Never before have couples and families been forced to spend more time with one another. While some relationships have welcomed and flourished during the forced lockdowns, it’s no surprise that others, unfortunately, haven’t.
For the last few years, the amount of foreign investment in Australian housing has plummeted. This corresponded with the implementation of penalty duties in every state and territory, which typically deemed an investment unviable. In New South Wales for instance, a foreign investor would be liable to pay the usual $40,000 transfer duty, as well as an additional $80,000 surcharge purchaser duty. This sunk cost is equal to more than 10 percent of the property’s value, an amount that would usually be enough to fund their deposit. With the current duty in place, a foreign investor would need a year or two of strong growth just to recoup their costs.
Last week, CoreLogic reported that home buyers are returning to the market at levels that outweigh new listings. The balance of supply and demand has tipped in favour of sellers as the number of listings fell, despite new listings increasing by 22.4 percent over the four weeks to 31 May. This means that sellers have returned to the market, but demand from buyers ate up all the extra listings. Property listing platforms saw a significant increase in web traffic as Australia passed the worst of coronavirus, with data from SimilarWeb showing an increase between April and May of 22.3 percent for realestate.com.au and 17.1 percent for domain.com.au.
The $688 million HomeBuilder initiative offers a glimpse into the state of housing construction in Australia. According to the Australian Bureau of Statistics, the value of work done in residential construction had been steadily declining since 2017. This period also happened to coincide with the peak of Sydney’s recent price and buying activity boom, as well as APRA’s subsequent lending constraints. Housing construction and associated services represent a significant component of both our employment profile and the national economy.
Last week, an article of mine on short-termism in the property market was published by Your Investment Property Magazine. Short-termism is the inclination for a group of people (culture) to focus more on their immediate wants and needs than those in the longer term. This becomes a problem when the long term and short term come into conflict, which they usually do.
Over the weekend, the Australian Financial Review published the attention-grabbing headline: House prices set to fall as discounting doubles. Referencing Domain data on vendor discounting, this article highlights the increasing proportion of home sales around the country being sold for less than the vendor had advertised. These statistics are not surprising, but they are very easily misinterpreted.
Over recent weeks, we have discussed the impact of COVID-19 on the property market. Property investors are also landlords, and with an economic shakedown underway there’s a chance your tenant could be impacted. This week’s research blog article discusses the current landlord-tenant environment, particularly insofar as landlord insurance is impacted by concessions you offer your tenant.