Australian property month in review: February 2017
The property market remained strong in February, but investors may have reason to be wary of the future.
Following on a strong start to the year, the property market looked set to continue its run in February. The month began with Housing Industry Figures (HIA) capping off 2016. The HIA New Home Sales Report showed a 0.2% rise for seasonally adjusted new home sales in December, following on a 6.1% rise in November.
Sales were quicker than the previous year, CoreLogic figures indicated. It took an average of 38 days to sell a capital city dwelling in December 2016, compared to 41 days a year earlier and a high of 50 days reached in August 2016. Melbourne homes sold the fastest, at an average of 29 days. Darwin properties remained on the market the longest, at 86 days.
The auction market also performed strongly in February. CoreLogic auction results showed auction volumes for the weekend of 18-19 February topped 2,000 for the first time in 2017. Nationally, 2,280 properties were brought to auction, with a clearance rate of 77%. The following weekend posted even stronger results, with 3,232 properties brought to auction.
Property investors were delivered some good news, with vacancy rates falling while asking rents rose. SQM Research figures released this month showed the vacancy rate fell sharply in January, down to 2.4% from 2.8% in December. Asking rents were up as well, with capital city asking rents up 2% on a year-on-year basis. Hobart saw the strongest rise, with asking rents for houses up 6.7% and unit rents up 11.6%.
But investors also faced possible headwinds. Rumours have swirled regarding potential changes to capital gains tax concessions in the May budget. While Prime Minister Malcolm Turnbull poured cold water on the speculation, government backbenchers seemed to offer contradictory statements. Liberal MP John Alexander told Sky News that capital gains tax changes were “another issue that could be addressed, could be modified, could be calibrated”.