JOHN MCGRATH – PRICE FALLS MODERATING AS BUYERS RETURN

Australian home values are still falling, but the decline in January was the smallest monthly drop since June last year, according to CoreLogic research released last week.

Even though interest rates are likely to increase again, I do think we’re either at or approaching the bottom of the market cycle, and this latest data supports that view. In a downturn, price falls begin to moderate when buyers stop watching the market and start buying again. They do so when prices have fallen to a point where they see value and opportunity for themselves in upsizing their home and/or buying an investment. That appears to be starting now. So, here’s the data.

The national dwelling value fell by monthly fall since June 2022. Drilling down on the East Coast cities, the fall in median home values in Sydney in January was -1.2%, which was lower than the December reading of -1.4%.

The fall in Melbourne in January was -1.1% vs -1.2% in December. In Brisbane, it was -1.4% in January vs -1.5% in December. In Canberra, it was -1% vs -1.2%. In Hobart, it was -1.7% vs -1.9%. Most regional markets are following suit or at least not falling any faster than before.

Regional NSW recorded a -1% decline in January vs a -1.5% decline in December. Regional Victoria and QLD were steady with -0.7% and -0.8% falls respectively in both months. Regional Tasmania bucked the trend with

Lawless says the numbers “are clearly pointing to a reduction in the pace of decline across most regions …”.

The biggest silver lining of a market downturn is the prospect of buying high-quality property for the long term, in the best locations, at a discount. Interestingly, the current moderation in price falls is occurring most at the premium end. Across the capital cities, upper quartile price falls were -4% over the 90 days to January 31. This compares to the September 2022 quarter, when values fell by -6.1%. That might sound like a small difference but it’s not. We’re talking about all capital city upper quartile markets grouped together, so a 2.1% difference is a material change in momentum.

McGrath CEO & Founder - John McGrath to January 31, CoreLogic says upper quartile values in Sydney fell by -3.9%. This is a substantial slowdown on the 90 days to August 31, when premium home values fell by -7.7%.

Sydney’s premium market rose the most during the boom, so it’s fallen the furthest during the downturn. CoreLogic quantifies the drop at -17.4% since the peak in January 2022. That can present good buying opportunities as premium buyers are less impacted by interest rate rises, so it seems many are seeing these softer prices as a window to upsize and/ or invest.

Additionally, Sydney attracts a large proportion of Australia’s expat buyers, and as I mentioned last week, a -6% fall in the Australian dollar against the greenback is giving expats buying in US dollars a further discount on top of that -17.4%. These factors are likely contributing to a greater moderation in price falls at the prestige end.

Regardless of the type of property or price level you’re interested in, I see 2023 as the year to buy.

From 1st October 2022, a number of changes to Queensland’s tenancy laws came in to place including: New laws around ending tenancies, framework for negotiating renting with pets, introduction of repair orders and other important amendments related to tenancy obligations. The most common request we are currently receiving and discussing with landlords and tenants is relating to the framework for negotiating renting with pets. Please see some helpful information below, sourced from www.rta.qld.gov.au/rentallaw-changes.

A tenant must seek written approval from the property owner/manager to keep a pet at the rental property. It is a significant breach if an animal, other than a working dog, is kept at the premises without the property owner/manager’s approval.

If a tenant wishes to rent with a pet during a tenancy, they should formalise their request by completing a Request for approval to keep pet at premises (Form 21) to seek the property owner/manager’s approval. The property owner/manager must respond to the request in writing within 14 days of receiving the request form and state two key pieces of information:

1. whether they approve or refuse the tenant’s request, and

2. other conditions for approval, or reasons for refusal of request.

If the property owner/manager does not respond within 14 days or the response does not satisfy the legislative requirements mentioned above, the pet request will be automatically approved.

Keep in mind that any nuisance and damages caused by an approved pet is the responsibility of the tenant and pet damages are not considered fair wear and tear at the end of the tenancy.

If you are a current or future landlord wanting to ensure your Property Manager is offering you trusted advice and service, please contact Rebecca Hill – New Client Consultant on 0488 771 626 who is always at your service to answer any questions you may have.