Increased Mortgage Activity from FHB

ABS data shows loans to owner-occupiers rose by 5 percent in December
and were higher by 18 percent than a year before. New FHB loans rose
by 6 percent month-on-month and were up 38 percent a year ago than
the same month. After the easing of APRA's loan conditions and
interest rate cuts in 2019, increased mortgage activity was spurred
on by owner-occupier and first-home buyers.

“It represents the
largest volume of FHB loans since December 2009,” says HIA
economist Angela Lillicrap, “This strong borrowing data is
consistent with other leading indicators, including new home
purchases and construction approvals which indicate that the housing
market reached a turning point mid-2019,” she says.

“This confirms our
expectations that the market reached a relatively shallow trough in
2019.” Across the country, lending to owner-occupiers for new
dwellings increased in the December quarter for all states and
territories except for Tasmania. The biggest increases were in the
ACT (up 40%), South Australia (16%), Queensland (13%) and the NT
(7%).

Is A Mortgage Cheaper Than Rent?

According to Ms. Eliza Owen CoreLogic’s Head of Australian Research “according to reports, more than a third of Australia's assets 33.9 percent find a mortgage repayment less than weekly rental repayments. Most of these 20 percent were in the Queensland region, namely the Gold Coast and the Sunshine Coast. “

At a greater capital
city level, Darwin was the region where mortgage serviceability cost
less than renting in most cases. 77.6 percent of Darwin homes are
estimated to have lower mortgage repayments than rental costs. The
phenomenon occurs on the other end of the spectrum only 7.1 percent
of all Sydney properties.

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Housing Supply Issues Emerge

According to property advisory firm Charter Keck Cramer, Sydney, Melbourne, and Brisbane will suffer a shortage of new housing by 2022, as the construction of new high-rise dwellings dwindles. "By the end of 2021, all the East Coast capitals are facing a significant shortage," says national director of research and strategy Rob Burgess.

Last year, 6,300 new units were launched by Melbourne which needs about 50,000 new dwellings a year to keep up with its growing population.

The new apartment releases from Metropolitan Sydney last year amounted to 5,700, well down from the 16,300 releases in 2018. While Sydney is larger than Melbourne, it has slower population growth, which means it needs about 40,000 new homes each year and 60 percent would traditionally be apartments.

“Sydney faces a very significant supply issue pushing into 2022,” Burgess says. Brisbane, which ended its slump in the development cycle of apartments faster than the two southern cities, even experienced a fourth straight year of fewer new unit openings, though the investment property loan rates downturn slowed.

Instead, the market slowdown pushed back many completions and this year will likely to mark the peak with 19,900 completions, Mr. Burgess said. "We're headed for record completions in Melbourne," he said.

"Part of the reason for that is that once the market started slowing down, the marketing and sales cycles stretched out significantly. What had been a marketing campaign lasting six or eight months was forced into a program of 12 to 14 months."

Original Post Here: Housing Supply Issues Emerge

Boost Increased Land Sales

The number of Australians buying land has increased significantly as buyers benefit from affordability. House prices were falling across the country but particularly in Sydney and Melbourne. Cuts in the RBA's cash rate and relaxing APRA's funding limits have made servicing a loan simpler. Tax cuts and other economic initiatives have helped to restore confidence to the wider housing market and helped boost land sales.

According to the latest data from the Housing Industry Association, land sales rose 46 percent across the nation in the six months to the end of the quarter of September 2019. The increased demand for residential land has not yet had any material effect on the prices of land. The capital cities saw a quarterly increase in the land median value of 0.7 percent and the regions increased by 0.6 percent. During the period the 10,563 lots sold were much higher than the quarter of March 2019, when sales were the lowest on record.

The
return has yet to have an impact on land prices, although Eliza Owen
of CoreLogic says it may not belong until demand drives higher
prices. “Demand for land and dwellings has rebounded strongly since
June last year, which is also reflected in a 6.7% rebound in national
dwelling values over the past seven months,” she says.

The rebound in the housing & property investment market follows the outcome of the Federal Election, a relaxation in lending standards, tax cuts, and interest rate reductions.

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Vacancy Started to Fall

Is rental property a good investment? Great news for property investors, vacancy rates have been falling, and rents are rising across most nationwide markets. A new study by SQM Research shows that the national vacancy average is 2.1 percent tighter than the rate of 2.5 percent in December 2019 and slightly lower than the rate of 2.2 percent a year ago.

The figures suggest there is a shortage of homes available for rent in most major
markets. In January, all cities reported reductions in vacancy rates, with the exception of Hobart, which remained steady at 0.6%, the lowest of all capital cities.

Adelaide (1%) and
Canberra (1.4%) have very tight rental markets, while Perth,
Brisbane, and Melbourne all have vacancy rates a little above 2%.
Darwin recorded 3.2 percent of the highest vacancy rate, followed by
Sydney 3.1 percent.

Managing Director of SQM Research, Louis Christopher said, "Following on from December, January’s vacancy rates are also affected by seasonality. We will have a clear picture of the rental market when the numbers for February are released. However, we do believe that rental vacancy rates have now peaked in Sydney, Brisbane, Perth, and Darwin. And assuming a stable economy, these cities are likely to record gradually lower vacancy rates as 2020 progresses.”

The capital city
average for house rents has risen by 1.6 percent over the last 12
months. Rents for both houses and apartments in Sydney, Brisbane,
Perth, Adelaide, and Hobart have risen in this period. Rent for both
Sydney and Darwin homes and units, however, remains lower than they
were a year ago.

Original Post Here: Vacancy Started to Fall

Clearance Rates Continue To Rise

Auction clearance rates continue to increase for the same duration last year, according to CoreLogic, with the latest national average of 79 percent well above the strike rate of 51 percent. Last week, 1,555 homes were taken to auction across the combined capital cities, returning a 78.6 percent preliminary auction clearance rate.

By comparison, last
week there were 1,167 auctions, returning a preliminary clearance
rate of 69.4 percent, before changing to a final clearance rate of
67.7 percent. Auction rates were smaller with 1,450 homes heading
under the hammer across the combined capital cities over the same
week last year, delivering a final auction clearance rate of just
51.2 percent.

Melbourne cleared 79
percent of its 717 auctions and 80 percent were sold of Sydney's 578
properties auctioned. Canberra had the highest 90 percent success
rate, although under the hammer there were only 48 houses.

62 percent of the
104 properties in Brisbane were cleared at the auction, a huge
improvement on the 29 percent a year earlier. Adelaide unloaded 75
percent of the 82 properties under auction, while Geelong also
achieved a good 90 percent result.

The outcomes were
positive in regional areas, including the Central Coast 55 percent,
the Mornington Peninsula 63 percent, the Hunter Valley 69 percent,
Wollongong 61 percent and the Gold Coast 52 percent.

The clearance rates of the combined capital cities were around 75 percent in 2016 and 2017 until they started to fall, dropping from December 2018 to January 2019 to around 40 percent. Home equity loan on investment property prices have grown over the last year apart from a fall over the Christmas holiday season.

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Housing Construction Boost Growth

The Reserve Bank predicts that this year Australia's economy will grow by about 2.75 percent and next year by 3 percent, reflecting a positive outlook for the country given the bushfires and coronavirus.

Reserve
Bank Governor Philip Lowe says dropping unemployment by
rebuilding would counterbalance the harmful effects of the bushfires
and the virus. He says the economic hit from the catastrophic
bushfire season and the virus threat that unfolds will only weigh
temporarily on domestic growth.

The Bank's outlook was for demand growth to accelerate slowly, accompanied by moderate growth in disposable household income and housing market recovery. In most capital cities and areas of regional Australia, increases for housing prices had picked up in recent months. Prices had increased very strongly in Sydney and Melbourne in recent months. Higher housing prices and the associated increase in housing turnover were expected to support consumption and property investment.

He states that
coming to an end was the downturn in global growth that started in
2018 and that global growth is expected to be slightly stronger this
year and next than it was last year.

He credits the
expected growth to low interest rate trends, recent tax refunds,
continuing infrastructure spending, a better resource sector forecast
and, later this year, an estimated improvement in residential
construction. Mr. Lowe also points out that the Australian dollar is
around its lowest in recent times and will help exporters.

Post Source Here: Housing Construction Boost Growth

FHB Loans All Time High

According to new ABS reports, first-home-buyer home loans rose to their highest level in December since late 2009. Master Builders chief economist Shane Garrett reports home loan volumes to FHBs rose 6.2 percent to mark a total of 9,606 a month. The last time they reported a higher monthly average was precisely 10 years ago-back in December 2009.

“The great news is
that FHB has expanded its activity even more since the beginning of
this year, The latest First Home Loan Deposit Scheme is already a big
success and, once it is released, the official data will reveal
bigger gains for FHBs.”

“There is a great
opportunity for people to buy or build their first home at the
moment. Apart from the assistance offered by the new First Home Loan
Deposit Scheme, interest rates are at their lowest in many decades
and house prices have stabilised after dropping back from the highs
reached in recent years,” Shane Garrett said.

The owner-occupier
market share of FHB was strongest in Western Australia throughout
December 43 percent, led by Victoria 41 percent, Northern Territory
38 percent and ACT 33 percent respectively.

Figures from last week also suggest other parts of the housing market are well recovered. Loans from property investors grew for the third consecutive month and reached a 14-month peak during December, says Garrett.

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