Live SEQ, Property research | 5 min read

The return of the positive property market

Anthony Hancock
Anthony Hancock
08/07/19

After some very positive news last week, this week the news for the national property market continues, with even more fundamentals aligning, making buying property now a very compelling argue for future capital growth.

Last week the news was overwhelmingly positive with the RBA cutting rates to a new record low of 1%, coupled with the first stage of the LNP substantial tax cuts passing through senate. From The Australian to the Financial Review, all media outlets were awash with stories of the recovery of the housing market, reports that auction rates were continuing to rise, monthly new home sales were at a one year high, and record low rates were all factors combining to spurn the property market into positive territory.

Another piece of the property growth puzzle is the recent announcement of the removal of APRA’s 7% loan serviceability buffer. The buffer required banks to assess all borrowers against their capacity to repay loans at 7%. New rules are now in place, which now only require banks to assess serviceability at 2.5% above the relevant lending rate.

Modelling indicates that the 0.5% total rate reduction since June should result in a 15% lift in home values over the next two years. And the tax cuts are predicted to double the effect of the interest rate cut. By delivering $7.5 billion back into the pockets of over 10 million people, the Federal Government is effectively delivering another two RBA interest rate cuts in their first stage of tax cuts. Stage two of the governments plan will bring that to a total of $15 billion in tax cuts, which will also have a positive flow on effect.

So what does this mean for South East Queensland?

BRISBANE

The economic hub of South East Queensland, one of the fastest growing regions in Australia, Brisbane is on a rapid growth trajectory with a thriving $162 billion economy. Escaping largely unscathed from the national downturn, Nerida Conisbee, Chief Economist at REA Group, stated that search activity on Realestate.com.au shows buyers are surging to the Brisbane market.

March 2019 saw Brisbane’s vacancy rate fall to just 1.6%, which was driven by the slowing decline in supply and continued population growth. “Considering both our in-house data and the total market data provided by the REIQ, the rental market in inner Brisbane is looking healthy.” said Urbis Director, Paul Riga.

GOLD COAST

REIQ chairman Andrew Henderson said the RBA rate cut, alongside new infrastructure and strong migration to the Gold Coast, will lead to a strong spring market and bumper summer. With the highest employment-to-population ratio outside of our capital cities, the Gold Coast is attracting a growing number of Sydney, Melbourne and overseas residents enticed by the opportunities, lifestyle and affordability on offer. A trend for high quality, luxury apartments has created high demand and low supply resulting in extremely low vacancy rates which have averaged 1.9% over the past five years to 2019.

SUNSHINE COAST

The Sunshine Coast is one of Queensland’s strongest real estate market, thanks to a massive $20 billion infrastructure pipeline of projects either completed, in the process or in planning phases. With a clear and progressive approach to sustainable economic growth, the Sunshine Coast economy and property market have both entered a new era of sustained growth. The scale and strength of the Sunshine Coast as a region is often underestimated. It is the 10th largest ‘significant urban area’ in the country, with economic and population growth that is outpacing other scale regions both as a percentage and in absolute terms.

Sources:

Australian Financial Review; The Australian; The Courier Mail;Gold Coast Bulletin; Sunshine Coast Daily; The Urban Developer; Realestate.com.au.