C21 Market Pulse | May 2024 | Australia

WELCOME TO THE May 2024

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Century 21 Australia Pty Ltd

CONTRIBUTORS

Chris Gray CoreLogic

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C ONTENTS

Your Empire CEO, Chris Gray

H OUSING Va LUES RISE

0.6% IN a PRIL, aS LOW SUPPLy TRUMPS HIGH INTEREST R aTES a ND INFL aTION

Australian home values continued to trend higher in April with CoreLogic’s national Home Value Index (HVI) rising 0.6%.

This was on par with the pace of gains recorded in both February and March, with the month-on-month rise adding approximately $4,720 to the national median dwelling value.

April’s increase takes the current growth cycle into its 15th month, with housing values up 11.1% or approximately $78,000 since the trough in January last year.

Beneath the headline numbers we are seeing multi-speed conditions with the mid-sized capitals continuing to lead the pace of growth. Perth remains at the top of the growth charts with a 2.0% rise in April, followed by Adelaide at 1.3% and Brisbane at 0.9%.

The monthly change in Sydney values (+0.4%) has held reasonably firm around the 0.4% mark each of the past three months, while Melbourne’s market (-0.1%) has broadly stabilised after recording

BY CORELOGIC

a subtle -0.8% dip over the three months to January.

The smaller capitals have emerged from relatively soft conditions, with both Hobart and ACT recording three months of consistent, albeit mild, rises in home values.

“We aren’t seeing any signs of heat coming out of the Perth housing market just yet, in fact the quarterly pace of growth, at 6.0%, is approaching the cyclical highs seen during the pandemic when interest rates were at rock bottom,” said Tim Lawless, CoreLogic’s research director.

“On the other hand, we are seeing the pace of gains slow across the Brisbane market, easing below the 1% mark to 0.9% in April for the first time in 12 months. Affordability pressures may be impacting the pace of growth across the city, following a nearly $300,000 increase in values since the onset of COVID in March 2020, the largest dollar value increase of any capital.”

Almost every capital city is recording stronger growth conditions across the lower value range of the market.

Darwin, where housing affordability is less challenging, is the exception, while Sydney’s lower quartile and broad middle of the market are showing the same quarterly change at 1.7% compared with a 0.5% rise in upper quartile dwelling values.

“The shift towards stronger conditions across lower value markets can also be seen between the housing types, with growth in unit values outpacing house values over the past three months,” Mr Lawless said.

“Hobart was the only city where houses recorded a larger gain than units over the past three months.”

Regional markets have shown a slightly stronger quarterly growth rate over the past five months than their capital city counterparts, following a 10-month period where the combined capitals index was outperforming. Looking at value movements over the past three months, the strongest regional markets were aligned with the strongest capital cities. Click

W ILL THE y RISE OR Fa LL, a ND SO SHOULD yOU BU y OR SELL?

BY CHRIS GRAY, CEO, YOUR EMPIRE

In the dynamic landscape of the Australian property market, the winds of change are blowing once again. Economists have been vocal about their forecasts, with all of them suggesting a potential drop in interest rates during the latter half of 2024.

However, recent discussions have added a layer of uncertainty, hinting at the possibility of interest rates veering in the opposite direction – upwards.

If rates do drop, that would likely boost borrowers' serviceability limits, empowering them to enter the property market with increased purchasing power. We know that most areas of Australia have a

limited supply of property and so that increased demand would almost certainly boost property prices even higher.

If this latest scenario unfolds and rates rise, it will reduce the serviceability limits of borrowers, making it harder for them to afford as much property. So, if buyers can afford less, surely that would lead to a drop in property

prices? Perhaps, but maybe not, given the lack of supply and high migration rates.

So, do you buy now before prices get beyond your reach, but have sleepless nights wondering how much it’s going to cost you month to month? Or do you lie in wait, but then risk only buying a property for a fraction of the amount you could have afforded if you had acted straight away.

For those that are happy to sit on the fence, take your mind back to what you could have afforded 2 years ago back in April 2022, before the interest rate rises that started in May.

Sure, interest rates have gone up 4.25% since, then, but property prices have risen by almost 10%, just in the last 12 months. Yes, you do have to be able to cash flow the difference between the rent and the mortgage, but if you look purely at the numbers, you would have been ahead if you had bought before.

Continued over page

$78,000 since the trough in

Beneath the headline numbers we are seeing multispeed conditions with the mid-sized capitals continuing to lead the pace of growth. Perth remains at the top of the growth charts with a 2.0% rise in April, followed by Adelaide at 1.3% and Brisbane at 0.9%.

The monthly change in Sydney values (+0.4%) has held reasonably firm around the 0.4% mark each of the past three months, while Melbourne’s market (-0.1%) has broadly stabilised after recording a subtle -0.8% dip over the three months to January.

The smaller capitals have emerged from relatively soft conditions, with both Hobart and ACT recording three months of consistent, albeit mild, rises in home values.

“We aren’t seeing any signs of heat coming out of the Perth housing market just yet, in fact the quarterly pace of growth, at 6.0%, is approaching the cyclical highs seen during the pandemic when interest rates were at rock bottom,” said Tim Lawless, CoreLogic’s research director.

“On the other hand, we are seeing the pace of gains slow across the Brisbane market, easing below the 1% mark to 0.9% in April for the first time in 12 months. Affordability pressures may be impacting the pace of growth across the city, following a nearly $300,000 increase in values since the onset of COVID in March 2020, the largest dollar value increase of any capital.”

Index results as at 30 April, 2024

value markets can also be seen between the housing types, with growth in unit values outpacing house values over the past three months,” Mr Lawless said.

Sydney

Melbourne

Brisbane

Adelaide

Perth

Hobart

Darwin

Canberra

Combined capitals

Combined regional

National

Media enquiries: media@corelogic.com

Continued from previous page

Interest rates may rise by 0.25 –0.5% this next 6 months or maybe more, but when you see that property prices have risen 0.6% just in April, that gives you perspective.

In my 30+ years investing in real estate, I’ve yet to meet anyone that can accurately predict the future of interest rates, let alone the whole property market and hence why the ‘time in the market’ strategy has always managed to beat the ‘timing the market’ strategy.

Each year we survey our subscriber base and time and time again,

“Hobart was the only city where houses recorded a larger gain than units over the past three months.”

Regional markets have shown a slightly stronger quarterly growth rate over the past five months than their capital city counterparts, following a 10-month period where the combined capitals index was outperforming. Looking at value movements over the past three months, the strongest regional markets were aligned with the strongest capital cities. Regional WA (+5.3%) led the pace of gains, followed by Regional SA (3.9%) and Regional Queensland (+3.2%), while Regional Victoria (-0.1%) was the only rest of state market to record a decline in values over the rolling quarter.

Home sales look to have moved through a cyclical peak in November last year. Although the monthly trend in home sales is highly seasonal, the less seasonal six-month trend has remained relatively flat since the November rate hike. Estimated sales over the past three months are tracking 8.6% higher than at the same time last year, and about 5.1% above the previous five-year average. However, it is likely a combination of worsening affordability and low sentiment will keep a lid on the volume of sales until interest rates start to track lower.

Change in dwelling values

90%+ of the respondents wished they had 1) bought more property and 2) bought it sooner.

Those that have followed me for years know that my decisionmaking philosophy is buy when:

1. You can get a mortgage

2. You can buy the right property at a conservative bank valuation price and

3. You have the cash to hold on for the short to medium term.

With the latest change in interest rate predictions, I still don’t see that much has changed.

CoreLogic Home Value Index Released 01 May 2024

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

S HOULD yOU HIRE a PROFESSION a L BIDDER FOR a N a UCTION?

Does the thought of bidding at a public auction make you anxious? Or are you too time poor to attend one for a property you really want? Auctions can be a great way to figure out the real market value of a particular home but they can often make people nervous if they haven’t attended one before.

Purchasing real estate under the hammer can be much more complex than simply placing a bid, but did you know you don’t always have to bid yourself? Professional bidders can be hired to help out those who don’t want to or aren’t able to attend an auction to bid for a property.

WHAT IS A PROFESSIONAL BIDDER?

A professional bidder will attend the auction with you, or attend for you and bid on your behalf. They are often called ‘buyers advocates’ and can also assist you with a range of matters relating to finding the right property for you. Providing the buyer is willing to negotiate they might even be able to help you secure a property without needing to go to an auction.

They use their knowledge and expertise to get the best results for their clients without going above the prescribed budget for their fee. This is regardless of whether you are successful at the auction or not.

WHAT CAN THEY DO?

Those who employ a professional to attend and bid on their behalf usually fall into one of three categories – those afraid of public speaking, those who recognise they’re out of their depth and those who are time poor. Buying at an auction requires analysing a lot of data to settle on your maximum limit, having a clear strategy for auction day and a cool head. Professionals can take care of all of this for you, for a price. The more experience the better!

ARE YOU CONSIDERING HIRING A PROFESSIONAL BIDDER?

Here is how to proceed:

Decide on the price you want to pay – It’s very important to settle on a figure before heading to the auction. This includes doing as much research as possible on what you think the property is worth well ahead of the day. You’ll also need to go over this figure with the bidder you’ve chosen to work with. Attend

as many inspections as you can before the big day, this will help you figure out the potential competition. Details about building reports, body corporate fees, rates and charges should factor into this price.

Decide on the price you’re willing to pay – It’s important to consider that other bidders will often think the property is worth the same amount as you do. Are you prepared to pay a little bit more to get the property if it’s what you really want? It’s best not to get too emotionally involved with the home as this can often lead you to pay too much for something that is less than ideal. Professional bidders can help you to decide if your upper limit is realistic or not.

There are often a lot of things to determine how much an individual property might be worth, from recent comparable sales, market sentiment, time of year and the motivation of other vendors.

They’ll study the crowd – This next step happens on auction

day. A professional bidder will be armed with a plan and call on all their experience to read the crowd around them to beat them all and get the best outcome for you. Remember, just because another buyer has a stronger budget doesn’t necessarily mean they will be the winning bidder.

Bidding starts! – Bidding at a property auction can often be like a game of poker, with each party trying to figure out the others and

what their limits might be. If one bidder/group of bidders starts to get frazzled the others could employ psychological tactics to make them lose their nerve and pay too much. This is where a professional bidder will be worth the cost, as they know all the tricks in the book. They bid strategically at the right moment.

Professional bidders can offer a reassuring solution for those daunted by property auctions. From

helping you set realistic prices to bidding strategically, their expertise can help you get closer to securing your dream property without the stress.

REI

Switch now at reisuper.com.au/join

T HE THREE BIG ‘MISSES’ IN THE BUDGET ON HOUSING

BY ELIZA OWEN, CORELOGIC

For a Budget that made housing one of its central focuses, the federal government has three big ‘misses’ in the plans laid out on Tuesday night. The CoreLogic Budget analysis considers what could be done more efficiently in the approach to Commonwealth Rental Assistance (CRA), construction, and use of existing supply.

WHAT DID THE BUDGET GET RIGHT ON HOUSING?

Increases in housing and rental costs since the pandemic have been especially hard on low income households. The decline of social housing over time has worn down the buffer between the private rental market and insecure housing, so when rents are rising as strongly as they are now, vacancies are low and demand is

high, it’s low income renters who are increasingly vulnerable.

Research from the latest ANZ –CoreLogic Housing Affordability report also showed the low-income end of the spectrum saw the biggest increase in the rent to income ratio in the past four years. In March 2024, the 25th percentile rent value nationally represented 54.3% of the

25th percentile gross household income estimate (figure 1).

The Australian Institute of Health and Welfare continued to report increases in unmet requests for specialist homelessness services, which rose to 108,000 in 2022-23, most commonly because there was no accommodation available at the time.

The federal Budget has allocated funding to where it is urgently needed: crisis accommodation, social and affordable housing funding, and a boost to rental assistance for renters receiving other social assistance payments. Housing initiatives in the budget included:

• An additional $423.1 million for the National Housing and Homelessness Agreement.

• A second-consecutive increase to Commonwealth Rental Assistance (CRA).

Click here to read the full article

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H OW TO MINIMISE STRESS WHEN MOVING HOUSE

Moving to a new home is an exciting adventure, but it can also be a whirlwind of tasks and emotions. To ensure a smoother transition, consider implementing these seven strategies to alleviate stress and embrace the journey to your new place.

EMBRACE

CHANGE

While it's tempting to cling to familiar routines, embracing the changes that come with relocation can make the process more manageable. Create a list of exciting activities or experiences you look forward to in your new location. Having something to anticipate can help keep you motivated during the sometimes chaotic moving days. Designate a small area in your new home where you can unwind and recharge, even amidst the boxes and chaos.

PRIORITISE SELF-CARE

In the midst of packing and planning, don't neglect your own well-being. Incorporate moments of self-care into your routine, whether it's through exercise, meditation, or indulging in a favourite hobby. Taking breaks to recharge will give you the energy and resilience needed to tackle the tasks ahead. Remember to prioritise restful sleep to ensure you're ready for whatever the day brings.

BUILD YOUR SUPPORT SYSTEM

Moving is a team effort, so don't hesitate to ask for help when you need it. Whether it's enlisting

the aid of friends and family or hiring professionals like movers or cleaners, having a reliable support system in place can ease the burden. Keep everyone fueled and hydrated with plenty of snacks and drinks, turning the moving process into a collaborative and even enjoyable experience.

ORGANISE IMPORTANT DOCUMENTS

Keep essential documents easily accessible throughout the moving process to streamline tasks like closing accounts or setting up utilities. Consider investing in a safety deposit box or designated folder to keep paperwork secure and organised amidst the chaos of moving.

ALLOW EXTRA TIME

Moving always takes longer than expected, so build extra time into your schedule to account for unforeseen challenges or delays. By avoiding the pressure of tight deadlines, you'll reduce stress and have the flexibility to adapt to changing circumstances.

SAY GOODBYE THOUGHTFULLY

Saying goodbye to friends, family, and neighbours can be bittersweet,

so plan ahead to make time for meaningful farewells. Schedule visits or gatherings in advance to ensure you can properly say goodbye without feeling rushed. This thoughtful approach will also help minimise interruptions and maintain focus during the final stages of packing and preparation.

EMBRACE NEW BEGINNINGS

As you settle into your new home, take time to explore and familiarise yourself with your new surroundings. Use online resources and community groups to learn about local amenities and attractions. Extend a warm welcome to your new neighbours, setting the stage for positive connections and a smooth transition into your new community.

By implementing these strategies, you can minimise stress and maximise enjoyment as you embark on this exciting new chapter in your life. Here's to a successful and stress-free move!