Australian property month in review: January 2017
The start of the year has seen the Australian property market remain strong, leading to a boost in confidence for the sector.
The month began with the release of CoreLogic’s final Hedonic Home Value Index of 2016. The index showed that 2016 was an unexpectedly strong year for property values across Australia’s capital cities. While the year began with pundits warning of a property market slowdown, it ended with home values rising at their fastest pace since 2009.
According to CoreLogic, capital city home values were up 10.9% for the year. When combined with gross rental yields, this spelled good news for property investors. Total returns on capital city properties for 2016 were 14.7%.
Sydney remained the top performer for Australian property, with values up 15.5%. Perth was the only capital city to see declines, with home values falling 4.3%.
For the month of January, CoreLogic data showed house prices up 0.7% for a 10.8% year-on-year change.
Meanwhile, new home sales got a boost after falling to a two-year low. Housing Industry Association figures showed a 6.1% rise for seasonally-adjusted new home sales.
Home building saw a rebound as well. Australian Bureau of Statistics figures released in January showed a bounce of 7% for dwelling approvals in November, following on a decline in October. The news was tempered, however, by figures showing a 4.8% decline compared to the previous year.
There were more indications of a home building slowdown in figures from the Australian Industry Group and Housing Industry Association. The Performance of Construction Index showed contracting conditions in the construction industry for the third straight month.
A bright spot of news for the home building industry came in the form of a new survey from Roy Morgan Research which indicated that 62% of Australian homeowners undertook renovations work in the past year. The figure was up from 57% when the survey was last run in 2013. While most homeowners did minor repairs or alterations, 17% said they had spent $5,000 or more on renovations in the past 12 months.
Renters were also delivered some good news in January, as SQM Research released its November vacancy rate data. The numbers showed a continuing rise for vacancies across Australian capitals. Vacancies were up from 2.3% in October to 2.5% in November, while asking rents for units eased. Sydney saw a decline in asking rents for both units and houses, with house rents falling 0.4% and unit asking rents dropping by 0.3%.
Finally, a quarterly survey showed industry optimism for the year ahead in housing. The ANZ Property Council Survey showed confidence among property industry professionals hit a two-year high. Property professionals expressed optimism about economic growth, capital values and forward work schedules.