Australia Residential Property Review

September 27, 2018

 

 

Australia is experiencing a record number of homes for sale in its residential market after an unprecedented amount of new-builds have now come available. As a result this is helping to ease the cost and affordability for buyers in a report by Propertywire.

 

Constraints had been in place on new residential building and as result prices had been steadily increasing until 2014 when new construction started.

 

Tim Reardon, principle economist of the Housing Industry Association (HIA) says of the affordability in Melbourne and Sydney:

 

‘The stalling of rental price inflation in the June quarter this year is the most important indicator as it tells us that the pent-up demand for new housing in Sydney and Melbourne is beginning to be met with a record volume of new housing,’ said Reardon.

 

‘The fall in house prices will dampen demand for new housing over the next 12 months. Add to this, the proliferation of punitive taxes on investors in the housing market, disincentives to overseas buyers and tighter oversight of mortgage lending for home purchases and the environment for residential building is facing significant challenges,’ he explained.

 

‘For these reasons we expect that the housing market will cool over the next couple of years, but the down cycle that has emerged, in certain segments of the market and locations, will be moderate,’ he added.

 

Detached home starts for March 2018 were the most in 18 years with June expected to show continued strength of the housing market.

 

 

 

Mr. Reardon:

 

‘On this basis, it now looks like we will round out the 2017/2018 year with over 120,000 detached house starts. This would be the strongest four quarter performance for the sector since the mid-1990s.’

 

What about the new-build market for Sydney and Melbourne within the next 12 months and affordability?

 

‘The stalling of rental price inflation in the June quarter this year is the most important indicator as it tells us that the pent-up demand for new housing in Sydney and Melbourne is beginning to be met with a record volume of new housing.’

 

‘The fall in house prices will dampen demand for new housing over the next 12 months. Add to this, the proliferation of punitive taxes on investors in the housing market, disincentives to overseas buyers and tighter oversight of mortgage lending for home purchases and the environment for residential building is facing significant challenges.’

 

‘For these reasons we expect that the housing market will cool over the next couple of years, but the down cycle that has emerged, in certain segments of the market and locations, will be moderate.’

 

‘The slowdown in Sydney and Melbourne is not consistent across the rest of their respective states. Strong activity in major regional centres has offset some of the decline in metropolitan areas. Queensland, Tasmania and South Australia are also on different trajectories and Western Australia is no longer in decline.’

 

Other metropolitan areas are likely to see improvement in affordability in the apartment sector. Victoria had a record high of 12,000 multi-unit start ups in the March quarter of 2018 which was half of the almost new-build 26,300 units for the nation. It is anticipated that a slowdown in apartments is more likely to occur in Melbourne and Sydney.

 

 

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