While a mid-50% clearance rate doesn’t suggest housing prices are set to bounce back, it does imply a closer fit between buyer and seller expectations and the improved auction success rate supports the reduced rate of decline in housing values across Sydney and Melbourne. Watch “Brisbane Housing Market Update | May 2019” on Vimeo:

The rate of property price decline continues to ease-Overall we are seeing further evidence that the worst of the housing market conditions might now be behind us. Hear all the national and state based insights here.

In this month’s housing marketing update, CoreLogic share that Australian dwelling values fell half a percent last month as the pace of home value declines continued to ease after moving through a recent low point in December last year when national dwelling values were falling at a much faster rate.  The latest figures take national housing values 7.2% lower over the past twelve months to be down 7.9% since peaking in September 2017.

The slowing of the rate of decline is attributable to an easing in the market downturn across Sydney and Melbourne where an improving trend in the rate of decline has been evident over the past three months.  In December last year, Sydney dwelling values were down -1.8%, with the pace of falls progressively moderating back to a month on month decline of 0.7% in April.  Similarly, Melbourne values were down -1.5% in December, with the rate of decline slowing to -0.6% in April.

Although the national rate of decline has improved, the geographical scope of falling values has broadened.  In April, dwelling values fell across every capital city apart from Canberra, while regional areas of Tasmania, Victoria and South Australia also avoided a fall.  The broad-based nature of weak housing market conditions highlights that tighter credit conditions are having a dampening effect across all markets.

Annually, national dwelling values were down -7.2%; the largest decline since the twelve months ending February 2009, which was associated with the Global Financial Crisis.

Overall we are seeing further evidence that the worst of the housing market conditions might now be behind us.  Values are still broadly declining, however the pace of decline has moderated since December last year and there are some tentative signs that credit flows have improved, albeit from a low base.

Considering that tighter credit conditions were one of the primary catalysts for the housing market downturn, any sign that credit availability is improving would be a welcome outcome for the housing market.

According to the Australian Bureau of Statistics, lending to households for dwellings, excluding refinancing was up 2.7% on a seasonally adjusted basis in February.  Additionally, a rise in CoreLogic valuation platform activity throughout March hints at a further improvement in housing finance, which will likely be reported in the next ABS release.

Another indicator of a subtle improvement in the housing market can be seen in auction clearance rates that are holding around the mid-to-low 50% range, albeit on low volumes relative to a year ago. The correlation between auction results and housing market conditions is strongest in Melbourne and Sydney where auctions comprise a larger proportion of selling activity.

While a mid-50% clearance rate doesn’t suggest housing prices are set to bounce back, it does imply a closer fit between buyer and seller expectations and the improved auction success rate supports the reduced rate of decline in housing values across Sydney and Melbourne.

Watch “Brisbane Housing Market Update | May 2019” on Vimeo: https://vimeo.com/335683099?ref=em-share

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Quarterly rents have increased across all capital cities, bar Sydney and Darwin.

At a glance:

  • CoreLogic has released its first Quarterly Rental Review for 2019, showing rents have risen by 1 per cent during the first three months of this year.
  • Sydney is the most expensive capital city to rent with a median weekly rent of $582 per week, while Perth is the cheapest at $385.
  • Quarterly rents have increased across all capital cities, bar Darwin and Sydney.

The first CoreLogic Quarterly Rental Review for 2019, which tracks median rents and rental yields across Australia, shows that national weekly rents have risen by 1 per cent during the first three months of the year.

“This seasonally strong first quarter has delivered the highest increase in weekly rents since the corresponding first quarter a year ago”, says Cameron Kusher, Research Analyst for CoreLogic. “Our regional housing markets are performing marginally better than the capital cities, many of which have been experiencing weaker rental market conditions in recent years due to excess housing supply and growing investor activity.”

“Quarterly rents have increased across all capital cities, bar Sydney and Darwin. Hobart is experiencing notable growth, with rents increasing by 3.6 per cent over the past quarter. However, with a median rent of $582 per week, Sydney remains Australia’s most expensive city for tenants by far.”

The Quarterly Rental Review also highlights a national increase in yields over the past three and 12 months. Gross rental yields for the first quarter are 4.10 per cent compared to 3.95 per cent in the previous quarter and 3.77 per cent a year ago. Darwin has the highest rental yield across the country with an annual median of 6 per cent.

Key findings – rents and yields

  • Nationally, rents increased by +1 per cent over the March quarter and by 0.4 per cent over the past 12 months. Combined capital city rents were 0.9 per cent higher than the December 2018 quarter but -0.1 per cent lower than the previous March quarter. This is the lowest annual change since CoreLogic started tracking rents in 2005. Regional rents were slightly stronger, with a 1.1 per cent increase over the quarter and a 1.8 per cent increase over the past year.
  • In the first quarter, rents climbed in all capital cities except for Darwin (-0.3 per cent). Hobart was by far the strongest performer, with a 3.6 per cent increase in rent over the past quarter, followed by Perth (+1.8 per cent) and Canberra (+1.5 per cent). Hobart also experienced the highest increase in rent over the past 12 months (+5.4 per cent) while at the other end of the scale the media rent in Darwin fell by -5.7 per cent.
  • Nationally, the median rent is $436 per week. The median rent across the capital cities is $465 per week, and $378 per week across the regionals.
  • Gross rental yields have increased from 3.8 per cent to 4.1 per cent nationally. Across the combined capitals, the average rental yield is 3.8 per cent (up from 3.5 per cent). Regional yields are far higher at 5.1 per cent, up from 4.9 per cent 12 months ago.

img_1498

 

Key findings – capital cities

  • Sydney remains Australia’s most expensive capital city market, with a median weekly rent of $582, despite a decline of -3.1 per cent over the past 12 months. While rents in Sydney remained the same as the previous month, they increased by 0.5 per cent over the past quarter. Sydney also has the lowest rental yields out of all capital cities, at 3.5 per cent over the past quarter.
  • Canberra reports a median rental cost of $550 per week, an increase of 1.5 per cent over the past quarter and 3.6 per cent over the past 12 months. Canberra is one of only two capital cities (alongside Darwin) to experience a drop in weekly rent over the past month (-0.1 per cent).
  • In Melbourne, rents are $454 a week – an increase of 1 per cent over the quarter and 2.1 per cent over the past 12 months. Melbourne also reported the greatest increase in rental yields out of all capital cities, with current rental yields being 3.6 per cent, compared to 3.1 per cent a year ago. Despite the rise in yields, Melbourne has the second lowest weekly rental yield out of all capital cities (after Sydney).
  • Brisbane rents are starting to climb again, with Brisbane now having a median weekly rent of $436.This is an increase of 0.8 per cent over the past quarter, and 1.4 per cent over the past 12 months.
  • Perth is the most affordable capital city to rent in with a median weekly rent of $385. However, it is showing signs of growth, achieving the second highest quarterly rate (after Hobart) with an increase of 1.8 per cent over the past 3 months. Over the past year, Perth rents have increased by 2.1 per cent.
  • Adelaide closely follows Perth to become the second most affordable capital city to rent a property in, with a median weekly rent of $386. Like Brisbane, it experienced a 0.8 per cent rise in rents over the March quarter. Over the past 12 months, rents in Adelaide have risen by 1.2 per cent. Gross rental yields have remained static over the year at 4.4 per cent.
  • Hobart reported the strongest growth in rents, up 3.6 per cent over the past quarter to $453 per week. Over the past year, rents have increased by 5.4 per cent. Hobart also reports the strongest growth over the past month, with a 1.6 per cent increase in weekly rent. Hobart also reported the second highest rental yield (after Darwin) of 5.1 per cent, which remained the same as 12 months ago.
  • Darwin has experienced the most significant decline in rent to achieve a median weekly rent of $458. This is down -0.3 per cent over the quarter and -5.7 per cent over the past year. In addition, Darwin also reports a drop of 0.2 per cent over the past month. However, at 6 per cent, Darwin has the highest gross rental yield out of all the capital cities (up 0.1 per cent on the past 12 months).

CoreLogic Research Analyst Cameron Kusher said the first quarter of 2019 had delivered the highest increase in weekly rents since the corresponding first quarter a year ago

“Our regional housing markets are performing marginally better than the capital cities, many of which have been experiencing weaker rental market conditions in recent years due to excess housing supply and growing investor activity,” he said.

“Quarterly rents have increased across all capital cities, bar Sydney and Darwin.

“However, with a median rent of $582 per week, Sydney remains Australia’s most expensive city for tenants by far.”

The Quarterly Rental Review also highlights a national increase in yields over the past three and 12 months.

Gross rental yields for the first quarter are 4.10 per cent compared to 3.95 per cent in the previous quarter and 3.77 per cent a year ago. Darwin has the highest rental yield across the country with an annual median of 6 per cent.

According to the ABS, total household assets were recorded at a value of $12.6 trillion at the end of 2018. Total household assets have fallen in value over both the September and December 2018 quarters taking household wealth -1.6% lower relative to June 2018. While the value of household assets have fallen by -1.6% over the past two quarters, liabilities have increased by 1.5% over the same period to reach $2.4 trillion. As a result of falling assets and rising liabilities, household net worth was recorded at $10.2 trillion, the lowest it has been since September 2017.

CK_001.png

 

Based on this data from the ABS, the Reserve Bank (RBA) calculates a number of household finance ratios.

The first metric detailed from the RBA are the ratios of household and housing debt to disposable income. As at December 2018, household debt was 189.6% of disposable income, a record high and up from 188.7% the previous quarter. Housing debt was also a record high 140.2% of disposable income and had risen from 139.5% the previous quarter.

CK_002.png

 

While debt levels are quite high, the ratios of asset value to disposable income are much higher. While that may be the case, it is important to understand that if asset values fall, the value of the debt typically doesn’t reduce at the same speed, which can lead to asset value erosion. As at December 2018, household assets were 927.9% of disposable incomes. This ratio has declined as property values have fallen, down from a peak of 962.1% in December 2017. Similarly the ratio of housing assets to disposable income is currently 495.3%, down from its peak of 529.7% in December 2017. The 495.3% figure is the lowest it has been since September 2016.

CK_003.png

 

As a result of a reduction in the ratio of assets to disposable income, the ratio of debt to assets is climbing. Total household debt is now 20.4% of household assets, the highest it has been since March 2016. Total housing debt is 28.3% of total housing assets, the highest it has been since September 2014. Again, this reflects the fact that asset values are falling as debt increases.

Despite generational low official interest rates, the measures of interest payments to disposable income have risen over recent quarters. This is likely reflective of lenders lifting interest rates independently of any adjustment to the cash rate by the RBA. Household interest payments represented 9.1% of household disposable income in December 2018, their highest share since September 2013. Housing interest payments accounted for 7.6% of household disposable income in December 2018, their highest share since March 2013. Despite the cash rate tracking at generational lows, households are paying a proportionally higher share of interest than they have in many years.

CK_004.png

 

With housing values falling and expected to keep falling, the ratio of assets to disposable incomes is likely to fall over the coming quarters. Although most households will likely remain in a position whereby the value of their assets is significantly higher than their debt, no doubt an increasing number of recent property purchasers will have higher levels of debt than the value of their asset. This is probably an area of most concern for the RBA. If this leads to reduced consumer expenditure an in-turn slower economic growth it may be a trigger for either lower official interest rates or changes to mortgage lending policies (or both). Furthermore, with household debt at record highs and households dedicating more of their income to servicing their debt at a time when interest rates are so low if household debt levels haven’t declined by the time interest rates rise it could create more challenges for households.

This data will be very important to focus on over the coming quarters.

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  • Open Planed kitchen/ dining and family area with ceiling fans and access to the backyard.
  • 4 Carpeted bedrooms with built-ins and ceiling fans.
  • Master bedroom has a Walk in robe and Ensuite.
  • Main bathroom with separate bath and Toilet.
  • Double lock up Garage with internal laundry.

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Pets vs No Pets at your rental property

Tips for landlords renting to pet owners

Pet-friendly properties will appeal to more tenants and can achieve higher rents, but there’s more to consider than just the rental return.

  • Choose the right property and features – An apartment with a large outdoor area or a house with a big backyard will appeal more to pet owners. Durable flooring such as tiles is less likely to be damaged than polished floorboards or carpets.
  • Have a pet renting policy  Stipulate the number of pets allowed, acceptable animals or breeds, and any size limits.
  • Ask for a pet resume – Tenant are often happy to supply references from previous landlords or property managers. You may also wish to meet the pet beforehand.
  • Investigate strata bylaws – Some complexes may not allow animals, while others have rules about the type or size of pet and may require residents to register pets or ask for permission first.
  • Check your landlord insurance  Tenants are generally liable for damage caused by pets, apart from reasonable wear and tear, but it’s wise to check your insurance policy as well to find out exactly what is and isn’t covered.
  • Claim repairs at tax time  The cost of repairing reasonable wear and tear, such as refinishing floors and repainting walls, can be deducted from your rental income to minimise your tax bill.

Landlords who allow pets could boost their rental return by up to 30 per cent

Investors are always looking for ways to increase their rental return, but there’s one strategy that can boost rents by up to 30 per cent and it doesn’t involve renovating. 

In almost every capital city, median asking rents for pet-friendly apartments are higher than for homes that don’t allow pets, according to Domain Group data.That means landlords who allow pets could boost their rental return by simply checking a box.

Apartments advertised as pet-friendly are rarest in Melbourne, representing less than 3 per cent of all rentals, followed by Adelaide (6 per cent) and Sydney and Canberra (both 7 per cent).

Houses are more likely to be pet-friendly, but the proportion is still low in Melbourne (9 per cent) and Sydney (21 per cent). On the other hand, more than half of Greater Brisbane rental houses allow pets, while in Darwin, more than two-thirds are pet-friendly.

Sydney investors have the most to gain by allowing pets, according to the analysis of rental listings from the March 2019 quarter. Asking rents for apartments that allow pets are 11 per cent higher than those that don’t, which equates to $60 each week or $3120 per year.

With landlords in Sydney facing tougher competition as the rising supply of rental properties pushes down rents, allowing pets could provide investors with a point of difference and minimise the time a property remains on the rental market.

Sydney property manager and Property North Agency director Ben Benny said he always encouraged landlords to consider allowing pets to improve returns.

Related: How to prepare your home for a pet

“We definitely see an increase in rents when properties are pet-friendly,” he said. “Hands down it’s the biggest inquiry we get for any property.”

In Melbourne and Darwin, rents for pet-friendly units are 8 per cent higher, and in Adelaide and Brisbane there’s a 5 per cent difference in price.

Premium highest for rare rentals

In areas where pet-friendly rentals are least common, the premium is often higher. 

Less than 3 per cent of apartments in Sydney’s Canterbury-Bankstown area were advertised as pet friendly, but rents were 26 per cent higher, with landlords pocketing an extra $105 per week or $5460 per year. 

In the Liverpool and Fairfield areas, only one per cent of apartments are pet-friendly, and are advertised for 18 per cent more, costing tenants an extra $60 each week or $3120 per year.

It’s a similar situation in Melbourne’s inner city, where less than one per cent of units allow pets and rents are 30 per cent higher. That trend continues among apartments in the inner east, northern suburbs and bayside areas.

Although few rentals in Melbourne were advertised as pet-friendly, Lucas Real Estate senior property manager Emma Racky said this was relatively normal, and pets were often allowed on a case-by-case basis.

“People won’t be deterred from applying just because it doesn’t specifically say it’s pet-friendly,” she said. “It just depends on the owner’s preference. Some aren’t too fussed, but if it’s a new property, they’re worried about damage.” 

Restrictive landlords limit their tenant pool

In Brisbane, where pet-friendly rentals are much more common because tenants considered them part of the family.

In Brisbane, you reduce the pool of tenants if you say it’s not pet-friendly.

I love to give out a property which is pet-friendly because I know I’ll have a bigger pool of people coming through and the take-up is much faster.” In Sydney, the northern beaches has one of the highest concentrations of pet-friendly houses. More than one-third of rental houses are pet-friendly, and landlords who allow pets can expect rents to be 17 per cent higher.

Pet ownership is common among families renting houses there as trends were changing.

Over the past two or three years we’ve seen more of a shift towards younger couples, finding it more common for two-bedroom apartments.

Although property damage is a concern for many landlords, it was not the only issue. For strata buildings and apartments, the biggest concern is noise and upsetting other neighbors.

 

 

 

NO PETS

Allowing no pets at all will potentially reduce the pool of tenants who will want to rent your property.

On the upside though, having no pets obviously means there will be less wear and tear on the property in terms of damage to the property and potentially, odours in the property.

In our experience, around eight times out of ten the tenant will ask for a pet. It’s a common thing that happens throughout a tenancy.

PETS

At the start of a tenancy when being advertised, we always ask owners to consider listing a property as ‘pets upon application’ (this does not mean pets are a definite ‘yes’, it means that each application will be considered on its merits and each pet considered). Ultimately it is the owner’s decision on whether to allow pets.  The benefits of allowing pets is that it will open up your property to a much larger potential tenant pool, possibly decreasing vacancy time. The reality is the most pets and pet owners are not an issue, however, not all pets are created equal! Having a ‘pets on application’ approach coupled with a signed agreement from the tenant is a good step in providing the right to ‘veto’ any pets you do not consider appropriate and safeguarding your investment.

Over 85% of our properties are pet friendly, meaning we have more tenants looking at our properties and we have less vacancy.

According to Domain, owners who considered pets can also boost their rent returns by up to 30%!

In a nation where pets are family, great tenants with a pet can be worth their weight in gold. They tend to pay rent on time, look after the property really well and they stay for 2 to 3 years!

Everyone wins 🐶 🐱 🐦 🐰 🐟

https://www.domain.com.au/advice/landlords-who-allow-pets-could-boost-their-rental-return-by-up-to-30-per-cent-833532/

 

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Purplebricks red faced… again

Purplebricks red faced as it pulls out of US amid growing losses

08:54 03 Jul 2019

“While there remains a significant opportunity to disrupt the US market, it would take substantially more management time and resources than the company is able to commit at this time”

https://www.proactiveinvestors.co.uk/companies/news/223268/purplebricks-red-faced-as-it-pulls-out-of-us-amid-growing-losses-223268.html

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Investors enjoying national rental yield at 4 year high: CoreLogic

CoreLogic’s national hedonic rental index held put in May and was up 0.4% over the past twelve months, according to their latest Home Value Index results.

According to the May Index, Darwin and Sydney’s rental markets remain the largest drag on national rental growth, with rental rates falling 5.2% and 2.9% respectively over the past twelve months.

Hobart rents are rising the fastest amongst all the capital cities, up 4.9% over the past twelve months.

The result of strong demand coupled with low rental supply.

Although CoreLogic’s head of research Tim Lawless described rental markets as “generally sluggish,” gross rental yields are continuing to recover from their recent record lows.

Nationally, the gross rental yield is recorded at 4.13%, the highest gross yield since May 2015, but still 14 basis points below the decade average of 4.27%.

The May Index noted, “each of the capital cities and broad regional rental markets, apart from Regional Tasmania and Regional Northern Territory, have recorded either a steady or higher gross yield profile relative to the same time a year ago; a reflection of the change in rental rates being greater than the change in dwelling values.”

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Loganlea Open for inspection

Just letting you know that there is an Open Home Saturday 8th June #2019 at 12.30 to 1pm and The Team at @ljgrealestate hope to see you there 🙂 #buy #makeanoffer #property #sales #management

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Housing affordability is now at its best levels since 2016, the inaugural Housing Affordability Report from CoreLogic and ANZ has found.

Sales activity has fallen 17% over the year to February 2019, according to the latest CoreLogic Regional Report.

The report, produced with figures from the December 2018 quarter, has noted housing affordability over the last two years has been improving much faster than it had declined over the past decade.

Sydney is described as being “overwhelmingly” the least affordable market to buy in, the report notes, followed by Melbourne. Darwin is the most affordable capital city.

Regional New South Wales is also the least affordable regional market across the country due to the strong value growth over recent years.

For the first time, Hobart is the least affordable capital city to rent.

CoreLogic’s head of research for Australia Cameron Kusher says the end of the housing downturn has had to be adjusted.

“The recent drop in property values follows a long period where prices increased at a much faster pace than household incomes,” Kusher noted.

“We predict that price falls will settle later this year, followed by modest price growth starting from 2020,” Mr Kusher said.  

Kate Gibson, ANZ’s home owners lead, says some areas it is more affordable to buy than rent. 

“Buying a home is an aspiration for many Australians and for the first time, we’re seeing suburbs and towns in every state where it is more affordable to buy than rent.

“This shift, combined with record low interest rates, is driving more first home buyers to look at entering the market.

“For the first time in fifteen years most buyers are not chasing a rising market,” Gibson said.

Albury in regional New South Wales is one of the areas where it is more affordable to buy than rent.

Some 26.8% of household income goes on a rental home, however to service the repayment of an 80% LVR mortgage is only 25.4% of household income.

Broken Hill and the Far West area has one of the biggest gaps between rental and mortgage repayments.

Some 25.9% of a household income goes on a standard rental, whereas only 9.2% of household income would go on servicing a mortgage.

In regional Victoria, Glenelg and the South Grampians cost 24.3% of household income to afford to rent, as opposed to the 19.4% repayments on a mortgage.

It is cheaper in Gippsland East, Latrobe Valley, Loddon, Maryborough, Mildura, Moira, Murray River, Shepparton and Wellington to repay a mortgage than to rent.

There are no areas in Sydney and Melbourne’s CBD ring that it is cheaper to pay off a mortgage than rent, however there are a number in Brisbane.

Beenleigh, Caboolture Hinterland, Ipswich Hinterland and the Springwood Kingston region are all more affordable to have a mortgage than rent.

Sales activity has fallen 17% over the year to February 2019, according to the latest CoreLogic Regional Report.

The report suggests it was the largest fall recorded across all five regions in Queensland. 

Of the 15,475 dwellings that transacted, 43% were houses, while 57% were units. Gold Coast home values are down slightly when compared to March 2018, with house values falling -2.8%, while unit values are down -0.4% over the year. Of the 15,475 dwellings that transacted, 43% were houses, while 57% were units.

The advertised rental rates across the region increased by $20/week for houses and $10/week for units over the year, an increase of 3.7% and 2.4% respectively.

The average home is taking an additional 14 days to sell for houses and 13 days for units when compared to February 2018, while the average vendor discount has increased to

The advertised rental rates across the region increased by $20/week for houses and $10/week for units over the year, an increase of 3.7% and 2.4% respectively.

The average home is taking an additional 14 days to sell for houses and 13 days for units when compared to February 2018, while the average vendor discount has increased to -6.4% for houses, and -6.3% for units over the same period.

The CoreLogic Regional Report reveals challenging property market performance across Australia’s regions, with falling sales activity in the 12 months to February 2019.

-6.4% for houses, and -6.3% for units over the same period.

The CoreLogic Regional Report reveals challenging property market performance across Australia’s regions, with falling sales activity in the 12 months to February 2019.

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Housing affordability improves while rental affordability declines: report & analysis of new data from the Australian Bureau of Statistics has found that a slowdown in housing approvals is being felt in the economy at large.

Queensland

Housing affordability in Queensland improved with the proportion of income required to meet loan repayments decreasing to 27.5%, a decrease of 0.6% over the quarter but remaining steady compared to the same quarter last year. 

Over the March quarter, the number of loans to first home buyers in Queensland decreased to 4,677, a decrease of 17.4 per cent over the quarter and a decrease of 17.1 per cent compared to the same quarter of 2018. The number of loans (excluding refinancing) decreased in Queensland to 17,979, a decrease of 16.9 per cent over the quarter and a decrease of 14.9 per cent compared to the March quarter of the previous year. 

Rental affordability in Queensland also improved over the quarter with the proportion of income required to meet the median rent decreasing to 22.0 per cent, a decrease of 0.1 percentage points over the quarter and a decrease of 1.1 percentage points over the past year. 

Data from the Australian Bureau of Statistics has shown that housing approvals have declined, with approvals for new dwellings for April declining by 0.6 of a percentage point.

Houses recorded a decline of 1.9 per cent, yet dwellings excluding houses rose by 1.2 per cent.

Looking at the states and territories, total dwelling approvals declined the most in Victoria at 2.8 per cent, followed by Tasmania at 2.2 per cent, the Northern Territory at 2 per cent and New South Wales at just 0.4 of a percentage point.

Meanwhile, the largest rise was seen in the Australian Capital Territory at 7.7 per cent, followed by South Australia at 1.8 per cent and then Western Australia at 1.3 per cent.

Queensland approvals held steady.

Looking at the last three months to April 2019, Tim Reardon, chief economist of the Housing Industry Association, noted that approvals were down by 20.5 per cent compared to this quarter last year.

“The downturn in building activity is now evident in other economic data, including today’s data on capital expenditure. [Capital expenditure] fell [by] 1.6 per cent in the March 2019 quarter due to significant falls in expenditure on new buildings,” Mr Reardon said.

“With the slowdown in home building accelerating in the first half of 2019, it is likely to weigh on economic growth in next week’s national accounts data.

“The fall in approvals in April were most likely influenced by low levels of consumer confidence during the federal election; however, the end of the election alone will not be sufficient to bring stability back into the housing market.”

Mr Reardon added that in order to address the housing downturn on the economy, the current credit squeeze needs to be eased.

ousing affordability marginally improved across the country in the March quarter 2019 with the exception of the Northern Territory, according to research from the Real Estate Institute of Australia and Adelaide Bank. 

REIA President Adrian Kelly said the March quarter 2019 edition of the Adelaide Bank/REIA Housing Affordability Report found New South Wales had the largest improvement in housing affordability with a 1.3 per cent decrease in home loan repayments.

“While rental affordability improved marginally in the larger states of New South Wales, Victoria and Queensland as well as in Western Australia and the Northern Territory, a large decline in rental affordability in South Australia and Tasmania offset this improvement resulting in an overall decline in rental affordability nationally,” he said.

According to the report the total number of loans declined (excluding refinancing) decreased to 86,909, a decline of 20.0 per cent over the March quarter.

“This is not unusual for the first quarter of the calendar year, however, compared with the same quarter of 2018, the number of new loans declined by 13.7 per cent,” Mr Kelly said. 

“The number of those entering the home loan market also declined over the year. Interestingly, while loan size decreased for changeover buyers, it increased marginally for first home buyers.”  

Mr Kelly noted that the RBA’s decision yesterday to cut interest rates by 25 basis point rates will see a further improvement in affordability. 

“Subject to the banks passing on the full cut, for a first home buyer this means a saving of $70 per month based on an average loan size of $338k in the March quarter of 2019,” he said.

New South Wales

Over the March quarter, housing affordability in New South Wales improved with the proportion of income required to meet loan repayments decreasing to 35.4 per cent, a decrease of 1.3 percentage points over the quarter. Housing affordability also improved over the past year with proportion of income required to meet monthly loan repayments decreasing by 1.1 percentage points. 

In New South Wales, the number of loans to first home buyers decreased to 5,790, a decrease of 24.2 per cent over the quarter and a decrease of 11.0 per cent compared to the March quarter 2018. 

Rental affordability improved marginally in New South Wales over the March quarter with the proportion of income required to meet median rent payments decreasing to 28.2 per cent, a decrease of 0.1 percentage points over the March quarter and 1.9 percentage points compared with the March quarter 2018. 

Victoria

Over the March quarter, housing affordability improved in Victoria with the proportion of income required to meet loan repayments decreasing to 32.5 per cent, a decrease of 0.6 percentage points over the quarter and 1.6 percentage points compared to the same quarter of the previous year. 

The number of loans to first home buyers in Victoria decreased to 7,199, a decrease of 18.7 per cent over the quarter, and a decrease of 11.9% compared to the March quarter 2018. In Victoria, the total number of loans (excluding refinancing) decreased to 24,566, a decrease of 20.4 per cent during the quarter.

Rental affordability in Victoria improved over the March quarter with the proportion of income required to meet median rent decreasing marginally to 23.1 per cent, a decrease of 0.1 percentage points over the quarter and 0.7 percentage points compared with the March quarter 2018. 

Queensland

Housing affordability in Queensland improved with the proportion of income required to meet loan repayments decreasing to 27.5%, a decrease of 0.6% over the quarter but remaining steady compared to the same quarter last year. 

Over the March quarter, the number of loans to first home buyers in Queensland decreased to 4,677, a decrease of 17.4 per cent over the quarter and a decrease of 17.1 per cent compared to the same quarter of 2018. The number of loans (excluding refinancing) decreased in Queensland to 17,979, a decrease of 16.9 per cent over the quarter and a decrease of 14.9 per cent compared to the March quarter of the previous year. 

Rental affordability in Queensland also improved over the quarter with the proportion of income required to meet the median rent decreasing to 22.0 per cent, a decrease of 0.1 percentage points over the quarter and a decrease of 1.1 percentage points over the past year. 

South Australia

Over the March quarter, housing affordability in South Australia improved with the proportion of income required to meet monthly loan repayments decreasing to 26.9 per cent, a decrease of 0.6 percentage points over the quarter and 0.3 percentage points compared to the March quarter in 2018. 

Over the March quarter, the number of loans to first home buyers in South Australia decreased to 1,370, a decrease of 16.7 per cent over the quarter but an increase of 5.6 per cent compared to the March quarter 2018.  In South Australia, the total number of loans (excluding refinancing) decreased to 6,503, a decrease of 14.5% over the quarter, and a decrease of 2.0 per cent compared to the March quarter 2018. 

Rental affordability in South Australia declined over the quarter with the proportion of income required to meet average rent payments increasing to 22.8 per cent, an increase of 0.8 percentage points over the quarter and an increase of 0.4 percentage points compared to the same quarter in 2018. 

Western Australia

Over the March quarter, housing affordability in Western Australia improved with the proportion of income required to meet loan repayments decreasing to 22.6 per cent, a decrease of 0.5 percentage points over the quarter and a decrease of 1.0 percentage points over the previous year. 

The number of first home buyers in Western Australia decreased to 3,313 in the March quarter, a decrease of 13.6 per cent over the quarter and a decrease of 7.4 per cent compared to the same time last year. The total number of loans (excluding refinancing) in Western Australia decreased to 9,235, a decrease of 16.2 per cent over the quarter and a decrease of 9.3 per cent compared to the same time last year. 

Rental affordability in Western Australia also improved during the March quarter with the proportion of income required to meet the median rent decreasing to 16.5 per cent, a decrease of 0.1 percentage points over the quarter. However, rental affordability declined over the past year with proportion of income required to meet median rent increasing 0.2 percentage points. 

Tasmania

Over the March quarter, housing affordability in Tasmania improved with the proportion of income required to meet loan repayments decreasing to 25.4 per cent, a decrease of 0.9 percentage points over the quarter. However, housing affordability has declined over the past year with proportion of income required to meet monthly loan repayments increasing by 0.9 percentage points. 

The number of first home buyers in Tasmania decreased to 475, a decrease of 12.8 per cent over the quarter but an increase of 13.1 per cent compared to the same quarter of the previous year. The total number of new loans (excluding refinancing) in Tasmania decreased to 2,245, a decrease of 12.9 per cent
over the quarter but an increase of 4.5 per cent compared to the corresponding quarter 2018. 

Rental affordability in Tasmania declined over the quarter with the proportion of income required to meet median rents increasing to 29.3 per cent, an increase of 1.2 percentage points over both the quarter and when compared to the same period in 2018. 

Northern Territory

Over the March quarter, housing affordability in the Northern Territory declined with the proportion of income required to meet loan repayments increasing to 20.2 per cent, an increase of 0.8 percentage points over the quarter and an increase of 0.4 percentage points when compared to the March quarter 2018. 

The number of loans to first home buyers in the Northern Territory decreased to 187, a decrease of 28.4% over the March quarter but an increase of 12.7% compared to the March quarter 2018. The number of new loans (excluding refinancing) in the Northern Territory decreased to 506, a decrease of 22.0 per cent over the quarter and a decrease of 17.6 per cent compared to the March quarter 2018.

Rental affordability in the Northern Territory improved during the March quarter with the proportion of income required to meet the median rent decreasing to 20.9 per cent, a decrease of 0.4 percentage points over the quarter and 1.6 percentage points over the previous year. 

Australian Capital Territory

Over the March quarter, housing affordability in the Australian Capital Territory improved with the proportion of income required to meet loan repayments decreasing to 20.3 per cent, a decrease of 0.3 percentage points over the quarter. 

The number of loans to first home buyers in the Australian Capital Territory decreased to 392, a decrease of 44.8 per cent over the quarter, and a decrease of 43.0 per cent compared to the March quarter 2018. The number of loans (excluding refinancing) in the Australian Capital Territory decreased to 1,952, a decrease of 31.0 per cent over the quarter and a decrease of 14.9 per cent compared to the March quarter 2018.

Rental affordability in the Australian Capital Territory has declined over the quarter with the proportion of income required to meet the median rent increasing to 19.0%, an increase of 0.1 percentage points over the quarter and an increase of 0.5 percentage points over the past year. 

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J.P. Morgan expects the RBA will slash Australia’s cash rate to just 0.5% by the middle of next year. The cash rate currently sits at 1.5% The bank says 50 basis points of cuts are unlikely to be sufficient to lower unemployment to levels where inflationary pressures begin to increase. Financial markets see a 25 basis point rate cut in June as a near certainty. Another 25 basis point cut is also fully priced by November.

Sharp uptick in housing sentiment post-federal election in some states: Westpac

Consumer sentiment towards the housing market has certainly lifted following the election.This article from Domain.com.au explains the results.

Hand Drawing A Graph About Real Estate Market Concept Image

Consumer sentiment towards housing has been boosted across some of Australia even before taking into account the re-election of the federal Coalition and key monetary policy changes, Westpac Australia Economics says.

Sentiment in NSW toward house prices has taken a sharp turn upwards, likewise Tasmania.

The response was more muted in the national results, and in Victoria, Queensland, the ACT and the remaining states and territory, Westpac #Housing pulse #May #2019 by @GillandDebello #2019 #australia https://www.slideshare.net/GillandDebello/westpac-housing-pulse-may-2019 released on Tuesday, shows.

“Prices have continued to decline but at a slower pace. Turnover remains very low but auction markets and listings are showing an improved tone,” the report states.

image_1_uzyjlf
NSW housing–related sentiment from consumers. Photo: Housing Pulse report by Westpac Economics.

Consumer sentiment about whether it is time to buy has been trending upwards for about 12 months across Australia.

Since the election, the Australian Prudential Regulation Authority has removed a restriction key to slowing the flow of credit.

The restriction was a policy which required mortgages to be stress tested for repayments at a 7 per cent interest rate.

APRA will now allow banks to set their own stress-test rate.

The Reserve Bank has also given strong indications that it will cut cash rates to a new historic low of 1.25 per cent at next week’s meeting, with some pundits predicting another cut later in the year.

These, combined with the apparent death of Labor’s tax reforms and the planned introduction of the Coalition’s first-home buyer guarantee scheme, have prompted some property experts to rethink dire predictions.

image_2_txonwa
Victorian consumer sentiment was more subdued. 
Economic growth

AMP Capital chief economist Shane Oliver was the first to predict a top-to-bottom fall of 20 per cent across the capital cities, but revised it down to 12 per cent and indicated he believed  the market had just about reached bottom.

The Westpac report indicated that sentiment may rise further following these changes.

“Needless to say, next month’s sentiment results, due out June 12 and surveyed in a week that is expected to see the RBA’s first 25 basis point rate move, will be of intense interest,” it stated.

Read the full article here

Rebound is on

House prices are rising in Sydney & Melbourne.

With the blindingly obvious caveat that an index doesn’t denote anything meaningful for individual properties, metropolitan housing prices are now rising again.

Sydney and Melbourne home values both rose over the week for the first time since all the way back in 2017, with a 0.3 per cent gain for Sydney, and a marginal increase in Melbourne.

Nab

Commonwealth Bank CEO Matt Comyn reported the largest volume of loan applications in six months this week, now that the looming threat of wholesale changes to taxation has been extinguished.

Whether or not those loans are approved on a timely basis…let’s see.

Read the full article here

J.P. Morgan expects the RBA will slash Australia’s cash rate to 0.5%

Are we in for an interest rate cut?

According to an article on Business Insider interest rates are set to drop to 0.5% by the middle of next year.

J.P. Morgan has just taken the lead when it comes to the most aggressive forecaster for RBA rate cuts in the year ahead.

Reserve Bank Of Australia

In a note released on Wednesday, the bank said that it now expects the RBA will slash Australia’s cash rate to just 0.5% by the middle of next year, a full 100 basis points below the level where it currently sits.

Previously, J.P. Morgan was forecasting the RBA would deliver two 25 basis point rate cuts this year, taking the cash rate to 1%, around the same level currently expected by financial markets.

So why the change in view?

According to Sally Auld, Chief Economist and Head of Australia and New Zealand Fixed Income and FX Strategy at J.P. Morgan, it’s because 50 basis points is unlikely to be enough to lower unemployment and boost inflation in her opinion.

“Core inflation has fallen 0.5 percentage points in the last 12 months and is now expected to track a lower path in coming quarters relative to the RBA’s expectations earlier this year,” Auld wrote.

“Not only is the real cash rate [the nominal level less inflation] now at its highest level in three years, but a lower level of inflation implies that more than 50 basis points of easing will be required to return real short rates to appropriate levels.”

low interest rates

Linked to the soft inflation outlook, J.P. Morgan also believes just two 25 basis point rate cuts will be sufficient to lower unemployment to levels consistent with higher wage growth, a necessary ingredient required to help lift domestic price pressures.

“A simple rule of thumb is that 50 basis points of easing should bring the unemployment rate lower by 0.15 percentage points over the subsequent 12-18 months,” Auld wrote.

“Assuming a starting level of 5.2% for the unemployment rate, 50 basis points of easing appears inadequate to deliver the macro-economic outcomes necessary to deliver a pick-up in inflation.”

Along with downside risks for inflation and a lack of progress in lowering unemployment, Auld says a recent deterioration in the global economy, along with the risk of rate cuts from the Federal Reserve should the U.S. economy begin to falter, are other factors underpinning its forecast revision for the cash rate.

recession-australia-note-money-economy-squeeze-tighten-save-saving-budget-cut

“The structural headwinds facing the domestic economy — a deleveraging of household balance sheets, persistently low incomes growth, a recalibration of lending standards and a rebalancing of economic growth away from housing-related activity — all demand a long period of low rates,” Auld wrote.

As for the risks to J.P. Morgan’s forecast are “two-sided”, implying the RBA may ease less or more than what’s currently foreseen.

“On the one hand, we can’t be definitive that 0.5% is the effective lower bound for the policy rate in Australia. It may well be lower, and we suspect policy makers are open-minded about this possibility given the experience in other developed economies,” Auld wrote, referring to the point where rate cuts fail to deliver any further support to the economy.

“On the other, the low level of government debt relative to GDP in Australia suggests potential for significant fiscal easing that could offset the need for a sub 1% cash rate.”

Read the full article here

It’s a trifecta of positivity

The post election positive vibes have translated across to the property market.

In this article for Switzer, John McGrath looks at the what’s going on.

RBA

No changes to negative gearing and Capital Gains Tax (CGT); the strongest indication yet that the RBA will cut interest rates as early as next week; and APRA’s decision to lower the interest rate benchmark used for new loan serviceability tests is a trifecta of positivity for the property market.

Credit restrictions have been the biggest challenge in the property market over the past 18 months.

Even good quality loan applicants have had to wait longer for approval (often missing out on the property they want in the process) and/or adjust their budgets due to unexpected finance limits.

It’s meant that competition has dropped, leading to dips in home values across the country.

Latest CoreLogic figures show price declines of -2 to -11% across the capital cities over the year to May with the exception of Adelaide, which was barely positive at +0.3%; Hobart +3.8% and Canberra +2.5%.

It’s had a particularly noticeable effect in Sydney and Melbourne because the banks got tight with credit right around the peak of the boom, so it has exacerbated the cyclical downturn and forced prices down faster than we’ve seen in other cyclic downturns for decades.

Royal Commission Into Misconduct In The Banking

APRA’s decision to let the banks choose their own mortgage rate benchmarks rather than forcing them to continue assessing every applicant’s ability to repay their loan at 7% makes a lot of sense.

Interest rates have been low for a long time and there’s little doubt they’ll go lower as early as next week, so we’re well off the long-term average (which is above 7%) and probably will be for a while.

The 7% benchmark was introduced in 2014, during Sydney and Melbourne’s boom, to raise the standards of responsible lending.

Following the Royal Commission, which scared the banks more than any other measure into becoming overly cautious with credit, APRA has judged that a high benchmark is no longer needed.

APRA’s decision isn’t a return to easy lending.

They will still require the banks to use a minimum 2.5% buffer above their advertised rates to assess serviceability.

Interest Only Lending Australia

The change will reportedly equate to 9% more borrowing power.

This will make a real difference in today’s market where prices have come off the boil and more value is already available.

If interest rates drop, which is highly likely next week following comments from the RBA Governor earlier this month, then that will mean even greater borrowing capacity.

This week I also want to talk about the Liberal Government’s First Home Loan Deposit Scheme, which will allow first home buyers to purchase with a 5% deposit with the government providing a guarantee on the remaining 15%.

It will be available from 1 January 2020 to single applicants earning up to $125,000 or couples earning $200,000.

It will be capped at 10,000 borrowers per year, with purchase price limits by region and they will still need to pass the banks’ serviceability tests.

Read the full article here

House built by social media now for sale

Social media has taken over many facets of our lives, and it would seem real estate is no different.

An article on Realestate.com.au looks at a house that was build entirely from social media inspiration.

It’s been dubbed “the house that social media built” and now this spectacular beachfront residence could be yours.

Designed entirely from digital inspiration, the industrial, mid-century style property at 24 Malcolm Street, North Beach is the culmination of thousands of snippets found on social media and the internet.

Malcolm St Front

Owner Sasha Ioppolo trawled social media platforms to uncover new, exciting and creative design ideas before teaming up with the award-winning team at Chindarsi Architects who then created the custom design.

Cleverly set on a 500sqm block with beautiful ocean views, the striking three bedroom, two bathroom home has become a feature of the suburb.

Malcolm St Kitchen

“The vision was for a unique architectural home using mid-century influences with industrial low maintenance materials that maximised the views available to the location,” Ioppolo says.

“The design was inspired by images collected from other mid-century and industrial homes that we admired from all over the world.”

The property is laden with intricate detail, including an unusual concrete ceiling, electronic dog door, art lift over the wall-mounted television and a polished concrete feature staircase.

Malcolm St Deck

Outside, there is a saltwater swimming pool.

The alfresco area incorporates marine outdoor speakers, a fridge, dishwasher, stainless steel cabinetry and a built-in barbecue, as well as a robot lawnmower.

Ioppolo says she and her plumber-builder husband lived in the previous property for five years before they decided to demolish to create their dream home.

Malcolm St Bathroom

“We had a strong vision of what we wanted and then sourced an architect based on what we were looking for,” she says.

“We were extremely happy to meet the Chindarsi team and were confident in their ability to design exactly to the mid-century/industrial aesthetic we were wanting.

“We love the open plan kitchen living and dining area.

We can appreciate the views of the ocean from various aspects whilst enjoying some of the main architectural features on the home including the concrete wall and the teak cabinetry.

Read the full article here








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How savvy investors can cash in on suburban zoning changes

The greatest argument in city planning is about density. Most state governments want to contain city growth within the existing urban footprint.

The alternative is urban sprawl, which is impractical and costly, because there’s no infrastructure in greenfield areas.

To create growth within existing suburbs, you have to allow increased density. That means the old model of a family home on a big allotment has to be relaxed.

In February, the Victorian treasurer Tim Pallas warned Melbourne residents to expect more density to absorb rapid population growth, in which Victoria leads the nation.

But homeowners in leafy suburbs don’t want six-packs on their street.

The NIMBY backlash has been considerable and local politicians have become opponents of density, claiming it creates congestion.

The NSW government has, in effect, banned new unit development in Sydney local government areas (LGAs) such as Ryde.

Brisbane City Council has also moved to stop unit development in certain situations. In Western Australia, the planning minister Rita Saffioti drafted a new planning scheme for the upmarket City of Nedlands after the council refused to do so. Nedlands, noted for its low density, had last updated its scheme in 1985.

Last year two independent research papers blamed the housing affordability issue on zoning systems that prevent higher density.

Reports from the Reserve Bank and Flinders University both argued that zoning restrictions kept affordable attached dwellings out of desirable areas, forcing new development to the fringes.

This swirling debate has created all sorts of conflicts but also opportunities for investors. It’s about finding the density-friendly locations and also the ones where new infrastructure is being created.

Exploit zoning changes

Despite the forces opposing density, many capital city councils have relaxed zoning rules.

Locations that previously allowed one house on a suburban block may now allow two or more. Suburban blocks of the right size and zoning can be subdivided or redeveloped.

Corner blocks have become especially prized because they make the process easier.

It’s all about adding value. If you buy an 800sqm corner block with a single house and are able to subdivide, you’ve created a second home site at low cost.

You can build a second house and accelerate the wealth-creation process – or on-sell with the approval in place.

Such opportunities are plentiful, both in capital cities and regional centres. The regional ones are becoming popular because the buy-in prices and development costs are lower.

To more easily find the opportunities, it helps to have a good buyers agent on your team. Miriam Sandkuhler, of Melbourne-based Property Mavens, says investors are increasingly seeking value-adding opportunities.

“Investors want to maximise the return on their investment,” she says.

“But an investor’s risk profile will often determine how they value-add. Somebody with a higher risk profile will do a subdivision or redevelopment, whereas someone with a lower risk profile is more likely to do simpler updates like landscaping or repainting the home.”

Sandkuhler says it’s important to understand what’s in demand before undertaking a value-adding project. If it’s an area with high demand from downsizing seniors, it might suggest single-storey dwellings with easy access and specific features, including space for a carer.

Adding a granny flat is a popular option but the rules differ from state to state. In Victoria, granny flats need to be occupied by family members.

Not all properties are suitable for subdivision and the shape of the block may dictate outcomes. There may be specific requirements, such as whether a fire truck can access the new home at the rear of the site.

Sandkuhler is busy in regional Victoria – in cities such as Ballarat, Bendigo and Geelong – because of the affordability factor.

It’s harder to find opportunities in Sydney and Melbourne because the costs can be prohibitive.

In Brisbane and Adelaide you can do a lot more with less money, the smaller capital cities and the better regional centres have the best opportunities.

Perth has possibilities because the authorities are trying to contain the city’s north-south sprawl, so increased density is allowed in LGAs such as Joondalup.

It adds up to opportunity.

Brisbane case study: a house on 800sqm in Wavell Heights, bought for $810,000.

The land is subdivided, the house demolished and two new homes built. The total cost, including subdivision costs and construction, is $1.59 million and the new houses are sold for a total of $1.77 million.

The gross profit is $178,000. The investor has put in $416,000 (borrowing the rest), so the return on the investment is 43%.

Investors can do it for less by buying in regional cities where a corner block may allow subdivision into three sites at relatively low cost.

I would encourage people to keep their minds open and go beyond their own backyards

It would be hard to do this profitably in Sydney at the moment.

The core risks are spending too much on construction, building the wrong product and skimping on professional advice. “Don’t be afraid to pay for good advice

It’s false economy not to. The risk is not engaging them before you purchase the site. Brisbane areas to consider include suburbs like Lawnton, which has good infrastructure and homes on large allotments, and Bridgeman Downs, where acreage blocks are slowly being swallowed up and chopped up into smaller sites.

There are opportunities all over Brisbane because it’s such an underdeveloped city with “arge houses that someone has lived in for 30 years on large blocks of land that could be turned into two blocks or six townhouses.

There is more money in redeveloping six townhouses than in doing a “splitter block” (turning one home site into two) but it’s wise to start small.

Start with a splitter block then perhaps do a four-pack project and then gradually get into bigger things.

Infrastructure trail

Many factors contributed to the recent Sydney boom but infrastructure spending was arguably the biggest of them.

Sydney’s upsurge was generated by an economy rated as the strongest in the nation, with infrastructure spending creating economic activity, jobs, wealth – and real estate demand.

Infrastructure can have specific impacts for real estate, especially transport infrastructure. A new motorway or rail link can lift the appeal of a location that was previously less accessible.

One of the tricks to creating wealth through property investment is to buy property that lies in the path of progress.

Even before work has started on the second Sydney airport at Badgerys Creek, the proposal has generated massive growth in property values in the area.

While Sydney prices are no longer rising, investors who buy strategically will still make money from the ongoing infrastructure planning. The south-west, west and north-west of the greater Sydney area will all benefit from new motorways and rail links.

An area of great potential in Adelaide is the City of Marion, where there are university and medical precincts with good transport links. The rail line is being extended to create new hotspots and the

Tonsley precinct is transforming a former car plant into a centre of innovation.

This factor is not confined to the big cities. Queensland’s strongest property market is the Sunshine Coast, thanks to a massive infrastructure spend.

Investment totalling more than $20 billion includes highway upgrades, airport expansion and creation of a new CBD. The game changer, however, has been a new medical precinct, based around the $2 billion Sunshine Coast University Hospital.

The infrastructure spend is not only creating a bustling economy but bringing in new residents, many of them on good money. The biggest uplift in prices has been at the top end, with many suburbs around Noosa Heads rising 15%-20% in the past year.

Transport infrastructure has played a big part in the rising markets in regional Victoria.

It’s not the only factor – affordability and strong local economies have helped – but the strong transport links to Melbourne have boosted the appeal of regional centres such as Geelong, Ballarat and Bendigo, helped by the $5 billion regional rail link.

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