The PRDnationwide Research Team has released a new report revealing the Australian property market has made a positive start to 2016, with housing and rental growth recorded in capital cities and metro areas along with improved conditions in regional areas.
After a hot 2015, the PRDnationwide 2016 Australian Economic and Property Report reveals the Australian property market has returned to more sustainable growth levels. Australia’s average median house price in capital cities grew by 3.8% during the first half of 2016, down from the 6.6% average recorded during 2015. Sydney, Melbourne and Darwin led the nation for growth.
National Research Manager Dr Diaswati Mardiasmo said strong fundamentals had helped the market to perform in the face of uncertainty.
“The July 2016 Federal Election coupled with uncertainty over changes to negative gearing, superannuation and capital gains tax policies have played a role in slowing the market.
“However consumer confidence climbed to 103.2 index points in May 2016, the highest since 2014. This has flow on effects for the property market, with buyers more willing to borrow capital,” Dr Mardiasmo said.
“Home loan affordability has increased by 3.0% in the last 12 months, leading to a 15% rise in confidence for mortgage holders. The low interest rate environment will continue to fuel further growth in the property market and improve cash flow for mortgage households.
“The RBA Commodity Price Index has been relatively stable over 2016, while there has been a general increase in the value of agricultural commodities. This has provided added confidence for buyers, particularly in regional areas.”
There are encouraging signs in regional markets with average median house prices edging towards positive growth. In the first half of 2016, the regional median house price fell by 0.2% – an improvement from the 1.8% average decrease in 2015. Positive price growth was observed in regional Victoria, Western Australia, Tasmania and South Australia.
The report reveals that high property prices in Sydney and Melbourne may be having a similar impact on new listings as buyers look for an alternative capital city at a lower entry point. Brisbane (10.1%) and Adelaide (13.3%) recorded double digit growth in new listings during the last 12 months while Sydney and Melbourne have seen declines.
Over the past year Sydney, Brisbane and Melbourne all saw growth in median rent for three bedroom houses. Hobart and Adelaide experienced no change, while decreases were recorded in Darwin and Perth. It was a similar result for two bedroom units, with Hobart, Melbourne and Brisbane capturing the highest growth. Darwin and Perth were the only cities to see a decline in median rents for two bedroom units.
Changes in vacancy rates have fluctuated between -0.2% and 0.5% across capital cities since March 2015. The average vacancy rate currently sits at 3.6% in capital cities, which is an overall increase of 0.3% over the last 12 months. Canberra’s vacancy rate saw the biggest drop of all capital cities, falling by 1.5% during the period.
While the market continues to grow, PRDnationwide Chairman and Managing Director Tony Brasier said there were some encouraging signs for buyers in the report.
“Owner occupiers committed $110.6 billion to dwelling finance during the six months leading up to April 2016, which represented a 6.8% increase. At the same time investor housing commitments fell by 11.6% compared to the previous half year,” he said.
“This is good news for buyers planning to live in their property as they are facing less competition from investors.
“The national average vendor discount continues to remain low for houses at -5.8% as well as units at -6.3%. However this slight increase from August 2015 figures suggests buyers may be gaining some leverage in negotiations.”
The Australian Economic and Property Report is prepared by PRDnationwide’s research division which provides reliable, unbiased, and authoritative property research and consultancy to clients in metro and regional locations across Australia.
“Our company was established 40 years ago on the premise of providing clients with access to the best research and data,” Mr Brasier said.
“We have extensive research capability which ensures clients can make the most informed and financially sound decisions about residential and commercial properties.”
To view the complete PRDnationwide 2016 Australian Economic and Property Report, click here.