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New housing sales – by Matusik

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Moreton Investor, Property Management, Real estate Moreton, Mortgage Broker Moreton, Moreton property market, new housing sales

Queensland’s new home sales rose by 1% in February.Moreton Investor, Property Management, Real estate Moreton, Mortgage Broker Moreton, Moreton property market, new housing sales

New home sales fell by 5% in February with apartment sales down 11% & detached house sales down by 4%.  Detached house sales fell by 14% in Victoria, 3% in New South Wales & 7% in South Australia but rose in Western Australia (+2%) & Queensland (+1%).

Several commentators remarked that the drop in new home sales was not a worry, well “at least for the moment” to quote the Commbank.  Home sales are still about 10% higher than the lows set five months ago but for mine, given low interest rates, new sales (and hence new housing construction) should be much higher & they should be improving on a monthly basis.

Despite lifts in new housing starts in recent months, there will most likely be about 146,000 new housing starts across Australia this financial year.  This will be just 3% more than the year before.

New housing construction fell by 10% during 2011/12 & also dropped by 6% during the preceding financial year.

In fact, new housing starts across Australia have fallen five out of the last ten years; showed no real change for another two years since the early 2000s; & have risen during three years only since 2002/03.

And next year – financial 2013/14 – if the growth over the past three months can be sustained, then up to 160,000 new housing starts are possible.  But the HIA are forecasting a more subdued fiscal 2014 with just 146,000 starts (a repeat of 2012/13), despite interest rates being at record lows & a significant rise in population growth in recent years.

Even if the 160,000 starts happen, Australia’s new housing market needs a serious overhaul.  It is just spluttering along.

Below are some housing start statistics.

Distribution of starts.  According to the HIA, 40,000 new starts are expected to take place in Victoria next year – this equates to a 28% share of the Australian market.  New South Wales is to get 36,000 starts (25% share); Queensland 31,000 new dwellings (21%) followed by Western Australia with 24,000 commencements or a 16% market share.

The other four states/territories combined hold just 10% of the overall Australian market.

Movements in new construction.  Despite getting top billing next year, new starts are expected to fall by 13% across Victoria next year, when compared to the 2012/13 financial year.  In contrast, new starts are expected to rise by 13% in both Queensland & South Australia.  A half decent lift (of 11%) is expected in the Northern Territory.  New starts are expected to remain steady in New South Wales, and fall 5% in the ACT.

New product mix.  Three out of five (62%) of the new dwellings built across Australia next year will be detached houses.  Obviously, 38% will be attached product – most of which will be apartments or townhouses.

Almost half of the new product built in New South Wales, the Northern Territory & the ACT will be attached.  Two out of five new dwellings in Victoria these days are also attached; followed by Queensland with 37%; Tasmania and South Australia each with 25% & Western Australia with 19%.

Changes to product mix.   Ten years ago, close to one in seven (68%) of new dwellings built across Australia were detached.  Today it has dropped to 62%.

The biggest mover by state towards ‘alternate’ new housing forms over the past decade has been Victoria, with a 24% attached market share in 2004 to 41% next year.  Next is Tasmania, from 12% to 25%, followed by Queensland from 33% ten years ago to 37% now.  The other states/territories have seen little change in their new broad dwelling mix over the last ten years.

All three states essentially are playing catch-up.  Stigma (both from the development community & the public), plus archaic planning, has kept new attached development subdued in Victoria; Tasmania & Queensland.

The Newman government’s new state assessment & referral agency (SARA) is a step in the right direction.

In summary, unless we see serious government action (like SARA) to assist new housing get off the ground, new starts will continue to be artificially curtailed.  This limitation on new housing construction will see Australia enter another period of serious undersupply – it has already started; which it turn should drive prices north & will create – in about three, maybe four years’ time – another price-driven bust.

Ironically, higher levels of residential construction will be an important economic growth driver once mining investment begins to wind down.

If new housing starts continue to rise in line with the trend over recent months – i.e. head towards 160,000 during financial 2013/14 – then the cash rate is likely to remain at 3.00% throughout calendar 2013.

But if the HIA’s outlook becomes reality (146,000 starts or thereabouts next financial year) – and keep in mind that building approval figures tend to be volatile – then the cash rate will need to fall further.

Enjoy the ride!

 

Article originally published in  Matusikmissive.com.au  on 16/4/2013

Opinion

How good an investment is south-east Queensland

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How good an investment is south-east Queensland

Why do we believe we’ll see increasing investor interest in this market? Strong population growth, a diversified and growing economy, and substantial investment in infrastructure should combine to boost demand.

We expect that these factors will swell the number of white-collar jobs – increasing demand for office space, which in turn will push down vacancy rates and raise rental incomes. This should be good news for office property investors – especially those like Centuria Metropolitan REIT (CMA) that are already well-positioned in the market.

A significant and growing population

South East Queensland (SEQ) stretches from the Gold Coast up to the Sunshine Coast and across to Toowoomba in the west. As Australia’s third-largest population zone, the region has been growing significantly, particularly Brisbane and the Gold Coast. Interstate migration figures show a pattern of steady net migration, with Queensland the only Australian state with consistent net inflows of people from other states. In the five years prior to the 2016 Census, over 220,000 people moved to the Sunshine State – mainly to SEQ where nearly 90% of population growth occurred. This is important for property investors because of its implications for demand, but the trend is interconnected with other favourable factors.

A diversified economy poised for growth

Queensland’s economy is diversified across a range of industries including agriculture, resources, construction, tourism, manufacturing, and services. Over the past two decades, its economic growth has consistently exceeded the national average – and in our view this is likely to continue.

The resources sector is gaining momentum, and a significant pipeline of major infrastructure and development projects is helping propel economic and jobs growth, in turn increasing interstate migration and driving demand for both residential and commercial property.

Investment in infrastructure

A strong infrastructure program delivers more than business and consumer amenity – it generates jobs, drives investment, and facilitates population growth. The pipeline of infrastructure and development projects announced in the past few years is likely to have a material impact on the region – substantially improving its accessibility and amenity – most notably, Brisbane’s Queen’s Wharf precinct and the Cross River Rail.

Queen’s Wharf, touted as a “world-class entertainment precinct”, is an integrated resort development costing $3.6 billion and covering over 26 hectares with retail, dining, hotel and entertainment spaces. As Queensland’s biggest ever tourism project it will be a game-changer for Brisbane, attracting overseas as well as local visitors.  Estimated to contribute $1.69 billion annually to the economy, it will employ more than 2,000 people during construction and an estimated 10,000 once operational.

The Queensland Government’s number one infrastructure project, the $5.4 billion Cross River Rail, comprises a new 10.2km rail line between Dutton Park and Bowen Hills, which includes a 5.9km tunnel under the Brisbane River and CBD. It’s the first major rail infrastructure investment in the inner city since 1986 and is set to generate urban renewal, economic development and the revitalisation of inner-city precincts.

Outlook for commercial office property investment

These factors indicate a region poised for growth – and for growing commercial property demand. CMA’s portfolio has a significant exposure to the area in general (six SEQ assets with a combined book value of over $480 million), with many of the individual assets located in those parts of Brisbane set to benefit most from these developments.

Our view is that Brisbane office markets, where five of CMA’s assets sit, are continuing to improve, with vacancies hitting a five-year low – indicating increasing tenant demand – and continued yield compression, demonstrating strong investment demand. Office sales hit the highest level in a decade during 2018 (at $2.35 billion), increasing 60% from 2017.

With the strong outlook for SEQ, we expect the region will continue to attract tenants and investors alike.

Source: brisbaneinvestor.com.au

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Brisbane’s out-performing real estate markets: Hotspotting’s Terry Ryder

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Brisbane's out-performing real estate markets Hotspotting's Terry Ryder

Brisbane is like a car where the engine is revving but it can’t move forward because the handbrake is on. The city’s property market is poised for an up-cycle but, according to the generalised price data published in mainstream media, it’s not yet happening.

Brisbane is like a car where the engine is revving but it can’t move forward because the handbrake is on. The city’s property market is poised for an up-cycle but, according to the generalised price data published in mainstream media, it’s not yet happening.

The key point for investors, however, is that there are many Brisbane markets achieving above-average price growth.

There’s no doubt that Brisbane real estate has an underlying strength and it continues to show gradual improvement in its market. It remains poised to deliver on the potential shown by advances in the economy, population trends (lots of Sydney refugees are escaping to affordable South-East Queensland) and infrastructure spending. 

The price data for the Greater Brisbane Area is noteworthy, because it shows that the generalised figures published in mainstream media are highly misleading. The latest figures from sources like SQM Research, Domain and CoreLogic have Brisbane houses showing little or no growth in the past year, but Hotspotting’s suburb-by-suburb analysis shows there are many out-performers.

We analysed 269 suburban markets, looking at the latest price figures showing quarterly and annual growth rates: 83 of them have recorded annual price growth above 5% (including 20 suburbs with double-digit growth) and another 100 have recorded growth below 5%; 47 have dropped by less than 5% and 39 have dropped more than 5%.

This means seven out of 10 suburban markets have median prices higher than a year ago – very different to the trend in Sydney which is dominating media coverage and causing careless analysts and writers to morph that into a national downturn.

Many of the Brisbane suburbs where the median house price has lifted more than 10% are higher-end markets, including Bardon (up 11% to $1,005,000), Hendra (up 13% to 1,100,000), Graceville (up 13% to $950,000), Kenmore Hills (up 10.5% to $900,000), Norman Park (up 10% to $950,000) and Paddington (up 11% to $1,165,000).

But the highest annual growth in median house prices has been recorded for Sandgate houses (up 19% to $755,000).

A key trend is that 27 or the 39 markets with prices down more than 5% are unit markets: median prices have dropped for apartments in Bowen Hills (20%), Bulimba (15%), East Brisbane (15%), Woodridge (10%), Greenslopes (11%), Hamilton (11%) and Woody Point (18%). 

This reflects the cold reality that the Brisbane unit market has been oversupplied for the past few years – and not just in the inner-city areas.

The Moreton Bay Region LGA has been the busiest market in Greater Brisbane for some time – and my latest survey of sales activity shows that the number of suburbs with rising demand has risen from 7 (six months ago) to 12 – making it one of the leading municipalities in the nation for growth markets.

Growth locations include Bray Park (median $435,000), where quarterly sales have been 37, 57, 62 and 65 in the past 12 months; Murrumba Downs ($540,000) where the sales pattern has been 50, 60, 58 and 68; and Everton Hills ($595,000), where sales have been 26, 39, 39 and 45. 

A number of Moreton Bay suburbs recorded good median price growth in the past 12 months, including Beachmere (up 10%), Sandstone Point (8%), Upper Caboolture (7.5%), Strathpine (10%), Burpengary East (up 9%) and numerous others which grew 5-6%.

The Brisbane-north precinct (the northern suburbs of the sprawling Brisbane City Council area) is now level with the Moreton Bay Region on growth markets (those where demand, as measured by sales volumes, is rising). 

With Moreton Bay Region and Brisbane-north the strongest market, it means the Brisbane market is strongest north of the Brisbane River (with more than half the rising suburbs in the Greater Brisbane area being in these two northside precincts).

A number of Brisbane-north suburbs recorded have good annual price growth, headed by Gordon Park (9%), Hendra (13%), Sandgate (19%), Newmarket (8%) and Nudgee (10%) – while many others have grown 5-6-7%.

These numbers, once again, show how misleading the generalised data is – and that investors need to dig a little deeper to find the growth markets. Brisbane – boosted by the affordability and rental yield comparisons with the biggest cities – has a lot more forward momentum than the media reports suggest.

Once the handbrake comes off (with the big banks starting to compete for business again and the Federal Election soon to be history), Brisbane will become a more obviously upwardly-mobile market.  

Source: brisbaneinvestor.com.au

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Queensland’s 100,000-property public housing shortfall revealed

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Queensland's 100,000-property public housing shortfall revealed

Queensland has a severe shortage of social and affordable housing, an issue that is projected to get worse by 2036 according to new research.

More than 102,000 additional social houses are currently needed across the state, and 54,700 affordable houses are also needed with nearly 13 per cent of Queenslanders spending more than 30 per cent of their income on rent.

By 2036, Queensland is projected to need 254,300 more social and affordable houses – the second-highest unmet need behind NSW, the report found.

The new figures come from a UNSW City Futures Research Centre report on social housing shortfall across Australia.

Regional social housing shortfalls are higher than in Brisbane, the data shows, but Brisbane residents are slightly more likely to be spending more of their income on rent.

Housing Minister Mick de Brenni said housing affordability was a “big issue” for Queensland.

“Through the Palaszczuk government’s $1.8 billion Queensland Housing Strategy, Labor is driving key reforms and targeted investment across the housing continuum,” he said.

“The Strategy commits us to build more than 1000 affordable homes for Queenslanders, as well as a further 4522 new social homes to help ensure everyone has a safe, secure and stable place to live.”

Lead researcher Laurence Troy said 22.5 per cent of Australia’s entire housing growth must go to social housing to meet demand into the future.

“Our analysis shows that the sheer number of households in rental stress across the country means that if we’re going to meet the need, at least 12 per cent of all our housing by 2036 will need to be social and affordable housing – which is a very reasonable ambition in global terms,” Mr Troy said.

“To cover the backlog of unmet need and future need in Australia two in 10 new homes will need to be for social housing over the next 20 years, and a further one in ten for below-market affordable rental housing.”

Mr Troy said the research’s financial modelling found the “best and cheapest way” for governments to meet the need for social housing was to fund it through upfront grants and low-interest government financing.

“Delivering below market rental housing through the not-for-profit sector, as opposed to the private equity model, will save $3 billion a year by removing developer mark-ups and shareholder returns,” he said.

The financial modelling was commissioned by the NSW community housing sector.

Mr de Brenni said the state government was “listening” through its recent public consultation on rental reform and was committed to investing in affordable housing in partnership with community housing, to provide more subsidied homes for low income earners.

“We heard Queenslanders are struggling to afford rental properties in the suburbs close to where they work,” he said.

“Through our Build-to-Rent pilot project, we are seeking to work with the private sector to increase the number of long-term, affordable rental properties for low to moderate income earners, including key workers in health, early childhood and hospitality.

“Internationally, the Build-to-Rent model is delivering fantastic outcomes and facilities for tenants and we’re looking to see what the market is open to delivering here.

“The pilot, if it proceeds, will see $70 million invested towards delivery of hundreds of affordable rental properties for key workers in inner-city areas where affordability has been identified.”

Mr de Brenni said the registrations of interest for that pilot had seen strong market interest, and the department was considering the responses before calling for expressions of interest.

Source: brisbaneinvestor.com.au

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