Despite being in the midst of a nationwide dwellings construction boom over recent years, the total volume of housing stock increased by a lower proportion in Brisbane, Adelaide, Perth and Hobart between 2011 and 2016 than they did between 2006 and 2011.
Over the five years between the Census collection periods, there has been a shift towards denser housing stock being added to the capital cities is evident.
Interestingly, while driving around inner city areas you would be led to believe that it is higher density units which have been most abundant in new supply, the data points to medium density supply having ramped up the most.
In Sydney (17.9%), Melbourne (61.0%), Brisbane (29.6%), Adelaide (46.5%), Perth (49.4%) and Canberra (36.9%) it was medium density housing types which recorded the greatest increase in stock over the five years.
In each of these cities, except for Adelaide and Perth, separate house stock saw the smallest increase of the three housing types over the five years.”
Looking at the proportion of total housing stock by type based on the Census data, across each capital city, separate houses remain the dominant property type.
However, given the previously presented data, the proportion of separate houses has fallen over recent Census periods.
The data indicates that in most capital cities, medium and high density housing remain a relatively small but increasing proportion of the overall housing mix.
Ten years ago in Sydney, 61.7% of housing stock was separate houses, and in the latest Census 55.7% of housing stock was separate houses.
If this trajectory continues by the 2026 Census less than half of Sydney’s housing stock will be separate houses.
With ongoing under investment in much needed infrastructure, there are significant lifestyle benefits associated with living closer to the city centre however, the supply of land in the areas closer to the city centre is limited.
This is leading to increasing levels of medium and higher density dwelling construction and premiums for detached housing located close to the city centres.
Although approvals for these types of properties has slowed recently, it is anticipated that construction of medium and high density dwellings will remain elevated relative to historic levels.
I believe we’ll see the shift towards a greater proportion of capital city housing being medium and high density will continue over the coming years.
Cameron Kusher is research analyst for CoreLogic.
The mortgage rate lift is starting to be felt, driven largely by Australian mortgage lenders rationing credit to the investor segment, according to CoreLogic’s Cameron Kusher.
He said the mortgage rate premium for investors appears to finally be biting into the market with weakness in both total investor credit and investor housing finance commitments.
“April 2017 lending aggregates data from the Reserve Bank (RBA) showed that investor credit rose by 0.55 percent over the month, its lowest monthly increase since August 2016,” he said.
“At the same time, April 2017 housing finance data shows there was $12.6 billion in investor housing finance commitments over the month, the lowest value since September 2016.
“Since August and September of last year, standard variable mortgage rates for investors rose by 30 basis points compared to a 5 basis point increase for owner occupiers.
“There are individual states and territories in where a slowdown in mortgage demand by investors will have more of an impact, namely New South Wales and Victoria.
“Tasmania is the only state or territory where the value of lending to housing investors is currently rising however, in terms of the value of lending to investors, New South Wales and Victoria account for a substantial majority of overall lending.
“This is partly a function of higher housing costs in these two states, nevertheless, New South Wales accounted for 49.3 percent of all investor lending nationally in April 2017 with Victoria accounting for 27.4 percent.
“A pull- back in lending to investors is inherently likely to have more of an impact on the New South Wales (Sydney) and Victorian (Melbourne) housing markets.”
The potential impact on the New South Wales and Victorian housing markets of investor slowdown is further highlighted by the fact that, excluding refinances (which are also trending lower), investors accounted for 55.3 percent of mortgage demand in New South Wales in April 2017 and 46.8 percent in Victoria.
“In all other states and territories, investors accounted for less than 40 percent of mortgage demand in April 2017, with the proportion trending lower over recent months in most regions.
“We anticipate that investor demand will continue to slow over the coming months.
“We’re seeing lenders re-price mortgage rates for investors and, we are yet to see the full impact of the policy changes designed to slow the level of interest-only lending.”
“With investor demand likely to fade further, this will also contribute to a further slowing of the rate of value growth in the Sydney and Melbourne housing markets where investor demand has been significantly greater than it has been elsewhere.
“A reduction in the pace of capital gains will add further disincentive to investors.
“We can assume most investors are focussed on the prospects for capital growth and relying on a negative gearing strategy to offset the cash flow losses.”