of growth in 2016.
Only London, Paris, Geneva and Singapore are forecast to see stronger price growth (or a slower rate of decline) in 2016 than in 2015.
London’s upturn is marginal, from 1% in 2015 to 2% in 2016. Higher transaction costs (a 3% increase in stamp duty for buy-to-let properties and second homes), political risk around the Mayoral election in May, and ongoing affordability concerns explain our muted forecast.
The recent terrorist attacks in Paris will undoubtedly affect buyer sentiment and will mean some buyers delay investments. With a Presidential Election less than 18 months away, however, we do not expect any radical shake up to the tax structure for foreign buyers and the city remains competitively priced compared to other top global cities.
Overall, prime prices across all ten cities are, on average, expected to have increased by approximately 3% in 2015 but average annual growth is forecast to slip to 1.7% in 2016. This confirms our view that lower returns will become the norm in the short to medium term.
Of the cities analysed, Hong Kong is forecast to overtake Singapore as the weakest-performing luxury residential market in 2016. A number of new developments are due to come to the market in 2016, this new supply coupled with a strengthening HK Dollar (pegged to the US Dollar) will see prime prices soften.
The price decline seen in Singapore’s prime residential market is expected to persist at least until the end of 2016 following the government’s assertion that it has no plans to relax its property market cooling measures. However, the drop in price of luxury properties has presented pockets of investment opportunities. We expect sale volumes to increase in 2016 and, due to the shrinking inventory of high-end homes, price falls within the prime sector will be less pronounced than those across the island as a whole. 
In the current climate of heightened political tension and ongoing tax fluctuations, Monaco’s status as a private and secure retreat continues to appeal to the world’s wealthy. With supply severely constrained on the two-mile wide principality we forecast steady price growth of 5% in 2016 as demand and sales activity picks up.
The Geneva market, along with Switzerland as a whole, has been characterised by levels will keep prices from rising over the next 12-18 months, hence our forecast of 0% growth in 2016, but more stable trading conditions seem likely in 2016 and beyond.
In 2015, the demand for New York’s luxury homes cooled from the frenetic pace observed in 2013 and 2014 due to the strength of US dollar and weaker economic conditions worldwide, although it is not expected to impact price trends until 2017. With the US federal and presidential elections due in November 2016 both New York and Miami are likely to see buyers adopt a wait-and-see approach.
South American currencies and the euro will influence demand/capital flows.
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Liam Bailey is global head of research and Kate Everett Allen is international residential research Knight Frank. They can be contacted <a href="https://www.knightfrank.com/research/prime-global-forecast-2016-3450.aspx" target="_blank">here</a>.
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With 10% price growth Sydney tipped to lead the world in 2016: Knight Frank

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Home values across Melbourne have substantially outperformed the regional areas of the state, according to the NAB Residential Property Survey.
While Melbourne home values rose by 11.2 percent over the past twelve months, the next best performing regions across the state were the primarily agricultural regions of Goulburn and Wimmera, where home values increased by 5.6 percent and 5.5 percent respectively.
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Melbourne’s strong rate of growth started to show some tentative signs of easing over the final quarter of 2015, with home values slipping 1.9 percent lower. 
At the same time auction clearance rates moderated from the high 80% range down to the mid 60 percent range indicating some rebalancing towards buyers in what has been a strong sellers’ market since mid-2012.
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The supply-demand fundamentals for the Melbourne housing market have not been as supportive as those in Sydney, despite strong population growth, due to relatively stronger construction rates over the years. Nevertheless, the NAB Residential Property Survey shows that foreign demand tends to be particularly strong in Melbourne, which in conjunction with low interest rates – contributing to local borrowing capability – has seen prices grow quite strongly. 
NAB has lowered its expectation for house price growth to 2% in 2016 (from 11.7% in 2015).
Price momentum is expected to slow, however, as affordability has deteriorated considerably in an environment of little to no real household wage growth. NAB also anticipates an extremely large supply response to record high prices in Melbourne, particularly in the inner city unit/apartment market, which will outpace demand. In combination with a more subdued population growth outlook and tighter credit conditions from prudential regulator changes, these factors will weigh on future price growth. 
Nevertheless, improving economic conditions in the state are expected to maintain solid rates of employment that will provide underlying support to house prices, although price growth will be more modest than in recent years. 
The NAB Property Survey reported a notable deterioration in market sentiment during the final quarter of 2015, although the deterioration was not as pronounced as that seen in the other major eastern markets, and Victoria is now the strongest state overall (replacing NSW).
Additionally, respondent expectations for house price growth in the next 12 months roughly halved, despite an increase in rental expectations, while foreign buyer demand for both new and existing properties eased off.
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As a result, NAB has lowered its expectation for house price growth to 2 percent in 2016 (from 11.7 percent in 2015). Given the anticipated ramp up in supply of units/apartments, and uncertainties over foreign and investor demand, prices for this type of housing are expected to fall 3 percent in 2016.
 
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Melbourne house values tipped to increase by two percent, units expected to fall by three percent: NAB

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GUEST OBSERVER
Sydney and Melbourne continue to show solid house price growth while Adelaide, Brisbane and Perth are much weaker.
Even within cities there is divergence, with oversupply in some apartment markets, while detached house markets lack supply.
We forecast national housing price growth to slow from 7 percent in 2016 to 2-5 percent in 2017; trends across and within cities to vary.
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Still cooling, but with divergence across markets
It has always been a misconception to refer to Australia as having one housing market. After all, Australia's population is strewn across a whole continent and each region is affected by different forces. The cycles in Western Australia and Queensland have been driven by mining, while the south-eastern states have larger services sectors.
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Being a currency union, there are clear unifying features, such as the common currency, interest rates and federal fiscal policy and free movement of labour, among other things. As a result, over recent decades, a key rule of thumb has been that mortgage rates drive the national housing price cycle. But this relationship has become more complicated recently, thanks to an unusually large cycle in commodity prices, persistent low global and local interest rates, rising foreign buyer activity, and increased use of prudential settings to tame the lending market.
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A key driver of trends over the past five years has been the rebalancing of growth towards the housing and services sectors, supported by the lower interest rates and AUD following the end of the mining boom. This has driven a substantial ramp-up in housing prices in Sydney and Melbourne since mid-2012, up 66 percent and 49 percent, respectively. Over the same period, housing prices in Brisbane, Adelaide and Perth have risen by only 19 percent, 9 percent and 5 percent, respectively.
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The worrisome pace of Sydney and Melbourne price growth, particularly in 2014 and 2015, motivated a tightening in prudential settings, starting in late 2014, which has seen some moderation in loan growth. As a result, both cities saw housing price growth slow from double-digit growth last year to high single-digit rates this year. We expect low single-digit rates of housing price growth in these cities in 2017, although trends are expected to vary across the apartment and detached house markets.
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A national apartment building boom, which has been part of the rebalancing act, is likely to deliver some oversupply in the Melbourne and Brisbane apartment markets, which is expected to see apartment price falls in these markets. Detached dwelling markets across the country are set to see further price growth, albeit moderating.
 <a href="https://www.about.hsbc.com.au/hsbc-in-australia/management-team" target="_blank">PAUL BLOXHAM</a> IS CHIEF ECONOMIST (AUSTRALIA AND NEW ZEALAND) FOR HSBC. 
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Low single-digit rates of housing price growth in 2017 for Sydney, Melbourne: HSBC's Paul Bloxham

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GUEST OBSERVER
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House price growth eased in September, led by the key Sydney market, which posted its weakest monthly result in two and a half years. Overall, the data are consistent with our view that the housing market is beginning to soften. 
House prices were unchanged in Sydney in September in seasonally adjusted terms, ending a run of 1-2% monthly growth over the past year. This result is in line with the sharp fall in auction clearance rates in Sydney (Figure 1) as demand has eased somewhat and housing supply risen sharply.
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<div class="column">This easing demand is supported by yesterday’s private credit data, which showed a further slowing in growth in investor housing credit. This suggests that APRA’s macro prudential measures (which have seen tighter borrowing conditions and higher interest rates for investors) are having the desired effect of containing investor borrowing and taking some heat out of the market.</div>
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 Meanwhile, Melbourne house prices posted strong growth in September, up 1.2% m/m (seasonally adjusted). It appears that lower auction clearance rates have been slower to impact on house price growth in Melbourne compared with Sydney. But as this trend continues to unfold, we expect to see price growth in Melbourne ease over coming months. 
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Justin Fabo is senior economist, ANZ Research and Daniel Gradwell is economist, ANZ Research. Both can be contacted <a href="https://www.anz.com/corporate/research/" target="_blank">here.</a>
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Sydney house price growth eases: ANZ Research

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Housing price growth of between 2 and 4 percent is expected in Melbourne in 2017 supported by growth in detached house prices of between 5 and 6 percent.
Paul Bloxham, HSBC chief economist as an oversupply is expected in the apartment market, particularly in the inner city
"We doubt that oversupply in the apartment market will have much effect on the detached house market, given the lack of substitutability," he said.
"Like Sydney, tighter prudential settings and a pull-back in foreign demand are expected to weigh on prices, particularly of apartments. "
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Melbourne's detached housing price growth to near six percent: HSBC's Paul Bloxham makes 2017 forecast 

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An overwhelming majority of respondents to Australian Property Investor’s latest Buyer Sentiment Survey say they are expecting prices to rise in 2021.

It's a reversal on the previous survey’s results which showed nearly half of those polled were tipping home values to fall.

More than 75 per cent of respondents said they were expecting house prices to rise in 2021 in the Q4 survey, as compared to just 14 per cent in Q3.

On the flipside, just 7 per cent of respondents said they expected values to drop in the next 12 months, down from 47 per cent in Q3.

“The results are in line with soaring consumer confidence,” API editor Dan Wilkie said.

“Buyers have been red hot in the back end of 2020," he said, adding many are clearly expecting the "momentum to continue to build next year.”

Queensland was the state of choice for buyers, with 31 per cent of respondents saying they had their eye on the Sunshine State.

Victoria was next at 26 per cent or respondents, followed by NSW at 23 per cent.

Just 12 per cent of respondents said they intended to buy in Perth.

“Brisbane, the Gold Coast and Sunshine Coast have become highlights of the Australian market as Melbourne and Sydney buyers moved north this year,” Mr Wilkie said.

Housing affordability emerged as the biggest concern for those surveyed, replacing tenants’ ability to pay rent due to COVID as the top worry in Q3.

A vast majority of respondents (53 per cent) said a detached house was their property of choice, followed by townhouse or villa at 17 per cent, while 13 per cent of respondents said they were considering buying an apartment.

The survey received more than 300 responses, 63 per cent of which were property investors.

New South Wales accounted for 32 per cent of survey responses, Victoria 29 per cent and Queensland 19 per cent.
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It's a reversal on the previous survey’s results which showed nearly half of those polled were tipping home values to fall.

urban.com.au

75 percent of investors expect property prices to rise in 2021

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One of the great absurdities of real estate research is the notion that you can encapsulate price growth for a major city in a single figure. 
The Greater Sydney area has a population of 4.82 million (2016 Census) and contains over 700 suburbs. They include markets as diverse as Macquarie Park versus Macquarie Fields and Newtown versus Campbelltown.
They’re not all doing to the same thing at any one time, nor moving at the same speed.
But the research houses would have us believe that you can distil all the sales activity in these contrasting places into a single growth figure that makes sense.
It’s crazy to even try, but that’s what they do. And media laps it up, so long as it’s presented in a neat little media release package that makes journalists’ lives really easy.
This may explain why Sydney house prices are growing at an annual rate of 7.4 percent if you believe SQM Research asking price growth index, or 4 percent if you trust the latest figures from Domain, or just 0.1 percent if you think CoreLogic is the bee’s knees in real estate data.
Melbourne house prices are growing at either 8 percent, 11.3 percent or 23.6 percent in annual terms, depending on your source of choice.
The Adelaide is rising, or falling; the Perth market is recovering, or not; and Canberra is up 5 percent or 18 percent – all dependent on which report you read most recently.
In my view, all real estate data is rubbery figures, to some degree.
And it’s adds an extra level of absurdity when economists, the least informed species about residential property on planet Earth, discuss Australian real estate as a single market. They all do it and media reports their misinformation daily – because if they have “economist” in their title they must be credible, right?
The reality is that we have a five-speed market in just the eight capital cities – and within those cities they are many different scenarios playing out.
We never have a situation in a major city where all parts of the market are rising (or falling) in unison.
Generally speaking, cycles start in a central point and ripple outwards gradually. The up-cycles in both Melbourne and Sydney began in the so-called prime suburbs and gravitated outwards over 3-4 years.
It’s a signal that the cycle has almost run its course when the areas with the most sales activity and price growth are in the outer-ring suburbs. We’re at that time right now with both our largest cities, with the Camden LGA one of the few remaining upwardly-mobile markets in Greater Sydney, and outlying areas like the Hume LGA and the Wyndham City LGA the strongest markets in Greater Melbourne.
What’s happening with our major markets makes a lot more sense when you chart them using sales volumes, rather than changes in price measures. 
The latter method is fraught with potential for aberrations, with the results dependent on methodology and other factors, as the figures presented earlier illustrate very clearly.
Sydney house prices are not growing at an annual rate of 4 percent, as Domain would have us believe. Some suburbs are growing more than that, others are at the point in the cycle where they’re not growing at all and some have values going a little backwards. A few areas, particularly those close to over-supplied apartment precincts, will have larger declines in values.
But none of that will be conveyed to real estate consumers – they’ll be given a single misleading figure encapsulating the whole city, only to be contradicted a few days later by a different number from another source.
But the sales activity figures (which we examine every quarter for The Price Predictor Index) seldom lie.
They’re revealing in all sorts of ways. For example, how about this question: when did the Melbourne market peak?
For in the swanky inner south-eastern suburbs such as Hawthorn (median price $2.1 million) and Canterbury ($2.9 million), it was early in 2014.
For middle market areas like Blackburn ($1.3 million) and Oakleigh ($1.2 million) it was the early part of 2015. And outer-ring precincts like Cranbourne ($480,000) and Carrum Downs ($500,000) hit their high points late in 2016 or early in 2017. Other outlying areas arrived at that point towards the end of last year.
It shows the many different market scenarios in play across the nation – and the degree to which economists and other commentators misinform consumers with their one-size-fits-all approach to real estate analysis.
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