The most important real estate news this week is the ongoing improvement in vacancy rates in major markets around Australia.

Today SQM Research published its monthly report on vacancy rates for the eight state and territory capital cities – and it shows that, for the third month in a row, there’s been a notable improvement in vacancies.

In April the national average vacancy rate was 2.6%. In May, it improved to 2.5%, in June it fell further top 2.2% – and now, the new figure for July, is a further improvement to 2.1%.

In June, the most significant thing was that vacancies fell in all eight capital cities.

With the new figures out today, for July, vacancies fell again in seven of the eight capital cities.

In five of the eight capital cities, vacancies are now below 1.5%. That means that Hobart, Canberra, Perth, Adelaide and Darwin all have very tight rental markets.

In addition, Brisbane’s vacancy rate is 2.2%, which is also low – while Melbourne has risen slightly to be a little above 3%.

Sydney has improved, but remains higher than normal at 3.6%.

I know from our day to day research that most of our major regional centres also have been tight rental markets.

The overall outcome is that there is – overall – a shortage of rental properties across Australia – despite all the impacts of the pandemic.

As a result of the generally low vacancies, rents rose 2.2% nationally in July for houses and were unchanged for apartments, according to the SQM Research figures.

House rents rose during July in Perth, Adelaide, Canberra, Hobart and Darwin.

And for apartments, rents rose during July in Brisbane, Perth, Adelaide, Canberra, Hobart and Darwin – everywhere in fact, except Sydney and Melbourne – which are the only cities with vacancies above the 3% benchmark.

Sadly, however, most media coverage you will see tomorrow will be focused on the situation with the two biggest cities – and in particular with the CBD markets, where there are a lot of empty apartments because Air Bnb is no longer working for investors.

The real story is that, for most locations across the nation, vacancies are low and rents are continuing to rise – but you won’t be reading about it in tomorrow’s newspapers.

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Turning to other real estate news, the Reserve Bank says the Sydney market is improving, declaring what it calls a “strong bounce-back” in auction rates – and listings returning to normal levels. It says that while housing prices have declined a little since May in some capital cities, the rising equity market has meant household wealth has remained largely unchanged, despite the impacts of the pandemic.

The Reserve Bank’s recent statement said: “The modest decline in established house prices at the national level, and the partial recovery in financial asset prices such as equities since March, mean that household wealth was broadly unchanged in the June quarter and increased a little over the past year.”

There’s also some positive news out of Melbourne, where the weekend auction market suggests that home buyers are reasonably comfortable with bidding online. Melbourne’s auction clearance rate rose to 73% at the weekend, as fewer vendors pulled out and more buyers pushed ahead, despite the ban on on-site auctions and private home inspections. CoreLogic’s research director Tim Lawless says the Melbourne market appears to be holding up relatively well despite the severe restrictions brought in recently.

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New research suggests that close to half of mortgage holders are ready to switch from their current lenders to access the record low interest rates available elsewhere.

The problem is that the major banks and other lenders give the lowest interest rates to new customers and keep their existing customers on the higher rates – which is referred to in the industry as a “loyalty tax” – in other words, if you stay loyal to your lender, you get punished, while new customers are rewarded with lower interest rates. Experts are predicting that interest rates on mortgages will continue to fall despite the Reserve Bank of Australia last week deciding to hold the official cash rate target at 0.25%.

RateCity.com.au research has found that the percentage of people keen to refinance had doubled in just two years, jumping from 19% after the banking royal commission in 2018 to 43% now. RateCity says that owner-occupiers who don’t switch are wasting thousands of dollars on high mortgage costs, paying over 1 percentage point more than they need to. RateCity research director Sally Tindall said “the loyalty tax gets worse the longer you stick with your bank”. She says: “It’s taken a pandemic to get people to shift their mindset, but hopefully we’ll come out of it more budget-conscious and less complacent towards our mortgages. “People won’t just tolerate overpaying anymore.”

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Now one of the features of the current market that stands out for me is that the cities which have handled the coronavirus the best – and are experiencing no new cases – are the cities with the most confident residents and the most active property markets.

And one of those places is Perth, where there is strong market activity, with selling volumes for both dwellings and land rising strongly.

The Real Estate Institute of Western Australia has found volumes were up 68% in July compared to April. REIWA President Damian Collins says that “whilst sales activity was quiet during the initial stages of the COVID-19 restrictions, it is great to see levels pick back up to where they were before the pandemic hit”.   Collins says: “While there are no surprises with the increase in land sales for the month, which saw a 121% increase compared to April, it was pleasing to see that both houses (up 58%) and unit sales (up 51%) also saw a significant increase.

“With the increase in sales activity, it is good to see a slight increase in the number of listings for sale, which demonstrate those who were considering selling their property are looking at the favorable market conditions and choosing to now sell.”

Land sales in Perth have boomed as buyers snap up new lots to take advantage of government subsidies at both the state and federal levels.

New data released by the Urban Development Institute of Australia shows Perth saw 3,322 new lots sold in the June Quarter, a new record according to the property body. UDIA WA chief executive Tanya Steinbeck says the data shows that the Perth market is holding strong despite the economic fallout of the pandemic.

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Another city handling the pandemic well is Brisbane and its markets are showing signs of rising also.

Some reports suggest Brisbane and Queensland overall are attracting growing demand for homes from refugees from southern states flocking north. Victorian and New South Wales buyer interest in Queensland has risen 18% in the past six months, according to research from realestate.com.au. Its figures reveal that some are ready to buy now, others are considering a move, and around 20% are just browsing, possibly considering a longer-term lifestyle change.

It comes as the nation’s top social experts say COVID-19 has accelerated interstate migration into Queensland. And they predict even more Sydney and Melbourne residents will make the move to the Sunshine State, once border restrictions are eased. Leading demographer Bernard Salt says the pandemic has shifted people’s priorities about where they want to live. Salt says: “I do think there will be a new driver in the 2020s … you’ll have people who feel uncomfortable with the congestion of living in the city whereas previously the congestion of the big city was seen as a positive, a drawcard. “The bright lights have dimmed a bit and they don’t have the same allure now that we’ve had full exposure to a pandemic. “A lot of people have decided to reassess their lifestyle and their location, and Queensland looks pretty good on both of those fronts, in terms of affordability, climate, security and non-congested lifestyle.”

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New home loan commitments are recovering from the previous decline experienced at the beginning of the pandemic.

Latest figures released by the Australian Bureau of Statistics show new home loans in June rose 6.2% compared with May, with the housing finance sector adding $17.4 billion in value.

ABS chief economist Bruce Hockman says the figures reflect the easing of COVID-19 restrictions in May in most parts of the country. The ABS data shows a rise in both the number and the value of housing finance commitments in June. Mortgage Choice CEO Susan Mitchell, says: “The housing finance data for June comes as welcome news following the fall recorded in May – and was likely the result of a renewed sense of optimism from buyers who were seeing the first signs of an economic recovery.”

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MEDIA WATCH

There was an article published on Domain that warrants some comment – and a warning.

The headline declares “The remarkable recovery of property markets in Australian mining towns”. The article says that property markets in mining towns around Australia have begun to record a strong recovery in the past year, which experts are saying could be the beginning of the next boom. Their words, not mine. New Domain figures have revealed both house prices and asking rents in the mining towns have chalked up “remarkable double-digit growth” in the year ending June 2020. It mentions locations such as Karratha and Port Hedland in WA – and I urge real estate consumers not to be lured by this very shallow analysis.

It is true that, in percentage terms, locations like that and also Moranbah and Gladstone in Central Queensland have recorded big growth in their median house prices. But they are rising from very low levels – and property values in these places are still less than half of their peak levels recorded during the previous resources investment boom.

In the coal mining town of Moranbah, for example, the median house price has risen to about $250,000 – but this remains a fraction of the price levels during the mining boom, when the median price rose to $750,000.

Anyone who bought back then will still be hurting financially, despite the recent price rises.

And I urge consumers: don’t be tempted. These kinds of locations are high risk and extremely volatile.

When you see headlines like the one published by Domain, be afraid, be very afraid.

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