The Dot Update - June 2024
Welcome to this edition of the Dot Update -
Property Nudging $11 Trillion
The value of Australia’s residential housing market is nudging ever closer to $11 trillion.
The combined value of Australia’s 11,176,100 residential dwellings increased by $209.4 billion in the first quarter of 2024 to reach $10.72 trillion.
The ABS figures show that Australians continue to park their money in property with the value of residential housing worth substantially more than the total value of Australia’s superannuation funds and share market.
The average price of residential dwellings rose by $14,300 to $959,300 in the March quarter, with the total value of residential dwellings rising in all states and territories.
According to PropTrack data buyer demand is still strong and is absorbing any increase in listings and driving up prices.
Senior economist Eleanor Creagh says even though borrowing capacity has dropped as a result of higher interest rates buyers are confidently purchasing as they believe there is further price growth ahead.
Investors Pick Up Pace
Investor lending is continuing to gather pace, according to the latest Australian Bureau of Statistics leading indicators.
ABS Head of Finance Statistics, Mish Tan, says lenders are also borrowing more, which likely reflects expectations of higher rental yields and the greater borrowing capacity of investors.
The value of new loans to investors for housing rose 5.6% in April to $10.9 billion, which was 36.1% higher than at the same time last year.
The average size of an investor loan for an existing dwelling is up from $592,000 to $648,000.
The value of investor borrowing picked up pace the most in Queensland, up 46.6% and New South Wales, up 43.9%.
In Victoria investment loans were lower, perhaps reflecting the response by investors in that state to growing taxes and fees for investment property owners.
Instead, first home buyers are returning to the market in Victoria with the state recording the highest number, 2526, of first home buyer loans in April 2024.
Rents Rise Faster Than Wages
The speed of rental growth is outpacing that of wages.
Analysis of the Australian Bureau of Statistics wage price index and Domain rent data shows asking rents for houses increased by more than six times and units by more than four times, the rate of wage growth in the March quarter.
In the quarter wages rose by 0.8% while combined capital city asking rents for houses rose by 5% and units were up by 3.3%.
Grattan Institute economist Joey Moloney says the only thing that will help those experiencing rental stress is to continue to increase rent assistance.
According to SQM Research capital city asking rents fell by 0.5% in the month to June 4 which is the largest monthly drop in rents since the start of the pandemic in April 2020.
It says Darwin rents fell by 6.3% over the month and Sydney was down by 1.1%. Rents increased in Adelaide by 2.1% over the same period, Brisbane was up by 0.7% and Melbourne remained the same as the previous month.
As always, we hope you enjoyed reading the blog and should you have any questions, please feel free to email Connecting@dotfinancial.com.au or you can call us on 1300 000 DOT (368).