Markets

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Let’s look at the facts and decide where first of all we need to separate the investment property markets and the first home buyer markets from the family residence markets.
We also need to look at the current NSW Government mandate where they intend to merge councils to ensure that NSW keeps developing and driving residential construction to record levels never seen before. Premier Mike Baird is a smart man as he knows that the investor market has never been larger given the record stamp duty and land tax receipts. These are the new ‘rivers of gold’ that will in part fund this massive infrastructure spend.
According to Stockland chief executive ‘the Australian property sector is in the second quarter of what is often a seven – to – eight year housing cycle’. Now I have no problems with that and I agree given we all know what the intentions are of the NSW State government….it’s build – build – build to then generate tax – tax – tax.
We also now find ourselves in unchartered waters given we have never encountered a record low cash rate which could even go lower – another driver of the real estate market. Historically there have been two drivers to mortgage delinquency – increasing cash rates and unemployment. On that basis we can remove an increasing cash rate in the short term or quite possibly long term, although some are now warning property developers that they should be factoring in a price crunch.
Well that can’t happen given the property developers are concentrating on investors and the booming overseas market where 100 per cent of all ‘new’ developments can be sold to non – Australian residents.
Now the biggest conflict is Australia’s housing policy or better still our elected politicians who have no idea what they are talking about when they implement new policies – Federal treasurer Joe Hockey is the prime example.
Earlier this week he declared ‘that the crackdown on foreign investors illegally buying property in Australia could force down house prices.” Well for that to happen there would need to be thousands and thousands of properties flooding the market. Is he aware of something that we need to know?
This week Treasurer Joe Hockey announced new laws regulating property purchases by foreign investors and this clanger got my blood boiling. Mr Hockey said “foreign investment rules had not been significantly revised since their introduction 40 years ago.” Under the draft laws, penalties would be increased from $90,000 to $135,000 for serious breaches of residential real estate rules. Real estate agents, migration agents, lawyers and conveyancers who knowingly assist a foreign investor in breaching the rules will now be subject to both civil and criminal penalties.
Well Mr. Treasurer, all you need to do is enforce that all property buyers produce a tax file number and then you build your national Property Register and the Australian Taxation Office can record all transactions.
Now back to the “foreign investment rules had not significantly been revised since their introduction 40 years ago”. Back on 18 December 2008, the Australian Federal Government (for reasons only known to themselves) announced policy and administrative changes for foreign investors acquiring Australian real estate where they very kindly made it much easier from 2009 for foreign investors to acquire Australian real estate. This was a major announcement so I assume our esteemed treasurer completely overlooked this announcement when he went back over the past 40 years.
The existing requirement which allowed only 50 per cent of new dwellings to be sold to foreign persons in an ‘off – the – plan’ situation was changed to 100 per cent – on the proviso that developers market locally as well as overseas. Today we have overseas developers selling new developments exclusively overseas and they are not offered to Australian investors. Also a ‘new dwelling’ was defined as never previously occupied or sold. This now includes dwellings that were not sold by the developer but were rented out for no more than twelve months. I bet that has never been policed or followed up by the Foreign Investment Review Board (FIRB)?
They also implemented student visa holder residents in Australia are no longer subject to a $300,000 limit on the value of an established dwelling purchased as their principal place of residence. So students through their parents can buy waterfronts and the like? Temporary residents will not be required to notify FIRB of proposed acquisitions of an established dwelling for their own residence, any new dwellings and single blocks of residential land. Foreign – owned companies can now purchase established dwellings for the use of their Australian – based staff provided they sell or rent them if they are expected to remain vacant for more than six months.
And on and on it goes …….
So by now I am hoping that you are identifying the conflicting evidence that is coming out of Canberra. Why has the allowed foreign investor allocation for new dwellings been allowed to remain at 100 per cent where for 34 years it was set at 50 per cent?
<a href="/expert-insights/44786-why-today-s-chinese-property-investment-is-just-the-beginning-andrew-taylor" target="_blank">Why today’s Chinese property investment is just the beginning.</a> The questions that need to be asked is just why did Kevin Rudd and Wayne Swan make such significant changes to best suit foreign buyers? Why has the ratio been left at 100 per cent given the strength of the Australian property market? A strong argument that if you want to keep this at 100 per cent then remove both Sydney and Melbourne CBD’s from the overseas shopping trolley.
This week we learned that Nine Entertainment has sold its Sydney headquarters to Hong Kong based developer Euro Properties for $147.5 million. The selling agent CBRE’s Matthew Ramsay said 17 bids had been received from local and international investors and developers. Mr Ramsay said “that foreign investment in the Australian property market was at an all – time high, bolstered by a lower Australian dollar.” I’d say the lower dollar helps and the real reason is that the overseas developers can (thanks to the Australian Government) sell the entire development off – shore to investors.
Oh and I wouldn’t hold your breath if you were thinking of buying one of the 400 or so apartments when the Nine Entertainment development is offered for sale.
<h5>MOSMAN – 2088</h5>
• Number of houses on the market this time last year – 66
• Number of houses on the market last week – 47
• Number of houses on the market this week – 53
• Number of apartments on the market this time last year – 48
• Number of apartments on the market last week – 40
• Number of apartments on the market this week – 41
<h5>CREMORNE – 2090</h5>
• Number of houses on the market this time last year – 8
• Number of houses on the market last week – 2
• Number of houses on the market this week – 2
• Number of apartments on the market this time last year – 13
• Number of apartments on the market last week – 18
• Number of apartments on the market this week – 15
<h5>NEUTRAL BAY – 2089</h5>
• Number of houses on the market this time last year – 4
• Number of houses on the market last week – 2
•Number of houses on the market this week – 4
• Number of apartments on the market this time last year– 31
• Number of apartments on the market last week – 25
• Number of apartments on the market this week – 25
 
ROBERT SIMEON is a director of <a href="https://www.rwm.com.au/" target="_blank" title="RWM" rel="nofollow">Richardson Wrench Mosman and Neutral Bay</a> and has been selling residential real estate in Sydney since 1985.  He has also been writing real estate blog <a href="https://www.rwm.com.au/news/" target="_blank" title="Virtual Realty News" rel="nofollow">Virtual Realty News</a> since 2000. 
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Why is property full of conflicting evidence? Robert Simeon

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The economic slowdown resultant from COVID-19 has changed working conditions for many. But quantifying the impact on labour markets at this stage is difficult.
That is because labour market data is not real time, but instead reference the first two weeks of the previous month to the data release date.
The start of the economic slowdown was not felt until halfway through March 2020, meaning unless the survey methods are altered, regular labour force data will not show an impact until the May edition.
However, there are some things we already know about Australia’s labour force that provides insight into how property markets may be particularly affected.
Many workers are having their hours reduced On April 7th, the ABS released new survey results on the impact of COVID-19 on businesses.
Over 1,200 business representatives responded, revealing changes that had been made to the workforce.
 
Of the actively trading businesses surveyed, about a quarter reported reducing staff hours over the past few weeks. A summary of businesses reporting reduced staff hours by size and industry is presented below. 
<img src="https://www.urban.com.au/images/2020/4/9/CL%20working.png" alt="">
Reduced staff working hours is an early response businesses typically adopt during a downturn, with a view to preserving jobs
ELIZA OWEN is the Head of Research Australia at CoreLogic
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The COVID-19 labour market shift: CoreLogic's Eliza Owen

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The strength of most capital city auction markets tracked marginally down over June 2015, according to the Domain Australian Home Auction Report for June 2015. 
The report, compiled by property website <a href="https://mail.privatemedia.com.au/owa/14.3.224.2/scripts/premium/redir.aspx?SURL=mZnFDtHeNC7xNr3NmEw_ju-p-6a1En_LGsXjtjltDcL_7phTxoDSCGgAdAB0AHAAOgAvAC8AdwB3AHcALgBkAG8AbQBhAGkAbgAuAGMAbwBtAC4AYQB1AA..&amp;URL=http%3a%2f%2fwww.domain.com.au" target="_blank">Domain.com.au</a> with analysis from Domain senior economist, Dr Andrew Wilson noted it had been a mixed month for the auction market overall.
"We are definitely starting to see the first signs of the typical winter cooling period as sellers are starting to think about the Spring property season. 
"That said, markets are still well ahead year-on-year and we are starting to see the underlying strength across the board,” Wilson said.  Sydney Sydney’s June clearance rate, while still strong at 82.9%, dropped slightly from 83.3% in May. This is still well ahead of the 70% clearance rate recorded in June 2014.  Domain’s Dr Andrew Wilson said that the declining weekend auction trend in Sydney in June, can can be attributed in part to the usual mid-year seasonal effects.  “Unrealistic expectations by vendors of market prices in the extraordinary Sydney market may be a factor in declining clearance rates. Unseasonably high auction numbers are set to continue into July, providing buyers with a wider choice of property, however.” 
<ul dir="ltr">
<li>Average number of Saturday auctions in Sydney in June was 599, down from 706 average in May, but well ahead of 528 averaged in June last year</li>
<li>Slight weakening in the clearance rate translated into a fall of 2.9% in the median auction price for homes sold under the hammer over June</li>
<li>June median auction price of $1,105,000 was down from the all-time record of $1,137,500 recorded in May </li>
<li>June median house price, although a slight decrease from May, was still an increase of 22.8% on the $900,000 median home auction price recorded in June 2014</li>
</ul>
 Melbourne Unlike the Sydney auction market, clearance rates for the Melbourne market increased over June compared to the previous month. Melbourne reported a clearance rate of 79.2% for June, just ahead of the 78% recorded over May and up more than 10% (68.8) from June last year.  Melbourne’s June clearance rate was the highest recorded for any month since April 2010 and the highest June result since 2007. According to Domain’s Dr Andrew Wilson, similar to Sydney, Melbourne clearance rates trended downwards over June as the mid-winter moderating effect took hold.  “The data was indicative of the slow down into July, when listing numbers are expected to in line with what is typically the trough of the market for monthly auction activity each year with the exception of January”.
<ul dir="ltr">
<li>Melbourne averaged 685 auction listings for each Saturday over June and although well down on the 928 averaged in May, remained ahead of the 634 reported over June last year </li>
<li>The Melbourne median price of homes auctioned over June fell by 4.9% over the month from $820,000 in May to $780,000. This however remained 10.6% higher than the $705,000 median recorded in June 2014</li>
</ul>
Brisbane The Brisbane auction market also experienced a slight increase in clearance rates in June. The clearance rate of 50% was just ahead of the 48.6% recorded in May, but significantly higher than in June 2014 (36.4). 
<ul dir="ltr">
<li>Brisbane averaged 92 auctions per Saturday over June, down from the 118 average over May but well ahead of the 79 averaged over June last year</li>
<li>Domain reported a median Brisbane home price sold at auction of $685,000 over June, an increase of 0.5% over May’s $681,500 and 5.2% higher than the $651,000 recorded over June last year</li>
<li>The Brisbane June clearance rate was its highest recorded for June since 2003</li>
</ul>
Canberra Canberra recorded another solid auction clearance rate in June at 63.2%. Although down marginally from the 64.2% recorded in May, it was nonetheless well ahead of the 55.4% recorded last June. 
<ul dir="ltr">
<li>Canberra averaged 35 listings per Saturday in June, down from the 48 averaged over May but well ahead of the 23 averaged over June 2014</li>
<li>Domain reported the Canberra median home auction price recorded in June was $650,000, a fall of 2.6% over the May result of $667,500 but an increase of 2.4 percent over the same month last year</li>
<li>Canberra’s June clearance rate was the highest recorded by that city for that month since 2009</li>
</ul>
Adelaide Domain reported that the Adelaide auction market fell away over June to a clearance rate of 61.2%, down from the 64.6% recorded over May. While there has been a significant drop month-on-month, the results are still ahead of the 57.5% result for June 2014. 
<ul dir="ltr">
<li>The Domain data shows that Adelaide averaged 53 auction listings per Saturday over June, down from the 67 average over May, ahead of the 49 averaged over June a year ago</li>
<li>The median auction price for a home in Adelaide over June was $560,000, a fall of 1.1% over the May result of $566,500 but 6.2% higher than the $527,500 recorded over June last year</li>
</ul>
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