Regional Surge Tipped To Endure

Terry Ryder The Week In Real Estate June 4, 2021

By Terry Ryder | Australia's Leading Independent Property Researcher


A shortage of property supply in the capital cities is set to fuel a decade-long shift to regional centres, as regional housing markets continue to outpace the capital cities.

Property Council of Australia chief executive Ken Morrison says a lack of affordable urban supply will help to ensure that a population and capital shift to the regions will continue in most states over the next decade.

His comments came as CoreLogic reports regional markets have outperformed value growth in the cities in the last 12 months, rising 13% compared with a 6.4% gain in city values – led by a 22% rise in the Richmond-Tweed area of NSW, which includes Byron Bay.

Morrison says the flight to the regions will continue - and presents problems for locals priced out of their own markets and burgeoning strains on infrastructure as small towns contend with bigger populations.

“Infrastructure pressures are being felt right across Australia, but particularly in some of our faster growing regions,” he says. 
Read more from The Week In Real Estate


CoreLogic & Tim Lawless May 23, 2021


Last month we said some of the Core Logic numbers were simply mouth-watering.

Core Logic’s Month Housing Data Report shows dwellings continue to rise a further 1.8% across the nation last month.

This is the equivalent of house prices going up $340 per day, or $2,400 per week!

Breaking down the numbers even further:

  • Sydney houses up 2.8% for the month and an amazing 10.5% for the quarter
  • Melbourne houses up 1.4% for the month and up 6.5% for the quarter
  • Brisbane houses up 1.8% for the month, and up 6.2% for the quarter
  • Perth houses up 0.8% for the month, and up 4.3% for the quarter

As always, our good friend from Core Logic, Tim Lawless states, “We are expecting housing values will continue to rise throughout 2021 and into 2022, albeit at a gradually slower pace. Demand should be supported by an expectation that mortgage rates will remain at their record lows for an extended period of time, as well as ongoing high levels of consumer confidence as the economy expands at a faster than average pace”


The risks associated with the expiry of mortgage deferrals and less fiscal support have become far less significant. The proportion of home loans that remained on a deferral arrangement at the end of March was just 0.7%, comprising only 0.07% of bank mortgage books.

We are not expecting any material lift in distressed listings. For borrowers that remain in a distressed situation, the lift in housing values has reduced the risk of selling at a loss.

The trend in labour markets will provide an important bearing for housing market outcomes. Labour markets have shown a ‘V’- shaped recovery through the COVID period to-date; although there may be some reversal in the trend due to the end of JobKeeper, this is likely to be temporary.

The RBA and APRA have reiterated they are watchful for any signs of slipping credit standards, but have also noted there has been little evidence of a deterioration in lending standards to-date. A rise in the proportion of riskier types of lending or higher risk loans could be met with a new round of credit policies.

Data by CoreLogic & Tim Lawless:



Sydney Property April 7, 2021

Weighing up the Property Boom

Residential property prices are booming not only in Australia but also around the world. What's the view for property investors and what factors should you consider before taking the leap?

Markets and economy

Written by
Tony Kaye

06 Apr, 2021

By Tony Kaye, Senior Personal Finance Writer, Vanguard Australia

Across Australia residential property prices are booming, thanks to pent-up demand, record low interest rates and ready access to mortgage finance.

Median house prices in metropolitan and regional areas have surged, and that trend is set to continue as owner occupiers and investors compete for limited stock.

National dwelling values rose by an average 2.8 per cent in March, the fastest monthly gain since October 1988, according to CoreLogic. This followed price rises in every capital city.

But what's happening in the property market here is actually being replicated right around the world, for precisely the same reasons.

Data from the Organization for Economic Cooperation and Development shows housing prices in 37 developed countries have risen at their fastest pace in almost 20 years.

The United States, China, Canada, New Zealand, South Korea, and much of Europe, are all heading into new territory in terms of property prices.

Parts of the Chinese property market have risen around 16 per cent over the last year, while prices in New Zealand have jumped more than 20 per cent since the start of 2020.

And it's a situation that central banks and financial regulators are monitoring very closely. Although any rises in official interest rates are almost certainly off the cards for some time, some regulators may impose tighter controls on lending.

While they're unlikely to intervene in any way at this stage and disrupt the pace of economic recovery, a general concern is that if property markets become too overheated that could create stronger inflationary pressures.

This would ultimately lead to higher rates, which is behind the market sentiment that's currently driving longer-term government bond yields higher.

In its March monetary policy minutes, the Reserve Bank of Australia noted its board members had noted that housing market conditions warranted close monitoring in the period ahead.

"In particular, it was important that lending standards remain sound in an environment of rising housing prices and low interest rates."

The Australian Prudential Regulation Authority (APRA) is also monitoring the market, but says there is no cause for immediate alarm.

The view for property investors

Australian economists and other property market forecasters are predicting that house prices will continue to gain ground over 2021.

The same may not be the case for apartment prices, particularly in Melbourne and Sydney where there is an oversupply of existing properties and more new apartments are under construction.

For property investors, there are a wide range of factors to consider.

Although residential prices are gaining broadly, property price growth is never uniform and capital returns vary considerably across cities and regions, by location, by property type, and an individual property's physical condition.

On a rental income level, current market conditions remain fickle.

The impacts of COVID-19 during 2020, including a rise in unemployment levels, resulted in governments enacting legislation enabling severely affected tenants to seek rent reductions and payment deferrals.

As a result, many property owners are still contending with lower rental income and, in some cases, have needed to seek mortgage payment relief from their lenders.

Rental demand also has weakened due to the departure of temporary residents as a result of COVID-19, most notably foreign university students. This will be further exacerbated with net overseas migration to Australia expected to remain negative into 2022.

The outlook for rates

On a monetary policy level, the RBA has made it clear that, like most of other central banks, it is not likely to be raising official interest rates for several years.

That's because neither wages, or inflation are rising fast enough to warrant a rate rise to dampen consumer sentiment at this stage, and especially with unemployment rates still elevated.

Yet, investing into property should generally be considered a long-term strategy. So, even though rates are at record lows now, there's every likelihood they will rise over the medium term.

This should be factored into your future capacity to service borrowings.

Assessing your investment goals

Whether you already own investment property or are considering an investment into direct property for the first time, it's vital to see how property fits in with your overall investment goals.

What is your overall strategy with owning property and your investment time frame?

It's also important to understand that property is an illiquid asset. Unlike assets that are highly liquid and can be readily sold on financial markets, either as a whole or in smaller quantities, generally the only way to realise capital growth from an investment property is to sell it.

The only exception is when it's possible to sub-divide land and sell off part of a property.

Furthermore, like other investments, owning property is not an instant pathway to gains. There are substantial entry, holding and exit costs.

And, as past episodes have shown, such as during the Global Financial Crisis, there will be periods when property prices decline, and sometimes quite sharply.

So, it's vital to weigh up both the pros and cons of buying residential property purely on an investment basis.


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