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Real Estate

PUBLIC FEEDBACK SOUGHT ON WAYS TO IMPROVE THE NSW HOME BUILDING INSURANCE SCHEME

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NOTICE OF MEMBERS EXTRAORINDARY LAND DEALING MEETING

PUBLIC FEEDBACK SOUGHT ON WAYS TO IMPROVE THE
NSW HOME BUILDING INSURANCE SCHEME

The NSW Government is calling for public submissions to help shape reforms to improve the compulsory home building compensation insurance scheme for homeowners and builders.

Minister for Customer Service and Digital Government Victor Dominello said that the proposals presented in the discussion paper, published by the State Insurance Regulatory Authority (SIRA), will help better support homeowners.

“The family home is still the Australian dream and each year more and more families are building or renovating their greatest asset,” Mr Dominello said.

“With almost 90,000 home building projects insured last year and increasing pressure in the housing construction market, the need for an effective insurance scheme has never been stronger.
“SIRA’s discussion paper proposes a range of reforms that offer clear steps to strengthening the scheme’s support for homeowners when their dreams don’t go to plan.

“We encourage homeowners and industry stakeholders to share their views on how the scheme can be improved.”

Company failures have been proportionately higher in the construction industry compared to other industries – in the 2021 calendar year, 24 per cent of total company insolvencies in NSW were in the construction industry.

“Home Building Compensation is a complex insurance scheme which involves managing insolvency risks in an industry where those risks are inherent and longstanding,” Mr Dominello said.

“As a result, the scheme was run at a loss for many years and has had a chequered history ever since the collapse of HIH Insurance in the early 2000s.”

Key proposals being considered include:
* Changing the amount of insurance cover offered by the scheme;
*Allowing homeowners to claim earlier in the dispute process;
* Extending cover to victims of unlawfully uninsured home construction;
* Updating the value of building work for which insurance is required; and
*Changes to types of work that may be exempt from insurance, such as in high rise residential buildings.

The public consultation is open from today until 16 August.

The discussion paper and how to get involved is available at
https://www.sira.nsw.gov.au/consultations/home-building-compensation-reform

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Real Estate Agents Weigh Profits Against Prices as Property Market Accelerates

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Real Estate Agents Weigh Profits Against Prices as Property Market Accelerates

 

Property prices across Australia continue to rise, with the market showing no signs of cooling. CoreLogic reports a 1.9% increase in property values for the three months ending in May, up from 1.1% in January. The Bureau of Statistics reveals the mean price of residential dwellings rose by $14,300 to $959,300 in the March quarter, pushing the total value of residential properties to $10.72 trillion—three times that of the share market.

Driving Forces Behind Price Increases

Demand Outstripping Supply: Tim Lawless, CoreLogic’s head of research, attributes the price surge to overwhelming demand outpacing the supply of new homes. The number of residential dwellings increased by 52,700 in the March quarter, equating to an annualized rate of 210,800 new homes. However, to meet demand, approximately 240,000 homes are needed annually.

Rising Construction Costs: Vanessa Radar, Ray White’s head of research, points to the rising cost of land, construction, and labour as additional factors driving prices. These increased costs set a new economic benchmark for new developments.

Impact on Homebuyers

Affordability Crisis: Decades of rising prices have pushed many city dwellers out of the property market. Lawless notes that median-income households in cities like Sydney would need to spend about 60% of their gross income to service a mortgage on a median-priced property—an unsustainable ratio that lenders are unlikely to approve.

First Home Buyers: ANZ economist Blair Chapman advises first-time buyers to adjust their expectations and consider more affordable options. With many households already in mortgage stress, this trend is expected to continue.

Industry Perspective

Balancing Profit and Affordability: Despite the affordability crisis, real estate agencies like Ray White are experiencing increased returns due to higher transaction volumes and prices. Radar acknowledges the challenge of balancing business profits with affordability for consumers.

Government Response

Housing Australia Plan: In response to the housing crisis, the government has introduced the $32 billion Homes for Australia plan. This includes the $10 billion Housing Australia Future Fund, aimed at funding 30,000 social and affordable rental homes, and a national target to build 1.2 million well-located homes.

Future Outlook

Potential Market Stabilisation: Lawless suggests that it may take 12 to 18 months for a material supply response to impact the market, with a potential for prices to stabilise or even fall in the future. Until then, affordability remains a significant challenge for many Australians.

Long-Term Solutions: Ensuring affordability in the long term will require a sustained increase in housing supply, alongside measures to manage rising construction costs and ensure that new developments meet the needs of a diverse range of consumers.

In conclusion, the Australian property market’s ongoing growth presents significant challenges for affordability, necessitating a careful balance between industry profits and consumer needs. The government’s housing initiatives offer hope, but their impact will take time to manifest.

 

For more real estate news, click here.

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CoreLogic Reports Record-High Rents Across Australia’s Biggest Regions as WA and Queensland Top the List

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CoreLogic Reports Record-High Rents Across Australia’s Biggest Regions as WA and Queensland Top the List

 

The allure of escaping the high cost of living in Australia’s capital cities for more affordable regional areas is diminishing, as rental prices in nearly every part of the country reach record highs. CoreLogic, a real estate analytics firm, has found that rents in three-quarters of Australia’s largest regional areas are now higher than ever.

Significant Increases in Regional Rent

  • Batemans Bay, NSW: Experienced the most substantial increases over the past three months, with rents rising by $32 per week, a 6% hike.
  • Bunbury, WA, and Sunshine Coast, QLD: Both regions saw rental prices increase by over 4% recently, with Bunbury witnessing a staggering 20% rise over the past year.
  • General Trend: No major regional centre recorded a significant decrease in rental prices. The slight declines were minimal, with Karratha in WA falling by 0.8% to an average rent of over $1,000, and Maryborough in QLD dropping by 0.2% to $478.

Factors Driving the Rental Surge

CoreLogic economist Kaytlin Ezzy highlighted that rental prices rarely decrease unless driven by an economic downturn. The current pace of rent increases is unusual compared to the pre-COVID era, with rents rising at about 6% annually across regional markets, whereas they typically increased by only 2%.

High Interest Rates

Persistent high-interest rates, hovering above 4% since their steady rise from 2022, are exerting pressure on both renters and investors. Investors, facing higher mortgage costs, are likely passing some of these expenses onto renters.

House Prices in Regional Areas

CoreLogic’s data also examined house prices in Australia’s major regional areas, revealing significant growth in Western Australia:

  • Geraldton, WA: House prices surged by 8.8% over three months.
  • Busselton, WA: Increased by 7.7%.
  • Bunbury, WA: Rose by 6.4%, with homes selling fastest at an average of 14 days.

Queensland: Regions such as Rockhampton, Gladstone, Gold Coast-Tweed, and Townsville featured prominently in the top 10 for quarterly growth. Conversely, New South Wales and Victoria had minimal representation.

Underperforming Areas: Ballarat (outside Melbourne) and Port Macquarie (NSW Mid North Coast) experienced declines in house prices, with Ballarat down 2% over three months and 4.2% over the past year, averaging just over $540,000.

Market Dynamics

Ms. Ezzy pointed out that while most areas suffer from a housing shortage, regional Victoria has 15% more homes on the market than average. Despite cost-of-living concerns, high interest rates, and low consumer sentiment generally correlating with a falling market, the current mismatch between supply and demand is driving prices up.

Western Australia Leading Growth: WA properties are outperforming other regions, with Queensland following closely behind. Notable growth in Queensland includes regions like Gladstone, Emerald, and Rockhampton, where property values have surged by about 16% over the past year.

Contradictory Trends: Despite several economic indicators suggesting a potential market decline, the persistent demand-supply imbalance is propelling property values higher.

Conclusion

The soaring rental and property prices across Australia’s regions highlight the growing challenges in the housing market. While some regions experience remarkable growth, affordability remains a critical concern, exacerbated by high interest rates and a consistent demand-supply mismatch. As the market continues to evolve, stakeholders must balance profitability with the pressing need for affordable housing solutions.

 

For more real estate news, click here.

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Uneven Price Growth Reshuffles Rankings of Australia’s Most Expensive Cities

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Uneven Price Growth Reshuffles Rankings of Australia’s Most Expensive Cities

 

In the ever-evolving landscape of Australia’s real estate market, Brisbane has emerged as the country’s second-most expensive city, following a surge in home prices that propelled the Queensland capital to new record highs. According to the PropTrack Home Price Index, property prices continued their upward trajectory in May, with the median home value across Australia reaching unprecedented levels, showcasing the enduring strength of the housing sector despite broader economic fluctuations.

The latest data reveals a varied picture across the nation’s capital cities, with six cities witnessing increases in home values, while four—Sydney, Brisbane, Perth, and Adelaide—set new price records. Brisbane’s remarkable ascent in the rankings signals a reshuffling of the hierarchy among Australia’s capitals, with the city now sharing the title of the nation’s second-most expensive capital with Canberra. Both cities boast a median home value of $834,000, encompassing both houses and units.

Brisbane’s rapid rise to prominence reflects robust price growth, with values soaring by 0.67% in May alone. This surge has catapulted the city’s housing market into the upper echelons of Australia’s real estate landscape, outpacing even Melbourne’s values for the first time in over a decade. The factors driving this unprecedented growth include heightened demand fuelled by interstate migration, coupled with a limited supply of available properties—a combination that has propelled Brisbane to the forefront of the nation’s housing market.

Concurrently, Canberra experienced a marginal decline of 0.21% in home values during the same period, contributing to the parity between the two cities. However, upon closer examination of property types, Canberra’s houses retain their premium status, commanding a median value of $961,000, compared to Brisbane’s $930,000. Conversely, Brisbane’s units have surpassed those in Canberra, with a median value of $632,000, outpacing Canberra’s $605,000—a testament to the evolving dynamics of urban housing preferences and affordability constraints.

Despite Brisbane’s meteoric rise, Sydney maintains its status as Australia’s most expensive city, with prices rising by 0.42% in May, marking an impressive 7% increase over the past year. However, the pace of growth has moderated since February, as an influx of listings has provided buyers with increased options, albeit against the backdrop of persistently strong demand.

Looking ahead, the outlook for Australia’s housing market remains positive, albeit with a tempered pace of growth. According to PropTrack senior economist Eleanor Creagh, the market continues to grapple with supply-demand imbalances, population growth dynamics, and tightening rental markets. Nevertheless, further price appreciation is anticipated in the coming months, albeit at a moderated pace relative to earlier in the year.

Beyond the metropolitan hubs, regional disparities in price growth emerge as a defining feature of Australia’s housing landscape. Perth emerges as the standout performer, with prices soaring by 20.58% over the past year, driven by robust buyer demand amidst constrained supply conditions. Similarly, Adelaide witnesses substantial price growth, buoyed by its comparative affordability and robust demand dynamics in the city’s northern precincts.

Conversely, Hobart’s housing market faces headwinds, with prices declining marginally, indicative of a protracted recovery from previous downturns. Yet, regional Tasmania presents a stark contrast, with home values reaching new peaks, underscoring the resilience and divergent trajectories within the broader Tasmanian property market.

In sum, Australia’s housing market undergoes a paradigm shift, with Brisbane’s ascent to the echelons of the nation’s priciest cities emblematic of the dynamic forces reshaping urban housing dynamics. As the sector navigates evolving demand-supply dynamics and regional nuances, the trajectory of Australia’s housing market remains a pivotal determinant of broader economic resilience and prosperity.

 

For more real estate news, click here.

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