Australian property month in review: March 2017
Rate rises and regulatory rumblings did little to slow the investor market in March.
March saw the release of CoreLogic figures indicating that moves by lenders to hike rates and tighten credit criteria has done little to deter property investors. Investor activity saw a 4.2% rise in January, for a 27.5% year-on-year increase. The monthly rise reinforced data from the Reserve Bank of Australia (RBA), that revealed investors accounted for 34.9% of all housing credit outstanding and 21.5% of total outstanding credit in January.
There was reason for investors to be wary, however, with the revelation that off-the-plan apartments see lower returns than established housing. A study by BIS Oxford Economics found Sydney off-the-plan apartments saw an aggregate return of 7.5% since July 2011, compared to 25.9% for established apartments. Brisbane also saw sluggish returns, at 1.9%. Melbourne off-the-plan properties actually shed value, with an aggregate loss of 2.7% since July 2011.
On a positive side for investors, figures from SQM Research showed a tightening rental market. After several months of rising vacancy rates, the national vacancy rate stayed steady at 2.4% while several capital cities saw their vacancy rates decline. Sydney vacancies fell from 2.0% to 1.9%, while vacancies in Melbourne hit their lowest level since June 2007, falling to 1.7%.
Owner-occupiers were offered some hope as well, as the Victorian government announced new initiatives for first home buyers. The government announced plans to increase its First Home Owners Grant while extending stamp duty concessions, and touted the launch of a shared equity scheme.
The housing market remains competitive, however, with CoreLogic figures showing strong clearance rates for the final weekend of auctions in March. Sydney’s clearance rate hit a 2017 high at 81.1%, while Melbourne recorded a 79.9% clearance rate.