National property pulse check – What’s happening in your area?

If Dorothea Mackellar was here today she might replace her famous poetry line about “ragged mountain ranges” with one about the country’s home price ranges. Just like our natural geography, the nation’s property landscape is one of contrasts.

Predicting which markets are on the up and which are heading south is never an exact science and nobody can claim to have a crystal ball. But there are plenty of economic indicators painting a picture of market movements.

Haven casts its eye around the country to check out property performance in our states, territories and capital cities.

New South Wales

Sydney
After sitting at the top of the charts in recent years (an 85 per cent surge since 2013!), the Sydney market is finally off the boil and predicted by BIS Oxford Economic to have the slowest growth among capital cities in the next three years (3 per cent). But it’s not all doom and gloom with a strong jobs market, population growth and a robust economy expected to keep things buoyant.

Elsewhere
Not surprisingly, the hottest Sydney barbie topic is the escape plan, as those feeling the property pinch look for greener regional or interstate pastures. The exodus has been helped along by the $750,000 stamp duty concession ceiling, which seems generous but not in a market with a median price of $1.1 million.

A couple of hours up the Pacific Highway, Newcastle – once dependent on mining and steel production – is a growing and diverse, self-sufficient economy, now luring Sydney-siders. Similarly, Wollongong to the south offers mortgage relief, plus job, study and vibrant social prospects.

The good news for homesick Sydney-siders is that both these hubs are within two hours of the capital.

Queensland

Brisbane
After crawling along in recent years, Brisbane is once again having its moment in the sun – 238 days of sunshine each year, to be precise. The Queensland capital is forecast to have the country’s biggest surge (13 per cent) over the next three years.

Despite a much-publicised oversupply of inner-city apartments, Brisbane property prospects are bright. Game-changing investment in tourism and transport infrastructure, a precinct plan to disperse jobs beyond the CBD and interstate migration are just some of the factors contributing to Brisbane’s appeal.

Elsewhere
The Gold Coast is expected to maintain a post-Games glow as it continues to position itself as more than a holiday destination, while the Sunshine Coast is also predicted to experience long-term capital growth on the back of increased infrastructure. Further north, Townsville’s $2 billion investment in mining, military and port projects is boosting its local economy and property market.

Victoria

Melbourne
While not quite as phenomenal as Sydney’s surge, Victoria’s capital has gone gang-busters in the last five years (65 per cent growth). And while the market has slowed considerably with investors cooling their heels (especially over apartments), strong overseas and interstate migration is predicted to fuel the owner-occupier market and drive moderate 6 per cent growth over the next three years.

Elsewhere
Satellite hubs Ballarat and Geelong are not just within striking distance of Melbourne but growing increasingly self-sufficient as they transform their industrial roots into new jobs and capitalise on more relaxed lifestyles. Geelong is one of the fastest growing regional property markets in Australia (10 per cent), while pundits have described Ballarat’s revival as its second gold rush.

Northern Territory

Darwin
The Top End hasn’t quite lived up to its name, slumping 19 per cent over the past four years after rising and falling on the back of the resources sector. The Territory’s capital has been left with a housing glut, which may not be corrected until closer to 2021. Interestingly though, while capital gains have gone south, Darwin rental yields are defying the oversupply, remaining among the country’s strongest at 5.8 per cent.

Elsewhere
The most sparsely populated of our states and territories, the Northern Territory doesn’t have many hubs outside of its capital. Darwin’s secondary city Palmerston relies on Darwin’s economy for its success so has suffered the same resources slide.

Alice Springs, on the other hand, could be the Territory’s best-kept secret, thanks to a housing policy change for employees at the nearby US Pine Gap spy base. Employees, who used to have housing supplied, are now required to rent or buy themselves, driving sales up and rental vacancies down.

Western Australia

Perth
Patience might be the key to Perth’s market, which looks like it is finally bottoming out after sliding with the resources sector. There are mixed predictions for the next few years. Some market gazers tip further, minor dips, while others claim the economy is rebounding with strong jobs growth and increasing export demands.

Elsewhere
Nowhere has the mining slump been felt more keenly than regional Western Australia. The brunt has also been borne by non-mining towns, including Bunbury and Broome, but green shoots are peeking through. Bunbury is looking to shed its image as just an industrial port with investment in waterfront, lifestyle precincts and a digital economy. Broome, once dependent on its pearl industry, is looking to capitalise on food production. How Western Australia diversifies and sheds its reliance on mining will have a big impact on its regional economies and property markets.

South Australia

Adelaide
Holden shutting shop in the city’s north last year cast an economic shadow over the city of churches. But it’s set to be something of a quiet achiever, with shipbuilding set to fill the Commodore-shaped hole. BIS Oxford Economics predicts 9 per cent property price growth for Adelaide over the next three years.

Investors, however, might be less enamoured. Weekly rental returns are among the nation’s lowest for a capital city – and going backwards, while rents in the rest of the country are on the rise.

Elsewhere
Despite struggling with an energy crisis and the ripple effects of the auto industry shutdown, South Australia’s economy is growing at its fastest rate in a decade.

Ironically, the electricity fiasco sparked investment in new energy infrastructure and exploration, while its mining sector has defied the downturn of other states, thanks to uranium prospects and hydrocarbons.

The benefits seem yet to flow through to property prices in regional centres but rents in South Australia’s outback have been on the rise, with returns sitting at about 7 per cent.

Tasmania

Hobart
Hobart, long-overlooked as a property play, is now turning heads. The Apple Isle’s capital is currently the country’s strongest market, with 35 per cent growth in the past three years. Affordability has no doubt been a factor – at $485,000, Hobart’s median house price is a fraction of Sydney’s and about half of Melbourne’s. But so too has its hipster, foodie and culture cred, fuelled by its much-lauded Museum of New and Old Art (MONA) and increased tourism. Traditionally an owner-occupier market because it was so cheap, Hobart now has a shortage of rentals.

Elsewhere

In a state as small as Tasmania, it’s not surprising the capital’s surge has overflowed to regional centres. Sentiment is particularly optimistic in the north, with Launceston hitting record numbers of house sales early this year. Despite talk of the Tassie market peaking, there are still bargains to be had. The West Coast remained the most affordable region with a median house price of just $80,000.

Australian Capital Territory

Our nation’s politicians would love to poll as optimistically as our country’s capital. Second to only Brisbane in growth predictions, the Canberra housing market looks set to rise 10 per cent over the next three years.

The rental market also remains one of the country’s steadiest and strongest (its average weekly rent of $528 sits just behind Sydney’s $582), thanks largely to its government-centric employment and higher-than-average wages.

Cash rate unchanged at 1.5% for the 27th consecutive time

As financial markets digest the findings of the Banking Royal Commission, the Reserve Bank of Australia has made its first rate announcement for 2019. The RBA has decided to leave the official cash rate unchanged at 1.5% for the 27th consecutive time.

The RBA continues to balance the worrying parts of the economy – inflation dipping below its target range of 2-3%, falling house prices, a borrowing squeeze in response to the Royal Commission, slow wages growth and negative consumer and small business sentiment with the more positive aspects of strong infrastructure spending, increased export earnings and stable employment figures.

With lenders continuing to review rates independently of the RBA, it is important to review your lending options regularly to ensure they remain the most suitable for your situation. There may be different rates available from our wide panel of lenders and an AFG broker is always available to ensure you have the right financial solution for your current and future circumstances.

If you’d like to have a chat about what today’s news means for you and your finances, please don’t hesitate to get in touch with an AFG broker.

AFG warns homebuyers will pay more if competition in home loan market is eroded

Australian Finance Group Ltd (AFG) said the Federal Government’s public acknowledgement of the importance of competition in the home loan sector directly recognises the benefits mortgage brokers bring to consumers.

AFG welcomes the Government’s support for the industry and the need to protect competition in Australia’s home lending market.

In its response to the final report of the Banking Royal Commission, the Government highlighted the contribution the mortgage broking sector makes in lowering borrowing costs and broadening choice for consumers.

Following the Royal Commission recommendations the Government has proposed ending the payment of trail commissions from lenders to mortgage brokers and aggregators on any loans taken out from 1 July 2020. Importantly, Treasurer Josh Frydenberg said the Government had not endorsed the Commission’s recommendation for upfront payment of mortgage broking fees by the consumer to be introduced immediately, instead pointing to a three-year review period to examine the impact of any changes to competition in the sector. AFG welcomes the announcement of a set timeframe for the industry to demonstrate the clear benefits the mortgage broking industry provides consumers so that information can be shared and the industry can define its effectiveness across the market.

AFG chief executive David Bailey said: “Both the Government and Opposition yesterday highlighted the need for any changes to the mortgage sector to be introduced in a phased and considered manner. At a time when navigating the complexity of the Australian mortgage market is more difficult than ever for consumers there is a danger the proposed changes, if not handled properly, could place assistance out of reach for some customers. Those hardest hit will be low-income earners and the changes could deliver pricing power and higher margins back to the major banks.

“That is why AFG and the broader mortgage broking industry will work closely and constructively with policymakers in coming months. We need a considered regulatory response that understands the home lending market and implications for all parts of the economy.

AFG was disappointed by the emphasis the Royal Commission placed on comments by the CBA about mortgage broker remuneration models as the major bank’s positioning was clearly self-serving and designed to win market share from the smaller banks.

AFG also noted the Royal Commission recommendations relating to campaign and volume-based commission have largely been implemented through the Combined Industry Forum.

The Government outlined an extensive consultation process involving the Council of Financial Regulators and the ACCC to review the impact of the recommendations and the implications for competition. AFG will work with industry bodies to ensure any recommendations are implemented in a way that improves outcomes for customers and changes work in the best interests of customers.

Mr Bailey said the full market and economic impact must be considered.

“With market share for the mortgage broking sector at an all-time high, customers clearly trust mortgage brokers. This fact should be front and centre in the minds of policymakers.

“The Royal Commission has created an opportunity to restore trust in the broader financial services sector. It is crucial that the transition to a new policy and regulatory landscape is a considered process to ensure any changes deliver better outcomes for customers. Leaving consumers and the economy worse off, which is a real danger if we don’t get this right, would undermine the whole Royal Commission process.

“Our response will be framed by a commitment to shareholder value and ensuring a competitive mortgage sector. Without competition, homebuyers will be left with less choice and higher costs of borrowing.”

ENDS

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AFG warns homebuyers will pay more if competition in home loan market is eroded