CoreLogic has just published its latest Pain and Gain report, in which it looks at property sold in the latest quarter and compares the sale price with the price paid previously for each property – to see whether the vendors made a profit or a loss. And the report covering sales during the March Quarter shows that nine out of 10 vendors made a profit – or 88% to be exact.
This latest edition of the Pain and Gain report analyses around 72,000 sales that took place over the first quarter of 2020. Nationally, the portion of profit-making sales in the March Quarter fell to 88% from 89% in the December Quarter – so a very slight decrease. The total value of gross profit derived from resold dwellings was $19.8 billion. This is down from the $22.5 billion gained on sales during the December 2019 Quarter, but substantially higher than the $14.3 billion in profit-making sales over March 2019 Quarter. Of the 12% of sales that made a loss, the total losses were $908 million in the March Quarter.
So $19.8 billion in profits versus $908 million in losses. That’s a very good outcome for most people who sold real estate in the first quarter of the year.
Hobart led the nation with the highest portion of profit-making property sales in the March quarter. Only 2.4% of homes sold in the greater Hobart area fetched less than the previous time those properties changed hands.
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The latest vacancy rate figures were published today by SQM Research and the data indicates a very positive result for major markets across the country. The national vacancy rate has dropped from 2.6% in April to 2.5% in May to 2.2% in June, which is a remarkably positive trend in the circumstances. In June, the vacancy rate dropped for every one of the eight capital cities – and five of the eight cities have vacancies below 1.5%.
The major problem markets in terms of vacancies continue to be the CBDs of our biggest cities. Vacancies reduced in the Sydney and Melbourne CBDs but still remain high.
Overall, though, in the circumstances, a national vacancy rate of 2.2% – which is lower than the same time last year – is quite remarkable.
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SQM also published its latest price data today – and this shows that house prices nationally have risen 0.7% in the past month and are up 0.9% in the capital cities. Sydney recorded a 0.6% rise in the past month, reversing a recent trend of decreases, and overall prices are up slightly in five of the eight capital cities – including Brisbane, Perth, Canberra and Hobart.
In annual terms, house prices remain higher than a year ago in all capital cities except Darwin.
These figures are a little more positive than those published two weeks ago by CoreLogic – but generally the house price data continues to show the defiance of real estate markets in the face of the pandemic pressures.
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Young Australians remain keen to get into home ownership, in some cases because of Covid-19, not despite Covid-19 – according to a new report from ING.
Its June study revealed one-third of Aussie millennials – those aged between 24 and 39 – plan on buying property within the next two years, with 75% aspiring to someday own their own home. Almost half of the millennials surveyed agreed that Covid-19 had made buying a house MORE achievable than it was prior to the pandemic.
ING’s head of mortgages, Julie-Anne Bosich, says that while the current economic climate has negatively impacted some young Australians, it’s enabled others to make strides towards home ownership sooner. She says: “This research suggests that many people, especially millennials, are being savvy by taking advantage of record low interest rates, government assistance and a weakened housing market to get on the property ladder.”
Building up a deposit was cited as the main barrier to home ownership in the ING study, but it also revealed pandemic-induced social isolation had forced many Australians to reassess their personal finances. Two-thirds of survey respondents said they had cut their costs on childcare, commuting and eating out during isolation, with 42% able to save more money while in lockdown.
And that has provided an insight into the possibilities of saving a deposit by generally cutting costs.
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One area of the property market that has been rising amid the pandemic situation is the sale of new homes – thanks largely to government stimulus measures.
New Home Sales rose 78% in June, after a record low result in May, off the back of the Government’s HomeBuilder program announced at the beginning of June.
HIA chief economist Tim Reardon says: “The rebound in New Home Sales in June does not fully offset the results of the preceding three months … but it is a clear indication that HomeBuilder will help protect jobs in the sector in the second half of 2020 and into 2021.”
The improvement in June can be seen across all the states which is a good indication that the HomeBuilder program is working, to some degree at least, in each jurisdiction.
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Australian banks have extended the period in which borrowers can defer their mortgage payments.
The banks have announced that mortgage holders who paused payments will be able to extend loan deferrals by up to four months if needed. Earlier, the banks allowed customers to defer their mortgage payments for six months as a result of the pandemic, with payment “holidays” also granted on small business loans, personal loans and credit cards. More than 485,000 mortgages have been deferred across the country since March, latest figures from the Australian Bankers Association (ABA) show, but many people who initially paused their payments have now resumed their repayments, as their situations have improved.
Under the latest phase of the plan, the ABA says borrowers who continue to struggle may be able to extend their deferral by up to four months to buy more time to restructure their loan, including by switching to an interest-only mortgage, consolidating debt, or extending the term of the mortgage.
Commonwealth Bank chief executive Matt Comyn says the extension is aimed at giving bank customers confidence and certainty about options after September. Comyn says: “We all want to avoid any form of a cliff, so this is all about how do we make sure we achieve an orderly transition.”
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Meanwhile, lots of Australians are refinancing their home loans to access lower interest rates. Indeed, re-financing is happening at record levels at the moment.
According to comparison site Finder, the total number and value of refinanced home loans rose sharply in May. The total value of these refinanced home loans exceeded $15 billion in May, up 26% from the previous high of $12 billion in April.
Graham Cooke, insights manager at Finder, said this shows more Australians are taking advantage of rock-bottom rates – and the reality that lenders don’t offer their special interest rate deals to their existing customers, they offer them only to new customers. It’s what is known as a “loyalty tax” – borrowers are punished for staying loyal to their banks. So, to get the best deals on offer, borrowers have to switch and refinance with a new lender.
RateCity.com.au research director, Sally Tindall, says: “Refinancing went through the roof in May, as homeowners looked for quick ways to reduce expenses and get into a better financial position. “Mortgage holders sick of paying an excessive loyalty tax are capitalising on the record low new customer rates on the market. “Banks have been inundated with refinance applications, with some unable to keep up with the demand seeing processing times blow-out.”
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Properties in Australia’s biggest capital cities are selling faster than this time last year despite the country’s tumultuous period of bushfires and a pandemic.
In the first half of last year, homes had been languishing on the market amid a crackdown on lending practices and widespread reluctance to do deals in the leadup to the federal election. With only serious buyers in the market now, and few sellers, any new listings are being snapped up quite fast. Domain data shows that it took 69 days on average to sell a Sydney house by private treaty in the June Quarter, down from 87 days a year earlier. Sydney units took 69 days to sell, down from 93 a year ago. Melbourne houses are being sold in 59 days, down from 76, while units in the Victorian capital sold in 67 days, down from 84.
Domain economist Trent Wiltshire says: “It shows how soft the market was in the June quarter last year during the election period … properties were taking a long time to sell.”
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One of the main motivations of these Good News Bulletins is to balance the extreme negativity in mainstream media on all things, but in particular on housing markets.
Your average journalist – and, let’s face it, most of them are very average – will always focus on the negative and quite often ignore the positives altogether.
And here’s yet another example. I began this broadcast speaking about the latest result from CoreLogic’s Pain and Gain report, which showed that the vast majority of properties sold in the March Quarter made a healthy profit.
But that’s not what media reported. Journalists around the country focused their reports on the only negatives in the data and, in some cases, completely ignored the overwhelmingly weight of positive outcomes.
And, as usual, it was the Fairfax newspapers like the SMH and the AFR which wrote the most pessimistic reports.
The SMH managed to overlook the fact that nine out of 10 ten properties made a profit. Its headline said: 1 in 3 Melbourne CBD apartments sold at a loss in March quarter. It could have chosen to say that 2 out of 3 Melbourne CBD apartments made a profit, but, being journalists, they switched it around to turn it into a negative. And then they invoked Covid-19 as a doomsday creator, although the pandemic had little or nothing to do with the results of sales in the March Quarter.
The SMH report focused on all the areas that did poorly with March Quarter sales and refused to even mention those that did well – which was the vast majority of cases.
These people are, in a word, pathetic.
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LAST WORD
Today, the last word goes to James Symond , the nephew of the legendary John Symond, who took on the big banks and reinvented the mortgage market in the early 1990s with Aussie Home Loans.
James Symond, who took over as chief executive at Aussie in 2015, says: “Mum and dad residential real estate is still being financed. Year on year, our sales are slightly up, our profit is slightly up. Our industry, not just us, is going through this marketplace pretty strongly. It just goes to show you how resilient mum and dad residential real estate is in Australia.”
I think that’s a good note to end on today.
