Where is the Property Market Headed?
Growth is still occurring but conditions have significantly moderated over the first quarter of 2016.
Dwelling completions, dwelling approvals, house prices and housing lending are all continuing to see increases but not at the same rates that occurred in 2015.
Rental levels have now completely reversed trend and are now experiencing a decline, the first time ever recorded.
Looking forward, conditions are likely to become more challenging for investors and offshore investors. Banks are continuing to moderate lending to both these groups on the back of recommendations put forward by the Australian Prudential Regulatory Authority last year.
In addition, negative gearing is looking to be an election issue and any changes to this will impact Australian investors in particular.
A decline in activity by both these groups is likely to continue to lead to moderation in house prices however given the importance of both these groups in providing rental accommodation, it is likely we will see an increase in rents.
Dwelling completions
Building completions continue to be at record highs however the rate of increase is starting to slow. Nationally there was particularly strong growth in 2014 with an increase of 16% in total completions. In 2015, the rate of growth declined to 9.8%.
NSW and Victoria continue to account for half of all completions however over 2015, Western Australia and Tasmania saw the biggest jump from 2014 levels.
The only state to see a decline in the number of completions was the Northern Territory.
Dwelling approvals
Building approvals provide the best idea of future development activity and levels continue to remain elevated. Similarly to completions, the rate of annual growth has slowed slightly.
For the ending February 2016, growth in approvals increased by 11% nationally, compared to 16% for the previous 12 months.
Greater Sydney was the only city to defy this trend with approvals increasing by 21% over the year to February 2016. The strong growth can be attributed to approvals for apartments, rather than housing. Sydney has now overtaken Melbourne in apartment approvals.
Median house prices
According to Core Logic RPData, house and apartment prices continue to increase nationally with average annual growth of 7.3% for houses and 7.94% for apartments. Perth, Darwin and Hobart are currently showing the greatest weakness with house prices declining over the past 12 months.
While house prices continue to increase, the rate of increase is slowing across all capital cities.
Rental data
Growth in average weekly rents declined by -0.2% over the 12 months to March 2016, according to Core Logic RPData This is the first time that rents have declined since the group started tracking rental levels in 1996.
Increases in housing supply is typically one of the major drivers of rental decline.
In Sydney and Melbourne however we are not seeing this trend. Sydney has seen the highest rate of dwelling approvals nationally while Melbourne has seen the highest rate of completions.
Both these cities saw an increase in their average weekly rental rates of 1.4% and 2% respectively. This suggests that the balance between supply and demand of housing is still evenly balanced.
Residential lending
The growth in lending for residential by financial institutions has been a key focus for the Australian Prudential Regulatory Authority (APRA). A range of measures have been implemented including greater capital requirements, caps to growth in lending to investors and restrictions to lending to foreign investors.
This is now having a significant impact on housing finance commitments, particularly to investors.
Total commitments increased by just 4% in January 2016 compared to the previous year. In 2015 we saw growth of 13%.
The biggest change has been lending to investors. This saw a decline of 13% while owner occupier lending increased by 18%.
First home buyers
Conditions remain challenging for first home buyers with the proportion of lending to this group the lowest it has been since June 2004. The good news for this group is that the average loan continues to fall and is now at its lowest level since March 2015.
This partly reflects supply (high dwelling completions), slowdown in house price growth and a slowdown in lending to investors.
By state, we are seeing strong declines in first home buyer lending activity in SA, WA, Tasmania and NT. This is likely to be closely linked to economic activity. NSW also saw a slight decline while Victoria saw a slight increase.
We are not seeing significant changes to affordability nationally.
Investors
Investor lending is well down on the back of recommendations put to financial institutions by APRA. Over the past 12 months, total lending to investors dropped by 13% and is now at its lowest level since April 2015.
Although there was no change over February, it does appear that banks are unlikely to significantly increase lending to this group in the medium term and as a result, this level is likely to continue to see declines.
Negative gearing is also looking to be an election issue. The Coalition have said there would be no change to this however the Labour party are looking to make changes that would eventually phase it out.
It is likely that any major changes to negative gearing will result in a reduction to investor sentiment, as well as impacting investors directly.
Offshore buyers
Domestic purchasers dominate activity however offshore investors continue to play an active role in the Australian market. According to National Australia Bank Residential Property Survey, foreign buyers accounted for 14.4% of total demand for new property and 8.6% of total demand for established property.
These rates continue to decline and it is likely that restrictions to investment are likely to be a key factor. As part of the measures of Australian banks to reduce exposure to residential, requirements by the banks when lending to offshore investors are increasing.
Westpac has taken it one step further and recently announced that they would no longer be lending to offshore groups.
Original article sourced from Realeaste.com.au, written by Nerida Conisbee
Les Cedres, the St Jean Cap Ferrat Trophy Home Set For Sale
Villa les Cedres, the grand estate at St Jean Cap Ferrat, is set for imminent sale and then becoming off limits.
The longtime owners, the Grand Marnier Group is selling their liquor company along with their grand 1800s family home. But Davide Campari Campari-Milano SpA - the makers of Campari - don't want the prize 14 ha estate.
So the listing of the world's priciest residential offering now looms. Set on the peninsula to the east of Nice, Villa les Cedres is surrounded by a botanical garden dating back to the 1920s.
The Marnier-Lapostolle family has opened it up for small tour groups of green thumbs several times a year, so it was on Title Tattle's bucket list.
The unexpected sharemarket announcement will see an abrupt end to that quaint possibility when some Russian oligarchs or US tech billionaire locks it up behind hedges of security.
The nearest villa is Maryland where Brad Pitt and Angelina Jolie stayed as guests of Microsoft co-founder Paul Allen. With the Cannes film festival underway this week saw Katy Perry and Orlando Bloom on the luxury Eclipse mega yacht off the coast.
Having holidayed in the region since the late 1980s, and spotting Robson Green one Easter, I made the dash earlier this month to get through through the elaborate gold leaf gates - a bit like Willy Wonka but with an eye more on the house rather than the Theobroma Cacao, aka choco tree.
I was pretty impressed by the estate's tallest tree, an Australian bunya pine (araucaria bidwillii) and also their most recent planting of an historic wollemi pine.
Alexandra Connolly, who runs a local real estate brokerage, said it could fetch 200 million euros to 350 million euros, though it’s hard to estimate given the diminished buying power of Russian billionaires who have previously snapped up anything the region in recent years.
A mansion outside Paris fetched a world record price of more than 275 million euros.
Nearby Villa Leopolda, on the hillside south of France vantage point, went close but the deal fell over. Set above Cap Ferrat at Villefranche-sur-Mer, widow Lily Safra accepted an unsolicited Euro 385 million offer from Russian nickel miner Mikhail Prokhorov, who pulled out of the deal and lost his deposit. Russia's richest man took proceedings for the return of his 38 million deposit, arguing he didn't get a seven-day cooling off period. Safra donated the deposit to charities after a Nice judge ruled in her favour.
Campari plans to keep 80 million euros of the Villa les Cedres proceeds after taxes and brokerage fees, and divide the rest equally among the holders of Grand Marnier’s 85,000 shares so long as the villa sells by June 30, 2021, according to the takeover offer.
This villa, built in 1870, belonged to King Leopold of Belgium from 1904 to 1924.
Original article sourced from Property Observer, written by Jonathan Chancellor
Company News
Ballard Property would like to welcome our newest staff member Christy Nochar. Christy has joined our Property Management Department as our leasing consultant, we would like to offer Christy our warmest welcome!
Feature Properties of the Month
Our Sales Department feature property this month is the luxurious 2 March Street, Bellevue Hill.
This is your opportunity to secure one of Bellevue Hills finest residences. Luxurious and grand in scale this is the ultimate entertainer on the largest scale. Marvel at the spectacular views over Sydney's cityscape and the hypnotic vistas of the Harbour Bridge, especially as they light up against the night sky. Experience a wonderful lifestyle in one of Sydney's most prestigious suburbs with gorgeous local villages, the best schools, abundant parklands and the delights of the harbour all close by.
Entering into the grand foyer entrance with soaring ceilings and spectacular lighting you are greeted with an array of flexible living and dining options that spill out to the outdoor entertaining and living pool-side terraces. These spaces can be opened up to form a vast open-plan indoor and outdoor entertaining or they can be easily separated by glass sliding doors to create smaller more intimate living spaces.
For more information on this property, please contact James Ball on 0410 740 349 or Mark Lowe on 0403 136 530.
From our Property Management Department this month, our feature property is the sophisticated one bedroom apartment at 14/66 Riley Street, Darlinghurst.
A modern space in a dining hotspot, this cool apartment blends into its urban backdrop. With a timber-decked loggia & oversized sliding glass, it has rare in/outdoor appeal for a one-bedder.
The property features include, smartly separated living & bedroom, floorboards & modern finishes throughout and plenty of storage.
Rent per week - $590.
For more an inspection or more information on this property, please contact our leasing consultant Christy on 0424 753 307.
Local Events
Carriageworks Farmers Markets
The Carriageworks Farmers Markets, are award winning markets, held every Saturday 8am – 1pm in the heart of Sydney City. Stalls include:
-Flower markets
-Fruit & vegetable markets
-Bread and baked goods
-Meat markets
-Fresh dairy products
For more information on these markets, visit: http://carriageworks.com.au/events/carriageworks-farmers-market/
Sydney Film Festival
The Sydney Film Festival will be held from 8th June – 19th June. The festival will showcase the best in cinema from across Australia and around the world, from documentaries to animation and short films.
For tickets and more information, visit: http://www.sff.org.au/
Latest Posts
