The recent cut in the official cash rate by the Reserve Bank of Australia (RBA) is estimated to keep growth strong in Australias $6 trillion housing market. Negative gearing legislation remaining unchanged is also said to be encouraging investors to return to the market.
The RBAs May decision to lower the cash rate to 1.75 percent was a notable move. However, many economists are suggesting that another cut of .25 percent is likely before the year concludes. Housing experts are suggesting that this rate cut will make housing more affordable for buyers with many lenders passing on the cut, and others offering home loan rates below 4 percent.
Budget announcements have left capital gains and negative gearing tax concessions untouched. With property market experts predicting that house values will continue to rise at around 3 to 4 percent nationally. This news is expected to stimulate owner-occupier home buying.
Changes to home lending guidelines and standards have reduced risk in the housing market, with investor numbers subsiding from around 50 percent of home loan lending value to approximately 35 percent of the lending market today. While a number of investors are returning to the market, a decrease in interest rates is not expected to stimulate investor activity as it has done in the past.
Auction Clearance Rates
Auction rates in Sydney and Melbourne remain around 70 percent, compared to 80 percent at the same time last year. But given that the housing market is less investor dominated, this indicates that the market in these cities is steadying.
Nationally, auction rates are remaining consistent. Perth and Adelaide recorded a 50 percent average, and Brisbane 40 percent. Compared to previous months this year, these rates have marginally fluctuated. However, when compared to the same time last year, these rates are down by between 10 to 15 percent. Canberra auction rates hover in the 60 percent range, which is similar to rates seen this time last year.
Monthly Housing Data
According to the CoreLogic research team, housing values across Australia increased by 1.7 percent over the month. Over three months, values rose by 2.4 percent. Between January to April 2016, home values in capital cities have increased by 3.3 percent. Over this time, Perth was the only city to record a decrease in price.
Over the last 12-months, city home values have increased by 7.3 percent, which is an increase from Marchs annual rate of 6.4 percent. However, this rate is far lower than the peak of 11.1 percent in annual growth recorded in July 2015.
Across the capital cities, the annual change in home values is as follows:
Sydney: +8.9 percent.
Melbourne: +10.1 percent.
Brisbane: +6.2 percent.
Adelaide: +3.6 percent.
Perth: -2.1 percent.
Hobart: +1.1 percent.
Darwin: -3.7 percent.
Canberra: +4.5 percent.
Home and unit sales are lower than recent months. Over the last 12-months, it was estimated that around 339,000 homes and 132,000 units were sold nationwide. When compared to data from 12-months ago, home sales decreased by 3.7 percent and unit sales fell by 9.7 percent over the same period. In the nations capital cities, approximately 208,000 homes were sold over the 12-months. House sales dropped 5.7 percent, and unit sales decreased by 12.2 percent over this time. Most sales nationally are lower, except in Perth and Tasmania where home prices are down, and these markets have recorded an increase in sales as the market stabilises.
The Rental Market
Across the capital cities, the rental market is recording an average of $490/week for homes, and $467/week for units. House rental rates are said to have declined by 0.5 percent over the last 12-months, and unit rents have decreased by 1.3 percent.
No capital city has recorded rental growth of over 3 percent. As a result, rental yields are lower than figures from 12-months ago. Gross rental yields for houses nationally are 3.3 percent, while units are at 4.2 percent. In comparison, home rental yields 12-months ago were recorded at 3.6 percent for homes and 4.4 percent for units.
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Written by eChoice
Since 1998, eChoice has helped more than 50,000 Australians secure a home loan through its network of over 25 lenders and hundreds of loans. Best of all our service is cost and obligation free!