Melbourne property market in 2018: Suburbs to watch and where to buy
This article was originally published by LARISSA DUBECKI on FEB 9, 2018 via domain.com.au
It’s that time of year. As we all pause to draw breath after a scorchingly hot 12 months in real estate, Domain gazes into its crystal ball to see what the new year has in store with the hottest areas and sought-after properties. Can 2018 hope to live up to the standards set by its predecessor, in which all records were smashed at auction and the $2 million club became the new standard for blue-chip Melbourne? Let’s see.
North
Photo: Chris Hopkins
Jellis Craig agent and auctioneer Lee Muddle calls it “the rise of Brunburg”. The fringe of Sydney Road in Coburg is the spot he predicts to heat up in 2018. “It’s a vibrant, multicultural area with a lot more value. Plus, it’s still south of Bell Street.”
Brunswick West is also about to get its time in the limelight, Muddle predicts. “It really is still undervalued. To think you can find a double-fronted period home of 400 to 500 square metres for around $1.2 million is pretty remarkable.” Apprehension about moving north of Bell Street remains a factor for inner city renters looking to buy their first home, but parts of North Coburg are increasing in popularity as the hipster-proof fence moves outward. As for their traditional stomping grounds, Collingwood,Abbotsford, Fitzroy and Northcote will continue to perform well, he says.
“The tip closer in is to look for housing stock like townhouses. People still love the charm of a period home but if you’re after really good value a townhouse from the 1970s or ’80s is the way to go.”
South
Photo: Eliana Schoulal
For Sam Gamon, director of Chisholm & Gamon, the Frankston train line will be the guiding principle of real estate growth in 2018. “Already we’ve got Bentleigh, Mentone, Seaford seeing serious price hikes. Now Aspendale and Edithvale are really on the move. They’re a little further out and there is still affordability there,” he says.
His big tip as the suburb to rocket in the new year? Beaumaris, take a bow. “The new secondary college has been zoned, which inevitably drives up prices in the area.” Indeed, the new public “super-school” set to open in 2018 has been predicted to cause a property bubble as parents rush to secure places for their children.
As for property types, look no further than art deco apartments in areas like Elwood and St Kilda. “They’re much larger than modern apartments. They’re the new house alternative.”
East
Photo: Wayne Taylor
Is there anywhere left for the inner east to go? The coveted suburbs (usually referred to with the adjective “leafy”) have boomed and boomed again, but there’s still gold in those green hills. So says Scott Patterson, a director of Kay & Burton, who’s pinpointed a corridor wending through Kew East and North Balwyn he believes remains undervalued even in this heady real estate climate.
”What it comes down to is the housing stock, which was developed in the 1950s and ’60s. You get large blocks, often with a smaller-sized family home. They aren’t as sought-after architecturally,” he says.
”If someone said to me, where should I invest my money for solid growth next year, that’s where I’d recommend. For $1.8 million or $2 million you’d get a good family home, you could add value confidently or look at rebuilding. It’s really starting to lift prices in the area.”
The other properties to look at for growth are single-fronted Victorians, Patterson says. “They sit on 200 square metres of land and attract people wanting to retire and move closer to the city from Surrey Hills and Mont Albert. They’re giving couples buying their first home a real run for their money.”
West
Cobb Lane bakery and cafe in Yarraville. Photo: Anu Kumar
“South Kingsville is another case in point – it’s a little pocket many people have never even heard of yet it’s where you can still get a period-style home on a good block of land of 450 to 500 square metres for less than $900,000. Where else can you say that within nine kilometres of the city?”
This year is going to see a continuation of a trend Stephens refers to as “The Block factor” in which the prices for unrenovated homes are rivalling renovated ones. “It’s the dream of doing it yourself rather than buying someone else’s vision, but it’s seeing some staggering prices for untouched homes.”
If it’s the already gentrified ‘hoods of Yarraville and its ilk, the sweet spot in 2018 will be the single-fronted Victorian cottage, while Footscray will continue to experience good capital growth, thanks to Docklands‘ emergence as Melbourne’s business centre. “Being close to the rail line is a great benefit,” he says, “but a lot of our clients are now riding their bikes to work.”
This article was originally published by Samantha Landy on 8th February 2018 via news.com.au
VICTORIA’S million-dollar club swelled by more than 50 suburbs last year, with Pascoe Vale South, Vermont and Seddon among those to join it, new research shows.
The state had 177 postcodes with seven-figure median house prices at the end of 2017, according to a CoreLogic Property Pulse report.
Five suburbs also had million-dollar median unit prices: Princes Hill, Albert Park, Brighton, Brighton East and Black Rock.
The number of ‘burbs with median prices of more than $1 million rose from 126 in the house market and one in the unit market in 2016.
The figures have also skyrocketed from 39 and two in 2012, and 32 and zero in 2007, the data reveals.
Brighton now has a million-dollar median unit price. 5/23 St Ninians Rd sold in the suburb last year for an undisclosed figure between $5.4-$5.8 million. Source:Supplied
Nationwide, there were 929 suburbs with a median value of at least $1 million for houses or units at the end of last year — the vast majority of them in New South Wales (521 for houses and 109 for units).
“As the Sydney and Melbourne housing markets entered an upswing in the middle of 2012, ... this period also resulted in a rapid upswing in the number of $1 million suburbs,” the report said.
“In fact, between 2012 and 2017, the number of $1 million suburbs increased by 243 per cent.”
34 Hotham St, Seddon fetched $1.04 million last year. Source:Supplied
Among the Melbourne suburbs to earn seven-figure median house prices last year were Pascoe Vale South, Vermont, Seddon, Spotswood, Oakleigh South, Maribyrnong, Mitcham and Coburg.
Coastal ‘burbs Fairhaven and Arthurs Seat also joined the club, along with Geelong’s Breamlea.
Toorak remained the most expensive member, with a median house price of $4,851,242.
Kooyong, Canterbury and Deepdene all came in at more than $3 million.
Melbourne also had 22 suburbs with medians of $2 million-$3 million.
Melbourne's western suburbs were the country's busiest as first-home buyers and owner occupiers focused on more affordable markets in an awakening housing market.
Suburbs to the west of Port Phillip Bay accounted for 80 of the 881 scheduled auctions nationally in the week to Saturday, and the region recorded a preliminary clearance rate of 69.2 per cent, above the national rate of 67.7 per cent, figures from data provider CoreLogic showed.
In Hopper's Crossing, 30km west of the Melbourne CBD, four bidders pushed a four-bedroom house "tens of thousands" above its reserve price to $680,000 on Saturday.
"It's a healthy market in the west," Benlor Real Estate Werribee agent Glen Wilson told The Australian Financial Review.
Auction clearance rates for week to 3 Feb 2017. Corelogic
"The main attendance was more owner-occupiers than investors. The people that bought it are moving from the east. That seems to be quite often these days."
Across the eastern seaboard, the residential market is picking up steam - the number of scheduled auctions was up from just 276 last week - but the outlook is for a more subdued year.
It now expects houses to fall 2.4 per cent and apartments to slip 1.8 per cent in the country's largest city. It predicts continued growth in Melbourne houses and apartments this year, with units in the Victorian capital to fall next year.
Best in the west: This four-bedroom house at 201 Morris Road, Hopper's Crossing, sold for 'tens of thousands' above its reserve price to $680,000 on Saturday. Supplied
Dwelling prices overvalued relative to wages and high levels of household indebtedness also put the country's two largest housing markets at risk of price corrections, separate reports by JP Morgan and Industry Super Australia warned.
Sydney subdued
While Melbourne overall recorded a preliminary 72.8 per cent auction clearance rate, Sydney was more subdued and with auctions in smaller numbers. Preliminary results of a 157 reported auctions - out of a scheduled 207 - showed a 63.1 per cent clearance rate. The Central Coast was the most strongest region, with a clearance rate of 76.9 per cent across 19 auctions.
In Sydney, where figures from Domain Group, majority owned by Fairfax Media - publisher of the Financial Review - showed a preliminary clearance rate of 57 per cent, a four-bedroom house at 1 Irving Crescent, Ryde, sold at auction for $1,335,000 on Saturday. It last sold in 2013 for $810,000.
The Hopper's Crossing house was purchased by a buyer who was moving from Melbourne's eastern suburbs, the selling agent said. Supplied
A two-bedroom house with shopfront retail space on a corner in inner-western Sydney's Annandale sold at auction for $1.65 million.
Conditions are mixed, however. Ray White Group director Dan White said the $2.45 billion in unconditional sales the group recorded in January was four per cent higher than the same month in 2017, indicating the market remained strong.
"The market is hardly falling off a cliff," Mr White said. "Quite the contrary. The strong feedback from our network is that the year has started with well-balanced momentum."
Stock levels remained short in some markets and buyer demand was strong, he said.
"Our results were strong right across the markets, and we have witnessed a strong early lift in prestige listings, especially in Sydney," Mr White said.
The CoreLogic figures showed Brisbane and Adelaide with almost identical auction numbers - 98 and 97 respectively - but the preliminary clearance rates differed greatly. Brisbane recorded a 55.4 per cent rate, where most homes are sold by private treaty, and Adelaide 76.7 per cent.
Canberra posted a preliminary 64.4 per cent clearance rate based on the result of 45 of the 52 scheduled auctions.
Melbourne's western suburb markets are likely to keep booming. Benlor Real Estate's Mr Glen said he listed a three-bedroom house at 11 Endeavour Way in Wyndham Vale, west of Hopper's Crossing, online on Wednesday last week and had already received three offers, two of which were above the asking price of $459,000.
This article was originally published by Scott Carbines on JANUARY 28, 2018 via news.com.au
FIRST-home buyers are expected to remain a force in the Victorian property market this year after rushing to capitalise on stamp duty changes.
More than double the amount of first-home buyers benefited from stamp duty breaks in the second half of last year than the same period in 2016.
New figures show first-timers charged to the city’s most affordable areas to enter the market from July last year, when stamp duty was abolished by the State Government for first-home purchases under $600,000 and concessions were introduced for those up to $750,000.
It comes as latest Australian Bureau of Statistics data shows loans to Victorian first-home buyers reached their highest monthly level in November, at 3527, since late 2009.
The buyer type made up 19.7 per cent of new loans written in the state that month — a percentage not seen since 2013.
First-home buyers saved the most on stamp duty exemptions in Wyndham in the second half of 2017. Source:News Corp Australia
Rapidy growing Wyndham in the outer west was the state’s busiest local government area for first-home buyer stamp duty exemptions in the second half of 2017 with 726.
Casey in the outer southeast followed with 664, then Hume in the north with 629, Greater Geelong (433) and Melton (368).
Hocking Stuart, Point Cook, director Scott Perry said demand had increased in the area since the changes were introduced and there was not enough supply to keep up.
“There’s more first-home buyers in the mix and also with the stamp duty changes we’ve found that it’s been possible for some of our tenants to get into the market as well,” he said.
“(A potential saving of) $32,000, if you buy at $600,000, is a huge amount of money for a first-home buyer.”
A total of 11,763 first-home buyers benefited from the concessions in the second half of 2017 — including 9702 exempt entirely and 2061 paying less — up from 6689 over the same period the year prior.
Real Estate Institute of Victoria president Richard Simpson said the changes had helped more Victorians get into the property market.
“We expect stamp duty concessions will encourage a high level of participation from first-home buyers in both the housing and apartment markets throughout 2018,” he said.
Demand is strong for affordable homes. Picture: Mark Dadswell Source: News Corp Australia
“Increased competition from first-home buyers, particularly for apartments in the inner ring, deterred investors in late 2017 and we expect this to remain the case for the first half of 2018.”
Mr Simpson said increased competition for homes in some of Melbourne’s most affordable suburbs boosted annual price growth: “however they remain well below the citywide median house price of $821,000.”
Acting treasurer Robin Scott said doubling the First Home Owner Grant for new property outside Melbourne had also provided a boost in regional Victoria.
“In only six months we’ve seen a notable increase in interest in the construction of new homes, which is great for local businesses and great for local jobs,” he said.
TOP LOCAL GOVERNMENT AREAS FOR FIRST-HOME BUYER STAMP DUTY EXEMPTIONS
1. Wyndham, 726
2. Casey, 664
3. Hume, 629
4. Greater Geelong, 433
5. Melton, 368
6. Whittlesea, 359
7. Cardinia, 322
8. Greater Bendigo, 302
9. Frankston, 299
10. Ballarat, 294
VIC TOTAL: 9702
TOP LOCAL GOVERNMENT AREAS FOR REDUCED STAMP DUTY FOR FIRST-HOME BUYERS
1. Casey, 248
2. Wyndham, 153
3. Whittlesea, 144
4. Yarra Ranges, 100
5. Greater Dandenong, 87
6. Knox, 82
7. Kingston, 81
8. Hume, 79
9. Frankston, 78
10. Moreland, 76
VIC TOTAL: 2061
Source: State Government, transactions 1 July 2017 — 31 December 2017
This article was originally published by Scott Carbines on JANUARY 25, 2018 via news.com.au
A RANGE of Melbourne suburbs and regional areas have been revealed as priority locations for the State Government’s new shared equity program for struggling first-home buyers.
There are 85 Melbourne suburbs, seven nearby towns and 130 regional towns and suburbs, split into 33 ‘priority areas,’ identified for the HomesVic program, which is anticipated to launch in the next few weeks.
The State Government will provide up to 25 per cent of a property’s purchase price to up to 400 eligible low-income first-home buyers through the pilot program, which was announced last year as part of the ‘Homes for Victorians’ package.
It retains a proportional interest, which is paid in line with the property’s value in the future.
Locations have been chosen in areas where there is high demand for housing and good access to employment, public transport and other services, according to the government.
These include the Box Hill area in Melbourne’s east, Dandenong area in the southeast, Werribee area in the west and Epping area in the north.
Brunswick — part of the Parkville ‘priority area’ — is included in the list. Source:News Corp Australia
Inner areas including Parkville, Fishermen’s Bend and Footscray have also been identified, as well as middle ring areas around Broadmeadows and Sunshine.
Geelong, Ballarat, Bendigo, Bacchus Marsh, Kyneton, Wallan and Gisborne are among the places outside the capital that will be prioritised for applicants.
Acting treasurer Robin Scott said there had been “significant interest” in the program which would “help Victorians take that all-important step on the first rung of home ownership.”
Applicants must select up to 10 choices of dwelling types (houses, townhouses, apartments) and priority areas, with houses excluded from Box Hill, Fishermen’s Bend and Parkville.
Interest can be registered online and applications will open officially in the next few weeks.
Eligible singles can make no more than $75,000 per annum and families or couples no more than $95,000 per annum. Households need to have a deposit of at least 5 per cent.
This article was originally published by Madeleine Heffernan & Craig Butt on JANUARY 24 2018 via theage.com.au
A record number of apartments were built in Melbourne's inner-city last year, and the skyscrapers housing them are getting taller.
More than 10,000 apartments were built in the Melbourne City Council area, predominantly in the CBD, Docklands and Southbank.
While the CBD apartment boom has been a boon for council and construction jobs, experts say it has led to shoddy apartments and questionable quality of life for residents.
The Victorian president of the Australian Institute of Architects, Vanessa Bird, said apartment living close to work, transport and infrastructure was "more sustainable than continually releasing green field sites further and further away from services" but that the finished product was lacking.
She said many of the newly finished buildings were approved when there were fewer regulations in place.
"Unfortunately, architects are still not mandated on apartment projects as they are in NSW to ensure design quality and public safety," Ms Bird said.
More than 4500 apartments were completed in the CBD last year, almost 2200 in Docklands, and just over 900 in Southbank.
More than 10,000 new apartments were completed in Melbourne last year. Another 13,512 are currently under construction. Photo: Leigh Hennigham
The rest were in areas including Carlton, Parkville, North Melbourne and West Melbourne.
Those units were housed across 46 new buildings, including the 70-storey Light House tower on Elizabeth Street.
The site of the former gasworks on Lonsdale Street now houses four residential towers, including a 54-storey building with more than 680 apartments.
The average height of new developments has been growing each year since 2011, and reached an average of 20 storeys last year.
University of Melbourne urban planning associate professor Alan March said CBD residents were missing out on green, recreational and community spaces.
"It's particularly important for high rise residents because people are packed in so closely, I would argue they would have an even greater need for open space," he said.
"We've got this challenge of open space being under more pressure, and being able to find a tranquil spot may be very hard at peak times."
He said Melbourne was over-reliant on city living, and had failed to properly develop its inner suburbs or properly service its outer suburbs.
The surge in CBD high rises comes amid controversy over plans to bulldoze Festival Hall in West Melbourne and replace it with a multi-million dollar apartment complex.
Mark Wizel, national director at real estate agency CBRE, said the apartment market was expected to cool this year.
Foreign investors were "starting to think twice" about investing in Melbourne's city hotspots in the wake of increased fees for foreign purchasers and banks cutting back on interest-only loans and residential development lending, he said.
"I expect [the market] to be subdued until the fourth quarter at which point the vacancy rate and demand from new migrants plus students will be so obvious that policy will have to change in government and with banks."
Acting lord mayor Arron Wood said the record numbers followed strong real estate market conditions between 2013 and 2016, which made apartment projects attractive to developers.
"With these projects now reaching completion, we are seeing increased interest in new student accommodation, hotel and office space developments," he said.
MELBOURNE enjoyed its strongest annual price growth in seven years in 2017, with Melton South, Sunshine West and Thomastown among the year’s best performers.
New Real Estate Institute of Victoria figures show citywide house prices increased for the seventh straight quarter in December, up a modest 1.1 per cent to a median of $821,000.
This took Melbourne’s 2017 price growth to 13.2 per cent — the biggest rise since 2010.
Wakelin Property Advisory director Jarrod McCabe said the figure reflected “some pretty impressive growth for a 12-month period”, predicting another 5 to 8 per cent rise to come this year.
“We’ll see a lot of that in the first three to six months of the year,” he said.
“Interest rates are still low, which is giving people confidence, and our rising population is a key factor in the growth — it’s eating up a lot of housing supply.”
Melton South’s median house price soared 44.1 per cent to $420,500 last year to make it Melbourne’s highest annual growth suburb, according to REIV.
9 Armstrong St sold in November for $1.315 million in strong growth suburb Sunshine West.
It was followed by Sunshine West and Glenroy, both up 29.9 per cent to $720,000 and $810,000 respectively, Thomastown, 29.1 per cent to $688,000, and Hoppers Crossing, 28.3 per cent to $580,000.
House prices in Cranbourne, Frankston, Lalor, Deer Park and Mount Eliza all rose by more than 26 per cent to round out the top 10.
REIV president Richard Simpson said the median house price for Melbourne’s outer suburbs jumped a solid 2.4 per cent to $666,500 in the December quarter.
“Houses within 20km of the CBD are almost out of reach for many first-home buyers, so these buyers are now looking for new entry points to the market, especially in established suburbs with infrastructure, amenities and services,” he said.
Mr Simpson said 2017 was a “record-breaking year” for Melbourne’s auction market, with 25 benchmarks broken.
These included highest number of auctions held in a year and highest number of auction sales in a year.
Real Estate Institute of Victoria president Richard Simpson said 2017 was a record-breaking year for Melbourne’s property market.
Mr Simpson attributed Melbourne’s stellar 2017 to “high levels of interstate and overseas migration, new government initiatives for first-home buyers and record low interest rates”.
He said the modest December quarter was the result of increased supply and reduced investor activity.
Melbourne’s median apartment price rose 1.2 per cent to $594,500 in the final three months of 2017.
And regional Victoria enjoyed a strong end to the year, with house prices up 2.6 per cent to a record $396,500 median. This marked a 10 per cent annual increase.
“Regional cities and towns within commuting distance of the CBD have certainly benefited from strong price growth in Melbourne, with a number of these areas now recording median house prices higher than those in the outer ring,” Mr Simpson said.
Melbourne’s median house price hit $821,000 in the December quarter, according to REIV. Picture: Mark Stewart
Melbourne median house price
—up 1.1% to $821,000 in December quarter
—up 13.2% in 2017 as a whole, the highest annual growth since 2010
Other numbers
—25 auction records broken in 2017, including highest number of auctions and sales in a year
—Melbourne median apartment price up 1.2% to $594,500 in December quarter
—Regional Victoria median house price up 2.6 per cent to $396,500 in December quarter
Top annual growth suburbs of 2017
MELTON SOUTH up 44.1% to $420,500 median house price
SUNSHINE WEST up 29.9% to $720,000
GLENROY up 29.9% to $810,000
THOMASTOWN up 29.1% to $688,000
HOPPERS CROSSING up 28.3% to $580,000
CRANBOURNE up 27.9% to $550,000
FRANKSTON up 27.4% to $650,000
LALOR up 27.1% to $699,000
DEER PARK up 26.7% to $580,000
MOUNT ELIZA up 26.3% to $1,232,500
EPPING up 25.9% to $631,500
SUNBURY up 25.6% to $520,000
CRANBOURNE WEST up 24.4% to $526,500
MENTONE up 24.3% to $1.2m
HAWTHORN EAST up 24.2% to $2.13m
MERNDA up 23.9% to $590,000
ROSEBUD up 23.4% to $624,000
BRUNSWICK up 22.8% to $1.25m
HAMPTON PARK up 22.6% to $567,500
WERRIBEE up 22.6% to $511,250
Source: REIV
This article was originally published via news.com.au and AAP on JANUARY 17, 2018
AN Australian economist has outlined a very simple reason why negative gearing concessions aren’t going anywhere.
DESPITE ongoing debate, politicians will never scrap negative gearing for one simple reason, Australian economist Saul Eslake has said.
The tax concession has been a key driver in rising housing prices, providing incentives for investors and tax relief for those who rent out their properties.
It’s also been partly responsible for locking thousands of Australians out of the property market, effectively crushing the great Australian dream, and has contributed to the widely acknowledged housing crisis for the same reasons.
Extraordinary property prices have put pressure on politicians to take action on housing affordability, with stripping the negative gearing tax concession considered one of the simplest and most effective options to drive down prices and open up the market to millennials.
But while it might seem like a no-brainer for those of us desperate to join the homeowners’ club, Mr Eslake explains, it would be one of the dumbest political decisions possible.
And It all comes down to votes.
“On average, about 100,000 people successfully become home buyers in every given year. They would obviously like the government to do things to make housing cheaper, more affordable for them,” he told ABC’s 7.30.
“There are over two million people who own at least one investment property, and the last thing they want to [see] a government to do is make housing cheaper and more affordable for people who don’t currently own housing.
“Even the least intelligent of our politicians can do that maths: 100,000 people who want cheaper housing versus two million people who want housing to get more expensive.”
Economist Saul Eslake. Picture: Nikki Davis-Jones Source: News Corp Australia
Despite this clear-cut argument, debate continues to rage among our major political parties over what to do with negative gearing.
Federal Labor is currently pushing to scrap the controversial tax concession, which Paul Keating did as treasurer in the 1980s, only to have it reinstated by then prime minister Bob Hawke a short time later.
It has seized on research presented at a Reserve Bank of Australia workshop which found eliminating negative gearing would benefit renters and owner-occupiers and raise the number of Australians owning their own homes, but the government has dismissed the paper as “preliminary and incomplete”.
The change would have a minimum impact on the economy while curbing the appetite of investors and the top 20 per cent of earners for owning multiple properties, the paper, based on economic modelling by Melbourne University researchers, predicted. The study said 75 per cent of Australian households would be better off if the policy was ditched.
An RBA report says three-quarters of households would be better off without negative gearing. Picture: Brendon Thorne/Getty ImagesSource:Getty Images
Last week NSW Premier Gladys Berejiklian was criticised for ignoring advice from her Treasury officials that the Federal Government should conduct a comprehensive study of negative gearing and capital gains tax arrangements “and consider alternative policies that would improve outcomes for Australians”.
Confidential federal Treasury advice published earlier this month contradicted the Turnbull Government’s claims that changing negative gearing and the capital gains tax discount would act like a “sledgehammer” on the Australian economy.
Federal Financial Services Minister Kelly O’Dwyer, who labelled the Melbourne University paper “preliminary and incomplete”, said Labor can’t argue negative gearing and capital gains tax reforms would both make houses more affordable and have no impact on prices.
Shadow treasurer Chris Bowen said the research shows Australian households would be better off.
“We have seen case after case of experts calling for negative gearing to be reformed,” Mr Bowen told reporters in western Sydney on Saturday.
“What negative gearing reform would do is take the heat out of the housing market and put a more level playing field in place for first home buyers, change the mix for purchases of housing and give people a chance.”
This article was originally published by Stuart Marsh on Jan 12th 2018 via finance.nine.com.au
The number of foreign investors purchasing Australian property is forecasted to dip significantly as tax hikes across the country take their toll.
Data from ANZ/Property Council of Australia forecasts that in NSW foreign buyers will snap up just 18.1 percent of residential properties on offer until March 2018, down from the record high of 24 per cent in September 2016.
In Australia's other hot property market, Melbourne, the fall will be less dramatic - 21 percent of sales will be expected to go to foreign investors, down from 25.2 percent at the same time last year.
In Queensland, the forecast of foreign investment has plummeted to just 13.8 percent for the three months until March 2018, compared to 17.5 percent in December 2016.
In South Australia, foreign buyers were tipped to fall to 11.6 percent - down from 15.6 percent in March 2017. In Western Australia that number is tipped to be 9.1 percent down from 11.4 percent in March 2017 and in the ACT foreign buyers were tipped to account for 10.9 percent down from 17.9 percent in December 2016.
The ANZ/Property Council data did not show expected forecasts for Tasmania and the Northern Territory.
Foreign buyers overwhelmingly preferred new dwellings, with purchases of brand-new houses and apartments accounting for 22.1 percent of foreign investment spend, compared to the 2.5 percent spend on existing dwellings.
The ANZ/Property Council survey canvasses the views of more than 1,110 property experts including developers, agents, government heads and owners.
Daniel Gradwell, senior economist at ANZ, said the majority of property experts interviewed for the survey believed that interest rates will not go up in 2018.
"A majority (70 percent) of respondents believe interest rates will remain the same over the next 12 months, compared to 40 percent as recently as June 2017," said Gradwell.
"This is in direct contrast to ANZ’s view. We believe that the RBA will hike the cash rate twice this year, as the Bank becomes more comfortable that wages appear to be trending higher. However, this view is certainly not without challenges."
The recent tax reform,s as the government tries to open housing supply to local first-time home buyers, is generally thought to be the reason for the downturn in foreign investment.
In NSW, the 2017 Budget increased the stamp duty surcharge for foreign investors from 4 percent to 8 percent, in addition to increasing the annual land tax surcharge from 0.75 percent to 2 percent.
In Victoria, from July 1 2016, foreign investors have had to pay an additional 7 percent tax on top of their land transfer duty.
In addition to these tax hikes is tougher investment rules from the Chinese government, where individual buyers have been limited to an annual $US50,000 limit on foreign currency purchases.
A recent report from investment bank UBS found that the interest of Chinese buyers in Australian property will fade in 2018 as their attention turns to the booming market of Bangkok.
"A lot of first home buyers will certainly hope that this prediction translates into good news for them," said Nine's political reporter Kerrie Yaxley.
"One bank estimates that Chinese buyers make up 80 percent of overseas-based property buyers."
This article was originally published by Frank Chung on JANUARY 10, 2018 via news.com.au
A MAJOR crackdown on Chinese buyers of Australian residential property could finally bring housing prices down to earth, experts say.
AN AGGRESSIVE crackdown by state and federal governments is sending Chinese buyers of Australian residential real estate offshore.
Last year the NSW government doubled stamp duty for foreign investors from 4 per cent to 8 per cent and increased the annual land tax surcharge from 0.75 per cent to 2 per cent, while the Federal budget removed capital gains tax exemptions for overseas buyers and introduced a 50 per cent ownership cap for new residential developments.
The budget also introduced a “ghost tax” giving the Australian Taxation Office power to fine foreign investors up to $5500 a year if they leave their properties empty, plus up to $52,500 for failing to lodge their forms.
Meanwhile, the Victorian government’s own vacant residential land tax kicked in this month, with owners in 16 council areas facing potential fines equal to 1 per cent of the property’s value if they leave their properties empty.
Last year, Credit Suisse analysts estimated foreign buyers purchased 25 per cent of all new supply in NSW, with Chinese buyers accounting for nearly 80 per cent of foreign demand.
But according to financial services company UBS, tax and regulation changes combined with moves by the Chinese government to prevent money flowing offshore were sending those buyers to greener pastures — with Bangkok tipped as the next hotspot.
“What we have found is that Chinese buying of property abroad tends to be very price and currency-aware,” UBS head of global property research Kim Wright told The Australian.
“Their focus on specific markets will fade or pick up, depending on their view of currency. Over the last two years we have seen Asian buying of Australian property, specifically Sydney, Melbourne and Brisbane, that’s been very strong. It looks like that has started to fade over the past six months.
“I think it’s the combination of factors. Prices have been very strong in Australia so there is now a discussion that the cycle has started to peak and there’s the tax changes that have come through along with the tax controls.”
It comes after latest CoreLogic data showed national dwelling values fell 0.3 per cent in December. “The Sydney and Melbourne property boom continues to deflate,” AMP Capital chief economist Dr Shane Oliver said in a weekly note.
“Tighter lending standards, rising levels of unit supply, slower Chinese demand and reduced investor enthusiasm for property are all impacting and are likely to lead to further declines in Sydney and Melbourne property prices this year of around 5 per cent — maybe a bit more in Sydney and a bit less in Melbourne.”
Dr Oliver said the cooling in Sydney and Melbourne was good news for the Australian Prudential Regulation Authority and the Reserve Bank and “helps provide the necessary flexibility to leave interest rates low until the broad economy is ready for a hike”, which isn’t tipped until late this year.
“It also provides a bit more room for first home buyers,” he said. “However, other cities are running to their own cycles with Hobart likely to continue strengthening, Perth and Darwin close to the bottom and moderate growth in Adelaide, Brisbane and Canberra.”
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