The updated edition of “The Property Imperative”, our flagship report on the residential housing sector, which includes survey data to March 2016 is now available free on request.
From the introduction:
The Property Imperative is published twice each year, drawing data from our ongoing consumer surveys, research and blog. This edition dates from March 2016 and offers our latest perspectives on the ever-changing residential property sector.
As usual, we begin by describing the current state of the market by looking at the activities of different household groups using our recent primary research and other available data.
In this edition, we also look at rental yields, household interest rate sensitivity and the role of mortgage brokers, plus data on negative gearing.
Residential property remains in the cross-hairs of many players who wish to influence the economic, fiscal and social outcomes of Australia. In policy terms, debates around negative gearing and capital gains tax breaks for investment properties have hotted up.
By way of context, the Australian residential property market of 9.53 million dwellings is currently valued at over $5.86 trillion and includes houses, semi-detached dwellings, townhouses, terrace houses, flats, units and apartments. In the past 10 years the total value has more than doubled. It is one of the most significant elements driving the economy, and as a result it is influenced by state and federal policy makers, the Reserve Bank (RBA), banking competition and regulation and other factors. Indeed, the RBA is “banking” on property as a critical element in the current economic transition.
According to the RBA, as at January 2016, total housing loans were a record $1.53 trillion. There are more than 5.4 million housing loans outstanding with an average balance of about $249,000. Approximately 64% of total loan stock is for owner occupied housing, while 36% is for investment purposes. In recent months there has been a restatement of the mix between owner occupied and investment loans, and as a result the true blend is hard to decipher.
The RBA continues to highlight their concerns about potential excesses in the housing market. In addition, Australian Prudential Regulation Authority (APRA) has been tightening regulation of the banks, in terms of supervision of lending standards, the imposition of speed limits on investment lending and has raised capital requirements for some bank. The latest RBA minutes indicates their view is these regulatory changes are slowing investment lending somewhat, though we observe that demand remains, and in absolute terms, borrowing interest rates are low.
As a result, momentum in the market has changed, with growth in investment lending relatively static, but counterpointed by a massive focus on owner occupied refinancing and the rise of differential pricing. In addition, 37% of new loans issued were interest-only loans, a drop from 46% last year as the regulators have been bearing down on the banks’ lending standards.
The story of residential property is far from over!
Request a copy of the report here. Please note this is an archived edition now, so if you are after this version – volume 6 please specify so in the comment section of the request form. Otherwise you will receive the latest edition.