WEALTH HUB JOURNAL

Demand for Rentals Higher Than Ever

The high demand for rentals experienced by the Australian housing market in 2021 is going strong, according to figures released by the data branch of realestate.com.au.

Rental properties on the platform are being snapped up faster than ever, with listings lasting an average of 19 days in March 2022, down from 23 the same month last year.

Listings in Sydney and Melbourne are taking slightly longer to be let than the rest of the country, with an average of 22 days and 23 days, respectively. However, rental prices are starting to rise in these cities with the end of lockdowns and the reopening of borders.

Among the capital cities nationwide, rents were 1.1 per cent higher over the quarter. The average increase over all regional markets was 2.4 per cent, up 10.3 per cent year-on-year.

Houses enjoyed higher rental growth than units, with a 4.3 per cent raise in national house rents, which is an increase of 6.7 per cent year-on-year. By comparison, rental growth for units was 2.4 per cent in the first quarter of 2022, and 2.4 per cent higher year-on-year.

However, rental yields have seen a steeper drop for houses over units, with median rental yield slipping from 4.1 per cent to 3.6 per cent. By contrast, multi-home complexes have a rental yield of 4.1 per cent, a slight drop from 4.3 per cent year-on-year.

In March, Sydney was experiencing the lowest yield at 3.2 per cent, with Melbourne at 3.5 per cent and Regional Victoria at 4.1 per cent. Enjoying the highest yields were regional WA at 7 per cent, regional SA at 6.9 per cent, and Darwin at 6.3 per cent.

Bunnings Expanding to Meet Timber Demand

Supply shortages have been a global problem throughout the pandemic, and Australians are feeling the impacts of this especially in the costs of new homes.

According to The Australian, Bunnings has a strategy that will help meet the demand for wooden frames and trusses. Over the next 18 months, the chain will seek to double its number of processing plants from three to six.

In addition to alleviating supply chain woes, this move will expand Bunnings’ market and help make it the go-to option for small to medium builders.

Ben McIntosh, chief operating officer for Commercial, told 9 News, “Bunnings has operated frame and truss plants in Australia for over 20 years, and it’s an area that we see a lot of opportunity.”

Bunnings’ current processing plants are in Hallam, Victoria, and Unanderra and Warnervale in New South Wales.

According to Hardware Journal, rumoured locations of the new frame and truss plants include Melbourne, Brisbane, and NSW. In addition to creating new jobs, these sites will provide home builders in the medium-density residential market everything they need from end to end.

This is welcome news for many Australians, as climbing timber prices and disruptions in the supply chain have frustrated residential builders as well as buyers. And it may be coming at the right time, as the war in Ukraine is expected to disrupt 15 per cent of the world’s timber supply.

Paper: ‘Australia Sleepwalking Into Permanent Class Divide’

An advocacy group has published a paper calling for a “long-term strategy” from lawmakers for more available and affordable housing in Sydney.

Following the federal election, Ehssan Veiszadeh, deputy chief executive of the Committee for Sydney, is asking federal and state governments to update policy to make housing options more accessible in the city.

Property prices recently experienced the biggest 12-month jump in history, with property prices up 23.7 per cent year-on-year. In March, the average price of a residential dwelling in Australia was $920,100.

The paper, “Real talk on cost of living,” states “Without a major change to housing price dynamics, Australia is sleepwalking into a permanent class divide, where only those who inherit wealth are able to obtain the security of home ownership.”

It places blame for rising prices on national policy settings like the capital gains discount and negative gearing, as well as state governments and the process for approving developments.

For example, the paper identifies that 30 per cent of houses in New South Wales are approved through a fast-tracked approval process, while in Queensland the rate is 70 per cent.

The think tank claims these factors have led to a reduced housing supply, which has caused demand (and prices) to skyrocket.

Planning is the “number one issue in housing”, according to Susan Lloyd-Hurwitz, CEO of Mirvac, a property group.

According to Mortgage Business, there are 550,000 net new dwellings projected for the next two years, nationwide. However, new households are expected to outpace supply from 2025.

Zlatko Todorcevski, CEO of Boral, a manufacturer and supplier of build materials, echoes this concern. He states the Australian government needs to improve planning and land approvals, with increasing supply as its primary focus.

With prices rising and supply tightening, now may be the best time to consider buying investment property. Contact Wealth Hub Australia today for your free consultation.

We connect everyday Australians with our referral network to help them reach their financial goals. These financial professionals will guide you every step of the way on your home-buying journey to help you achieve your objectives and reach financial independence.

‘Liar Loans’ Down from 2020 Peak, Except at ANZ

According to the annual “liar loan” survey by UBS, more Australian home-buyers were truthful about their finances when applying for a home loan, compared to the sky-high number of misstatements reported in 2020.

That record year saw 41 per cent of applications contained claims that overstated the facts, while the latest report shows 37 per cent for 2021, says UBS banking analyst John Storey.

The 4 per cent drop in borrowers exaggerating their financial position is attributed to stricter lending standards. However, while “liar loans” are in decline nationally, ANZ has seen an increase.

In fact, 55 per cent of ANZ customers who took out a mortgage in the latter half of last year admitted to lying on their application. According to Storey, “This is particularly concerning, given ANZ’s persistent declines in mortgage market share, and the fact that 81 per cent of the 93 respondents who misrepresented their ANZ originated loan claim they were advised to do so by their banker.”

Storey says while some areas of the market are more likely to see rising interest rates that cause difficulties for customers, banks have some things working in their favor:

• The majority of customers are head on payments.
• A large number have buffers and emergency funds to cover at least several months of repayments.
• 39 per cent of people who responded to the survey have total income that well exceeds spending.

After ANZ, runners-up for factual inaccuracies on loan applications among major banks include Westpac (40 per cent), Commonwealth Bank (30 per cent), and NAB (19 per cent).

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