C21 Market Pulse | March 2024 | Australia

WELCOME TO THE March 2024

ISSUE

OF c21 M arKET PULSE

PUBLIS h E r

Century 21 Australia Pty Ltd

c ONT r IBUTO r S

CoreLogic

Chris Gray

EDITO r I a L ENQUI r IES

Century 21 Australia (02) 8295 0600

a DVE r TISING ENQUI r IES

Century 21 Australia (02) 8295 0600

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What

the best decision you ever made about

Your Empire CEO, Chris Gray

Cover image: Jonathan Borba on Unsplash

h OUSING Va LUES r E c O r D a SUBTLE r E- acc ELE raTION IN FEB r U arY aS SENTIMENT IMP r OVES

BY CORELOGIC

Housing values posted a broad-based rise in February with CoreLogic’s national Home Value Index (HVI) up 0.6% in February.

The 20 basis point acceleration from the 0.4% increase seen in January was the strongest monthly gain since October last year. Each of the capital cities and rest-of-state regions recorded a lift in values over the month, except Hobart where the market fell -0.3%.

“Housing values have been more than resilient in the face of high interest rates and cost of living pressures,” CoreLogic’s research director, Tim Lawless, said. “The ongoing rise in housing values reflects a persistent imbalance between supply and demand which varies in magnitude across our cities and regions.”

Perth continues to stand out with a substantially higher rate of growth compared to any other region, up 1.8% over the month. Adelaide (+1.1%), Brisbane (+0.9%) and the regional areas of SA (+1.1%), WA and Queensland (both +1.0%) also show a consistently high rate of capital growth month-to-month.

“These regions are generally benefiting from a combination of comparatively lower housing prices and positive demographic factors that continue to support housing demand,” Mr Lawless said.

Although growth rates in Sydney and Melbourne home values have leveled out, the monthly trend has accelerated, with Melbourne emerging from a three-month slump of negative monthly movements to record a subtle 0.1% rise in February. Similarly, Sydney dwelling values have moved back into positive territory over the past two months

after recording a subtle decline in November and December.

“Potentially we are seeing some early signs of a boost to housing confidence as inflation eases and expectations for a rate cut, or cuts, later this year firm up,” Mr Lawless said.

There-acceleration in value growth has been accompanied by a bounce back in auction clearance rates, which averaged in the high 60% range through February. Consumer sentiment also recorded a solid rise in February, signaling a lift in confidence.

“Auction results and sentiment have both shown a historically strong relationship with housing trends,” Mr Lawless said. “The rise in clearance rates from the mid 50% range late last year to the high 60% range in February points to a better

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Continued from previous

fit between buyer and seller pricing expectations. A rise in sentiment suggests households will have a better ability to make decisions around large financial commitments, like a property purchase.”

Although the pace of gains has shown some uplift, most regions are still recording value growth well

below the highs of last year when the national index rose 1.3% in May.

Last years’ rate hikes clearly dented capital gains, but higher interest rates haven’t been enough to extinguish growth entirely,” Mr Lawless said. “The shortfall of housing supply relative to housing demand is continuing to place upwards pressure on home values across most

regions. “However, it’s hard to see a significant rebound in values shaping up given downside factors. Affordability constraints, rising unemployment, a slowdown in the rate of household savings and a cautious lending environment, are all factors likely to keep a lid on value growth over the near term.”

Simple

Once

W haT WaS T h E

BEST DE c ISION YOU EVE r M a DE a BOUT BUYING (O r NOT BUYING) P r OPE r TY?

BY CHRIS GRAY, CEO, YOUR EMPIRE

Every year Your Empire survey our database of 10,000+ people to understand what their best learnings and regrets around property are, to try and help others not make the same mistakes in the future.

An almost unanimous theme is about "getting started" and just buying.

Note that there were ZERO responses about "best decisions" having anything to do with NOT buying property. Funny that.

Here are a few of the best responses to the question:

"WHAT WAS THE BEST DECISION YOU EVER MADE ABOUT BUYING (OR NOT BUYING) PROPERTY?"

• Starting small – not biting off too much.

• Buying property in a ‘blue chip’ area in Sydney.

• Bought the best house in the best street.

• Buy and wait.

• Taking the leap of faith into buying

properties with no guarantee that they would go up in value.

• My best decision has been to take action and not wait.

Once again, no real surprises here. Yet no matter how many times I ask this question and share the answers, people still do nothing. They have excuses.

Then guess what they say in 10 years’ time when I ask again?

Effectively, many of the answers mention something to the effect of:

• I wish I had purchased more when I had the chance.

• I wish I had purchased sooner. Though there are also some interesting ones that spell caution for potential buyers everywhere.

Here's a few of the responses to the question:

"WHAT IS YOUR BIGGEST REGRET ABOUT BUYING (OR NOT BUYING) PROPERTY?"

• Selling our investment property 10 years ago and not buying again.

• Not doing proper research and letting emotions influence a purchase which had stagnant growth for many years.

• Selling property to take the “profit”, not thinking I could refinance. They have now quadrupled in value.

• Buying for cash flow in a mining town :) and listening to other so-called experts which led me to this regretful decision. We live and learn.

IF YOU COULD TRAVEL 20 YEARS BACK IN TIME, WHAT ARE THE EXACT WORDS YOU WOULD SAY TO YOURSELF (OR YOUR FAMILY) ABOUT BUYING PROPERTY?

You can likely guess this one as well, though have you ever heard me say:

BUY and HOLD

Well over 90% of responses included at least one of those themes...

Buy:

• More

• Sooner

• As much as you can afford

• When you can

Then:

• Never sell.

However, there was also some suggestions that appeared multiple times through the responses. These included (but were not limited to):

1. Don't buy mining towns.

2. Get professional advice.

3. Invest in yourself.

4. Buy in proven areas over the long term.

5. Follow a checklist.

6. Never buy off the plan.

7. Don't buy into hype of hot spots. However, my personal favourite response:

Buy that lovely unit in Coogee you idiot – you fell in love with Coogee in 1990 when everyone thought it was a dump – soon everyone will realise how great it is.

They sure did.

The one thing I did notice in these results compared to previous questions we have put to our community, was the number of answers that talked about a "buyer's agent" (and getting advice in general).

Almost 15% of respondents mentioned either a buyer's agents or other professional advice and I'm certain this is significantly more than I have seen previously.

So don’t let 2024 be the year of your regret for not doing anything. There’s currently capital growth in many parts of Australia, interest rates look to be dropping, which should increase everyone’s serviceability, leading to more demand and higher prices.

ABOUT THE CONTRIBUTOR

Chris Gray is CEO of Your Empire, a buyers’ agency that buys homes and investments for time-poor professionals – searching, negotiating, renovating and managing property on their behalf. Chris has spent over 10 years as the host of ‘Your Property Empire’ on Sky News Business channel, where he’s interviewed various heads of property research companies and major industry figures. Chris is a qualified accountant, buyers’ agent and mortgage broker. For more information, visit www.yourempire.com.au and follow Chris on Facebook: @ChrisGraySydney

h OW DO I ch OOSE a LO caTION TO INVEST IN?

When it comes to investing in real estate, it is important to have a competitive edge. Australia’s ever changing property market keeps investors on their toes in search of emerging ‘hotspots’ with potential returns.

Understanding the key driving factors for growth are imperative for success when analysing markets before they fully mature. Identifying a hotspot involves recognising a suburb or location experiencing significant growth, offering long term capital appreciation and robust rental yields. Your assessment strategy will depend on individual investment factors and whether you choose to focus on capital growth, positive gearing or a combination of the two.

So what are some of the factors to consider?

UNITS VS. HOUSES:

Units often boast higher gross rental yields due to affordability, but additional costs like strata fees need to be considered.

Landlord insurance needs to be factored in as it is vital for liability claims and potential injuries on the property.

REGIONAL VS. METRO:

While properties in metropolitan locations currently show higher rental demand, regional areas are still witnessing a surge in interest, driven in part by the work-fromhome trend.

TRANSPORT, SCHOOLS AND AMENITIES:

Proximity to quality schools, recreational facilities, healthcare services, shopping centres, and transportation hubs enhances a location's desirability.

Future value can be influenced by ongoing or planned projects that improve a region's amenities.

Other considerations might be proximity to beaches and national parks, as well as the walkability factor. You can research your preferred locations by looking at suburb reports via Domain, realestate.com.au or Century 21's instant suburb report C21.com.au/ suburb-report/

Whether a seasoned investor or a newcomer to the property market, considering these factors will allow you to make more informed investment choices.

P r OPE r TY a P r IO r ITY FO r GEN Z WOMEN BUT a FFO r Da BILITY a ND INVESTMENT M a JO r h U r DLES

CoreLogic's 2024 Women & Property report, which surveyed home ownership status and motivations, barriers and attitudes towards dwelling ownership among women and men in Australia, reveals that 68.2% of women surveyed own at least one property - including owner occupied and investment properties - slightly higher than men at 67.4%.

However, women are more likely to own residential property with someone else (53.3%, compared to 51.9% for males), while men have a higher rate of sole ownership (51.9%, compared to 50.2% for females)[1].

CoreLogic head of research and report author Eliza Owen said the updated survey methodology had provided more insights into some of the nuances of home ownership.

“Examining home ownership holistically unveils gender equity gaps, highlights generational risks, and underscores the critical role of residential real estate in wealth, retirement, and tenure stability. It prompts crucial questions about the accessibility of property ownership for women across generations and the challenges faced for early entry into the market.”

YOUNG WOMEN AND THE OWNERSHIP GAP

A notably higher share of males aged 18-29 (Gen Z) reported owning at least one dwelling (51.6%) relative to women in the same age group (27.3%), with the survey revealing that Gen Z women overall had lower levels of income ($67.8k versus male $83.5k per year before tax), and greater levels of part-time and casual employment (32.9% versus male 12.9%).

Dwelling ownership increases with age, with the portion of Millennial Women (aged 30-44) who own at least one dwelling increasing to 72.5% (versus 63.5% men), Gen X to 75.8% (versus 69.0% men) and Baby Boomers at the highest rate of property ownership at 83.3% (versus 84.5% men).

Ms Owen said given the importance of residential real estate, it was

reassuring to see home ownership rates between men and women even out over time.

However, she said the survey findings also raised some important questions about the timing of home ownership and some of the barriers confronting a purchasing decision.

“Presumably the gender-based home ownership gap closes in part due to the formation of couples and family households, so while the pay gap between men and women becomes less important for mixed-gender couples, it may pose potential risks during relationship breakdowns,” she said.

“Further, if men can attain dwelling ownership at a younger age, they are likely to benefit from greater levels of capital growth from the asset class over the long term.”

BRIDGING THE INVESTMENT GAP

Residential investments skewed towards men, with 14.1% reporting owning a least one residential investment property, compared to 12.5% of women.

Ms Owen said this was a trend which extends to almost every asset class nominated in the survey, with the biggest gap in shares, which showed a 12-percentage point disparity between men and women (30.1% for females versus 42.0% for men).

“This gap may be tied to differences in income between men and women, but it may also reflect differences in exposure to financial concepts through education,” she said.

"Greater intervention at the high school and university level to familiarise young females with concepts of economics, finance and investment may help to bridge the investment gap, not just across property, but a range of asset classes.”

IMPLICATIONS OF FINDINGS

Home ownership constitutes 56.7% of household wealth in Australia and is a proven source of wealth and security and a vital part of a comfortable retirement, Ms Owen said.

While high-level data shows a promising parity between males and females of dwelling ownership in Australia, there were discrepancies and more work to be

done to empower women with respect to dwelling ownership and investment.

“Accessibility to home ownership varies, with younger, low-income households experiencing a prominent decline, and genderrelated challenges persisting, exacerbated by the gender wage gap,” Ms Owen said.

“Despite overall dwelling ownership parity, this year’s survey reveals that affordability constraints and the home-buying process pose significant challenges for a higher share of females, emphasising the need for targeted solutions to address gender disparities in Australian home ownership.”

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