Australia's Housing Now Worth Six Trillion Dollars
The two tiered growth evident in Australia’s housingcontinued through July, with the overall value of Australia’s housing market surging by half a trillion dollars. This is largely a result of the boom in Sydney & Melbourne’s house prices over the past year.
Year on year, most capital cities have seen growth.
Changing Median Values in Your Capital
Sydney + 18.4%
Melbourne + 11.5%
Brisbane + 3.9%
Adelaide + 3.4%
Perth – 0.3%
Hobart + 2.5%
Darwin – 5.3%
Canberra + 1.2%
Combined + 11.1%
Melbourne traded places with Sydney over the past three months to record the highest rate of capital gain.
However, several cities entered a correction phase with Darwin the most affected – values down 5.3%. Perth values also drifted lower but its downward trend appears to have halted.
The strongest growth conditions outside of Sydney and Melbourne have been in Brisbane where dwelling values were 3.9 per cent higher over the year.
Based on the median dwelling price, Sydney prices are now 72% higher than Brisbane’s, and Melbourne’s are 24% higher.
Detached housing continues to outperform the unit sector, with house values outperforming unit values over the past year.
While dwelling values continue to rise across most cities, the pace of rental growth has slipped to a new record low, which has caused further compression of rental yields.
Hobart is the only capital city where yields haven’t deteriorated over the year.
Reserve Bank Dismisses Fears of Investor Exit
The RBA’s head of financial stability Luci Ellis has indicated the type of housing price growth older investors enjoyed in the 15 years to 2005 was a one-off.
Slower price growth is now to be expected, as well as occasional price falls, but she does not expect a mass exit of investors unless there is a dramatic rise in unemployment.
The Reserve Bank has repeated warnings that the combination of negative gearing and the 50 per cent capital gains tax discount is encouraging property investors to take on more debt and pay higher prices.
However, it believes a holistic review of tax incentives related to property is necessary, rather than looking at negative gearing in isolation.
Young Aussies Use Tax Refund to Buy Homes
For 25% of Australians, the annual tax refund provides an opportunity to pay some more off the mortgage.
This year, it’s expected that an even larger percentage of tax dollars will boost the housing market.
More than 15% of 18 to 24 years say they are committed to strengthening their foothold in the property market using their tax refund towards saving for a deposit.
An equal number say they will use their refund to pay down their mortgage, having already bought a home.
Thursday, 8 October 2015