<p>Perth’s new apartment market recorded its strongest quarter of sales since Q4 2021, with 412 apartments sold in Q1 2026 and a record quarterly sold value of $537 million, according to Urbis’ latest Apartment Essentials results.</p>

<p>Urbis said the March quarter result reflects strong, highly product‑specific demand across both ends of the market, from more attainable projects delivering at scale, through to premium stock being absorbed by equity‑rich downsizers.&nbsp;</p>

<p>David Cresp, Partner at Urbis, said the key story in Perth is not demand, it is the market’s ability to convert demand into delivered housing.&nbsp;</p>

<p>“This is the strongest sales quarter since Q4 2021, and it reinforces that demand in Perth is real and it’s local,” David Cresp said. “But the task now is delivery, turning that demand into projects that can actually be built and completed.”&nbsp;</p>

<p>[smartcode_project:default project_id=110291 project_image_fid=302785]</p>

<h2>Affordable product leads, premium demand remains resilient</h2>

<p>Sales in Q1 were led by more affordable projects, with The Boulevard (SKS Group) recording 115 sales in the quarter, the presentation noting this is only the second time a single project has surpassed 100 quarterly sales. The project was able to offer more affordable housing product right next to a train station.&nbsp;</p>

<p>Palmyra West (Finbar) also delivered strong results with 28 sales in Q1, following 84 sales in Q4, with an average price of under $800,000, underscoring depth of demand for well‑located, attainable new stock.&nbsp;</p>

<p>At the premium end, Urbis said downsizer demand is continuing, with the results highlighting Romeo (Applecross, Finbar) recording 75 sales and reaching almost 50% sold in one quarter.</p>

<p>Jual (Shenton Park, Celsius Property) also posted a strong quarter with 28 sales, reaching 39% sold in one quarter.</p>

<p>Urbis noted that Perth apartment demand is not speculative, not investor‑led, and not uniform, describing it as localised, often equity‑driven and highly product‑specific, a pattern reflected in the polarisation between strong “attainable” performers and premium downsizer product.&nbsp;</p>

<p>[smartcode_project:default project_id=148957 project_image_fid=364102]</p>

<h2>Prices underpinned by costs, and the delivery risk is growing</h2>

<p>Urbis said pricing pressure is cost not demand‑driven: construction costs and delivery risk are now a central constraint, with the results noting build costs remain elevated and volatile, and that energy, fuel and labour uncertainty weigh on feasibility.</p>

<p>David Cresp said a growing challenge for private Build‑to‑Sell developers is simply securing a builder in the current environment.</p>

<p>“Developers are really feeling the pressure from a building market that was operating at capacity and securing a builder is challenging,” David Cresp said, adding that even where a builder can be secured, “trying to get to the price that makes the development financially viable is incredibly challenging in the current market.”&nbsp;</p>

<p>Urbis’ broader WA commentary also notes that industry remains at or above capacity with lot and housing creation, and that many builders are limiting new sales to manage stretched workforces and fixed‑price contract pressures, conditions that flow directly into apartment feasibility and delivery timing.</p>

<p>[smartcode_project:default project_id=108869 project_image_fid=317905]</p>

<h2>Supply: improving later, but still constrained, and Perth lags eastern benchmarks</h2>

<p>While near‑term supply remains constrained, Urbis’ forecast shows completions lifting “Supply is forecast to be back above 1,500 apartments per annum for the first time since 2019”, with 1,775 completions forecast for 2026, and volumes remaining above that level over the following years.&nbsp;</p>

<p>Looking further ahead, completions are forecast to reach 2,500 in 2028, with the report noting 32% of that total is social/affordable, reflecting the role of government‑supported delivery in rebuilding the pipeline.&nbsp;</p>

<p>However, Urbis said Perth remains behind comparable markets on pipeline scale. In a national comparison of projects under construction, the report shows under construction Perth Build‑to‑Sell (BTS) at 3,446 apartments versus the Gold Coast at 7,922. Mr Cresp said “The challenge for Perth is how to we grow the delivery pipeline”.</p>

<p>Urbis’ conclusion is that Perth’s market is increasingly defined by product discipline and delivery certainty, with the research identifying “delivery certainty is key” and calling out builder risk and procurement models as core success factors, alongside “timing and staging”.&nbsp;</p>


Joel Robinson

Perth apartment sales hit strongest pace since late 2021 as builder capacity tightens

<p><a href="https://www.apartments.com.au/developers/sammut-developments">Sammut Group</a> has secured development approval for its latest Brisbane apartment project, marking the Sydney developer’s next step in expanding its Queensland pipeline following the success of its debut Gold Coast development, Coast.</p>

<p>The approved project at <a href="https://www.apartments.com.au/new-apartments/44-glen-road-toowong-qld-4066">44 Glen Road, </a><a href="https://www.apartments.com.au/developments/toowong-qld-4066">Toowong</a> will deliver a 15-storey riverfront apartment building with 42 residences, significantly increasing the scale of the site’s previous approval for a smaller luxury scheme. Designed by Bureau^proberts, the development will comprise a mix of predominantly four-bedroom and two-bedroom apartments positioned to maximise Brisbane River and city views.</p>

<p>Sammut Director Julian Sammut said the group had been actively searching Brisbane for several years before identifying Toowong as the right fit.</p>

<p>“Brisbane was the right step for Sammut,” Sammut said.</p>

<p>“With the success of Coast we thought we should definitely look to do more in Queensland alone. We then pushed up to look at Brisbane. We've been looking for I'd say two to three years actually and it was hard to find the right location.”</p>

<p><img alt="Sammut makes Brisbane apartment play" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/f_auto,c_limit,w_1440,q_75/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/field/image/Screenshot%202025-12-23%20at%203.27.14%E2%80%AFPM.png?VersionId=dYAVIL7qdcGA8ojvkslSrLjczXFejSSx" /></p>

<p>Sammut said suburbs including New Farm and Teneriffe were considered before the group ultimately focused on Toowong due to its strong downsizer demographic and limited supply of developable riverfront land.</p>

<p>The site was acquired off-market after what Sammut described as a lengthy negotiation and planning process, with the developer pursuing an uplift to the original approval.</p>

<p>“We are DA approved now which is very exciting,” Sammut said.</p>

<p>“We've had our change approval come through and we've obviously doubled the height, 15 storeys plus rooftop. We've got 42 amazing apartments that are going to be coming to market soon.”</p>

<p><img alt="Sammut makes Brisbane apartment play" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,dpr_2.0,q_auto:good/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-12-23%20at%203.27.26%E2%80%AFPM.png?VersionId=ohkRkY0dIZlqdfME2EZePsCQavRiBadE" /></p>

<p>Bureau^proberts said the design responds to Toowong’s evolving urban character, balancing contemporary apartment living with the area’s established residential identity.</p>

<p>“A place where traditional Queensland living has taken place for centuries; Toowong is seeing a shift of contemporary influence, commercial and retail hubs mixed with well-considered residential offerings – all the while maintaining its character and charm,” the architect noted in planning documents submitted to Brisbane City Council.</p>

<p>The architecture practice said the project’s form was shaped by its riverfront setting, flood considerations, neighbouring building scales, and view corridors.</p>

<p>“They said the mix of four and two-bedroom apartments capture the ‘fundamental qualities of Queenslander living,’ translated into the context of a contemporary subtropical building.”</p>

<p>The development sits just off Coronation Drive within walking distance of Toowong’s retail precinct and the upgraded Regatta ferry terminal, while also benefiting from proximity to the incoming green bridge connection to West End. Sammut said the accessibility and amenity offering were central to the site’s appeal.</p>

<p>The approval adds to growing residential activity along the Toowong riverfront, joining nearby projects including Consolidated Properties’ Monarch Residences and Spyre Group’s ARC Residences.</p>


Sammut secures approval for debut Brisbane apartment development in Toowong

<p>Developer Lanevick is heading back into Sydney’s apartment market after focusing more heavily on the luxury townhouse and terrace sector in recent years.</p>

<p>Lanevick, founded and directed by Steve Maroun, is expecting to receive approval in the coming months for a new apartment development in Gladesville, with the aim to launch it to the market later this year.</p>

<p>The 51-apartment project, designed by Studio Johnston, will comprise a mix of one-, two-, and three-bedroom apartments positioned toward the Hunters Hill downsizer market.</p>

<p>“Traditionally it’s been difficult for people in that market to downsize because there just hasn’t been the right product available,” Maroun said.</p>

<p>“We’re targeting buyers who might have 30 to 40 per cent of their house value sitting in the bank after downsizing.</p>

<p>“They still want good spacious entertaining areas, they still want quality design, but they also want flexibility and the ability to enjoy life a bit more after working hard for a long time.”</p>

<p>The project sits near Boronia Park and within close proximity to the Parramatta River foreshore, an area Maroun says offers more of a Hunters Hill lifestyle than a traditional apartment precinct.</p>

<p>“From a lifestyle perspective, it’s really more Hunters Hill than Gladesville,” Maroun said. “You’re close to the foreshore, close to parklands, and still connected back into the village precinct.”</p>

<p>From level four and above, apartments will capture water views&nbsp;toward Sydney Harbour. Communal amenity will include rooftop entertaining areas, wellness spaces, and a gym tailored toward owner-occupier buyers.</p>

<p>“We’ve really designed these apartments around that buyer coming from the Hunters Hill LGA and what they’re actually looking for in their next chapter.”</p>

<p>The proposed development has also been designed to respond to the changing character of the broader Gladesville town centre, where a growing number of mixed-use and residential proposals are expected to emerge over the coming years.</p>

<p>“Gladesville presented a rare opportunity to deliver a genuinely design-led residential project within an evolving lifestyle precinct, just moments from the growing Gladesville town centre, and we’ve approached the project with a strong focus on architecture, liveability and long-term community value,” Maroun said.</p>

<p>Maroun said Lanevick saw a first-mover advantage within the precinct as planning controls continue to evolve to accommodate greater housing density.</p>

<p>“We think there’s a real opportunity there that hasn’t really been serviced properly yet,” he said.</p>

<p>“There’s going to be a broader evolution of the whole Gladesville village precinct over time, particularly with more activation and mixed-use outcomes.”</p>

<p>The Venus Street proposal will include a commercial and retail component at ground level designed to contribute to that evolving streetscape activation.</p>

<p>“A big part of the thinking was how do you activate that area properly and create more vibrancy and amenity, which is what Hunters Hill has been looking for,” Maroun said.</p>

<p>Lanevick’s focus since 2020 has largely been on smaller-scale luxury townhouse and terrace developments. The developer recently completed Royale Randwick, also designed by Studio Johnston, where prices reached $3.65 million. The project was featured in the UDIA NSW 2026 Professional Development Prospectus and was also named a finalist for Development of the Year.</p>

<p>&nbsp;</p>


Lanevick to cater for Hunters Hill downsizers with new Gladesville apartment development

<p>Property developer One Living, backed by former Macquarie banker turned investment manager Chris Green’s investment firm, has unveiled plans to bring more institutional capital into housing to help address the national supply crisis.</p>

<p>The New York-based investor has focused his firm, GreenPoint Partners, on addressing the supply shortage hitting middle market housing in Australia.</p>

<p>It is backing the new One Living business to develop more than 1000 units along the eastern seaboard. The new firm is starting with a development on Mona Vale Road, on the border of Mona Vale and Pymble, in Sydney’s Northern Beaches, with around 140 apartments planned. They are eyeing off more sites across the city.</p>

<p>With cost pressures rising in the industry, One Living’s model is to be a vertically integrated developer-builder, so it can respond directly to the housing gap by removing the cost inefficiencies embedded in traditional residential delivery.</p>

<p>“We are building a platform designed to operate at scale and starting in a market where there’s a clear need for quality, attainable housing,” One Living joint managing director Joseph Scuderi said.</p>

<p>“It’s that missing middle – it’s that attainable end of housing… that’s what most Australians invest into and what Australians can actually afford.”</p>

<p><img alt="Mona Vale" data-entity-type="file" data-entity-uuid="798dfa93-4941-4db6-a696-31e9dc18e81c" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%202.31.50%E2%80%AFPM.png?VersionId=mKBqi5C_DmeiXS.AtJkcR8LQIxqCqmFi" /></p>

<p>GreenPoint Partners brings years of experience assembling and scaling real estate operating businesses across major markets. And Green sees a big opportunity in Australia.</p>

<p>“For its size, sophistication and importance to the community, Australia’s living sector has remained largely under-institutionalised, which represents significant opportunity,” Green said. “GreenPoint identified that gap, assembled the right team, and is backing One Living to build a platform that is aligned to market needs.”</p>

<p>Green said being a builder-developer would give the company the capacity and flexibility it required to deliver reasonably-priced homes.</p>

<p>“We want it to be at that attainable level; not super high end luxury but at that attainable level,” he said.</p>

<p><img alt="Mona Vale" data-entity-type="file" data-entity-uuid="74a5344a-4b26-4d4a-ada3-056b1220be77" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%202.32.15%E2%80%AFPM.png?VersionId=vY8hXHO4reBMdO8ZXMWCNtGZJofUPQ3j" /></p>

<p>&nbsp;</p>

<p>One Living will undertake a component of affordable housing in its schemes, which it will own and operate, and it could also run build-to-rent on some sites.</p>

<p>Green praised local policy settings.</p>

<p>“The NSW government is being very supportive, strategic and pragmatic in terms of how do we generate more supply of housing,” he said. “We think it’s actually positive for development and the bit that’s been lacking at that attainable level is that it’s lots of relatively small private developers, whereas we want to create an institutional platform.”</p>

<p>One Living is also&nbsp;looking at high-density projects and could take on more institutional funding in the future.</p>

<p>“The way we will be able to achieve economies of scale is through size,” Green added.</p>


One Living enters Sydney's new apartment market with Northern Beaches site acquisition

<p>It's been several years since there's been an opportunity to buy a brand new townhome in Melbourne's coastal suburb of Mordialloc. Even apartment developments in recent times have been few and far between in the area.</p>

<p>Local developer LDS Property identified the gap in new housing, securing a site on White Street, directly opposite&nbsp;Woodlands Golf Club Mordialloc. They've recently launched&nbsp;<a href="https://www.apartments.com.au/new-townhouses/wm-residences-mordialloc-102-white-street-mordialloc-vic-3195">WM Residences</a>, just 13 townhouses which they have already started building.</p>

<p>Projects by Buxton Director Heath Thompson, who is selling WM Residences, says the townhouses x that perfect middle ground be</p>

<p data-end="683" data-start="511">"Mordialloc residents have had limited options to downsize within the suburb, often forcing them to look elsewhere despite long-standing ties to the area," Thompson says.</p>

<p data-end="882" data-start="690">"With very little comparable new supply coming to market, projects like WM Residences are well placed, particularly as buyers look to capitalise on current conditions amid constrained supply."</p>

<p data-end="882" data-start="690">[smartcode_project:default project_id=134646 project_image_fid=6109]</p>

<p>The development, designed by regarded architecture firm&nbsp;<a href="https://www.apartments.com.au/architects/ewert-leaf">Ewert Leaf</a>,&nbsp;adopts a deliberately restrained architectural approach, focusing on simplicity, durability and liveability rather than overt design gestures.</p>

<p>The boutique scale is central to the offering. With only 13 three-bedroom residences, each home is configured to prioritise functional layouts and everyday use, supported by private terraces and secure two-car garages.</p>

<p>Ewert Leaf’s design response leans into a calm, neutral material palette. Interiors are defined by oak flooring, white walls and soft finishes, creating a consistent and understated backdrop. The approach avoids trend-driven detailing in favour of longevity, with an emphasis on natural light and spatial clarity.</p>

<p>[smartcode_project:default project_id=134646 project_image_fid=6110]</p>

<p>Beyond aesthetics, the homes are designed to meet contemporary performance expectations. Each residence targets a minimum 6-star energy rating, incorporating double glazing, comprehensive insulation and all-electric Bosch appliances.</p>

<p>The project’s location supports a walkable coastal lifestyle, sitting within close proximity to Mordialloc’s foreshore, Main Street retail strip and the train station. Local cafés and dining venues, including Suburbia Deli and Hendriks Café, are within a short walk, reinforcing the area’s established neighbourhood character.</p>

<p>[smartcode_project:default project_id=134646 project_image_fid=6116]</p>

<p data-end="247" data-is-last-node="" data-is-only-node="" data-start="0">While <a href="https://www.apartments.com.au/developments/mordialloc-vic-3195">Mordialloc</a> is often defined by its beach and pier, the project taps into other areas of day to day living, offering easy access to local food, casual dining and transport, rather than positioning itself purely as a lifestyle retreat.</p>

<p>WM Residences reflects a continued trend across Melbourne’s coastal suburbs towards smaller-scale, design-led townhouse developments, particularly on infill sites where proximity to amenity is already established.</p>

<p>With construction commenced prior to its market entry, the project aligns with a growing preference among buyers for developments with visible progress and defined delivery timeframes.</p>

<p>[smartcode_project_cta:default project_id=134646]</p>


WM Residences fills gap in Mordialloc townhouse market

Rental market

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<p class="legacy"><strong>EXPERT INSIGHT</strong></p>

<p>Many Australians whose jobs were decimated by the COVID business shutdowns will soon be waking up to new income shocks and the prospect of rental stress. This is because people whose employers can’t afford to keep them on will suddenly lose more than A$300 per week when the <a href="https://www.ato.gov.au/general/jobkeeper-payment/">JobKeeper</a> scheme <a href="https://www.ato.gov.au/General/JobKeeper-Payment/JobKeeper-key-dates/">ends on March 28</a>. Worryingly, this income shock will happen just days before the payment to people on the <a href="https://www.servicesaustralia.gov.au/individuals/services/centrelink/jobseeker-payment">JobSeeker</a> benefit is effectively <a href="https://www.ideas.org.au/blogs/jobkeeper-jobseeker-what-has-changed#:%7E:text=The%20JobSeeker%20Payment%20replaced%20the,This%20was%20announced%20in%20November.">cut by $100 per fortnight</a>.</p>

<p>At that point, all income support recipients – more than 2.6 million people – will be below the poverty line and many will face extreme rental stress.</p>

<p>This income shock has been anticipated for some time, but what does it means for rates of rental stress, particularly in Victoria? Despite <a href="https://www.theage.com.au/politics/federal/victoria-s-economic-recovery-to-outstrip-all-other-states-as-nation-bounces-back-20210115-p56ufo">promising signs of recovery</a>, Victorian jobs lost in the COVID-induced recession, such as in the hard-hit <a href="https://www.theage.com.au/national/victoria/business-tourism-on-its-knees-as-covid-19-casts-long-shadow-over-events-20210203-p56z2j">business tourism</a> and <a href="https://www.theguardian.com/culture/2021/feb/22/more-job-losses-ahead-for-australian-live-music-industry-operators-warn">live music industries</a>, have not bounced back at the same rate as others.</p>

<p><strong>What will happen to rental affordability?</strong></p>

<p>To illustrate this point we have modelled housing affordability for single people who were on either the full-time or part-time JobKeeper rate. In this scenario, they could also get JobSeeker payments at a part-rate because of the temporary increase in the <a href="https://www.propertyobserver.com.au/https://www.servicesaustralia.gov.au/individuals/topics/income-test-jobseeker-payment/29411">income-free threshold to $300</a>. This made them eligible for <a href="https://www.dss.gov.au/housing-support/programmes-services/commonwealth-rent-assistance">Commonwealth Rent Assistance</a> too.</p>

<p>The chart below shows the impacts on income and rental affordability when JobKeeper and <a href="https://www.servicesaustralia.gov.au/individuals/services/centrelink/coronavirus-supplement">Coronavirus Supplement</a> payments end. Their incomes and the amount of rent they can afford are roughly halved.</p>

<p><img alt="" height="278" src="https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/jobkeeper_poverty.jpg" width="754"></p>

<p>Full-time and part-time single workers were able to afford weekly rent of $265 and $245 respectively before the withdrawal of JobKeeper. Afterwards, affordable rent goes down to $115 per week. That’s about $110 less than the <a href="https://www.dhhs.vic.gov.au/sites/default/files/documents/202011/DHHS%20Rental%20Report%20September%20quarter%202020.docx">$450 median rent</a> ($225 per person) for a two-bedroom share house in Melbourne.</p>

<p>Based on <a href="https://theconversation.com/city-share-house-rents-eat-up-most-of-newstart-leaving-less-than-100-a-week-to-live-on-123772">our earlier calculations</a>, this leaves these renters with only $17.57 per day to meet basic costs. They have a lavish $3.57 per day more than they did before the pandemic to pay for food, utilities and job-seeking costs such as mobile phone plans and travel cards (A$4.40 a day in Melbourne).</p>

<p>What is different now than for pre-COVID unemployment was that business shutdowns thrust people who had reliable earnings – and accompanying high rents and mortgages in metropolitan areas – onto JobSeeker and JobKeeper payments.</p>

<p>The chart below shows the change in rental affordability for a number of household types before the pandemic and during the Coronavirus Supplement stages (i.e. payments of $550, then $250, then $150).</p>

<p><img alt="" height="391" src="https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/jobkeeper_poverty_2.jpg" width="754"></p>

<p>For example, when their income was highest during the $550 stage, two singles sharing could afford rent of $430 per week. Once the supplement ends and is replaced by the <a href="https://www.smh.com.au/politics/federal/it-breaks-my-heart-jobseekers-hit-back-at-25-a-week-dole-increase-20210225-p575p9">$25-a-week increase in JobSeeker</a> payment, affordable rent declines to only $230 per week or $115 each.</p>

<p>Rental affordability for single-parent households is notable here because the COVID Supplement was payable to one person only. Once the supplement is withdrawn, they will again be disadvantaged relative to other households because they will not be receiving the increase in the JobSeeker payment.</p>

<p><strong>What sort of job losses can we expect?</strong></p>

<p>It is hard to predict exactly how many people will lose their jobs when JobKeeper ends. What we do know is the economic recovery in Victoria has lagged behind the other states. We also know that at the end of December 2020 <a href="https://theconversation.com/victorians-struggle-to-exit-jobkeeper-as-the-schemes-end-looms-155288">1.55 million people</a> were on JobKeeper and a large proportion of them (626,000) were in Victoria.</p>

<p>Economist Jeff Borland <a href="https://drive.google.com/file/d/1kE4f5qxNQwdh5Xp_6l2Cu-HrjiZvfkrB/view">conservatively estimates</a> national job losses could range between 125,000 and 250,000. It is reasonable to expect as many as half of these could be in Victoria.</p>

<p>Our analysis also shows there are worrying signs that the economic recovery celebrated in the January labour force data was not sustained in February. The latest data provided to a <a href="https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/COVID-19/COVID19">Senate inquiry</a> into COVID-19 show JobSeeker recipients increased by 7,267 between <a href="https://www.aph.gov.au/DocumentStore.ashx?id=60c91b42-dde2-415f-9f9b-7d5fd3935cb6">January</a> and <a href="https://www.aph.gov.au/DocumentStore.ashx?id=9c1805cb-fe51-419b-8a7b-61315c64c302">February</a>. The increase in Victoria could be attributed to the temporary Christmas retail boom, but in states like New South Wales and Queensland claims decreased slightly.</p>

<p>While <a href="https://www.propertyobserver.com.au/https://www.abc.net.au/news/2021-03-17/jobkeeper-end-will-hit-these-postcodes-hardest/13242400?nw=0">fewer people</a> will lose their jobs in other states than in Victoria when JobKeeper is withdrawn, they are not immune to this income shock. We created the chart below to show the overall scale of the coming problem of rental stress when the fortnightly $150 Coronavirus Supplement disappears and is replaced by the $50 JobSeeker increase.         </p>

<p>Once the supplement reduced to $250 per fortnight, singles and single parents with two children were below the poverty line.  When it was reduced to $150, the number of household types in poverty increased again. From April 1, all income support recipients – covering more than 2.6 million people including children – will be waking up to poverty and the prospect of extreme rental stress.</p>

<p><strong>What can be done to avoid this?</strong></p>

<p>So how can governments prevent people from falling off the rental cliff? It is unlikely to be achieved by introducing <a href="https://www.propertyobserver.com.au/https://www.abc.net.au/news/2021-03-10/tourism-coronavirus-pandemic-assistance-package-cheap-flights/13235432">cut-price flights</a> to Far North Queensland.</p>

<p>A new range of strategies will be needed. These include options <a href="https://www.acoss.org.au/wp-content/uploads/2021/03/Strengthening-Income-Support-Bill-2021.pdf">advocated by ACOSS and others</a> to increase the maximum rate of Commonwealth Rent Assistance by 50%, increase the JobSeeker base rate above the poverty line and introduce rental stress grants targeted at individuals who need help.</p>

<p>Over the longer term, there is also a need to adopt strategic approaches to increase the supply of affordable rental housing such as those <a href="https://www.ahuri.edu.au/housing/policy-analysis/increasing-affordable-rental-supply">recommended by researchers</a> at the Australian Housing and Urban Research Institute (AHURI).<img alt="The Conversation" height="1" jamjgoj="" src="https://counter.theconversation.com/content/157244/count.gif?distributor=republish-lightbox-basic" tblrv1n7b="" width="1"></p>

<p><span><a href="https://theconversation.com/profiles/simone-casey-130516">Simone Casey</a>, Research Associate, Future Social Service Institute, <em><a href="https://theconversation.com/institutions/rmit-university-1063">RMIT University</a></em> and <a href="https://theconversation.com/profiles/liss-ralston-295934">Liss Ralston</a>, Adjunct associate, <em><a href="https://theconversation.com/institutions/swinburne-university-of-technology-767">Swinburne University of Technology</a></em></span></p>

<p>This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/at-least-2-6-million-people-face-poverty-when-covid-payments-end-and-rental-stress-soars-157244">original article</a>.</p>
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Many Australians whose jobs were decimated by the COVID business shutdowns will soon be waking up to new income shocks and the prospect of rental stress

At least 2.6 million people face poverty when COVID payments end and rental stress soars

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<p>Rental conditions across the Melbourne and Sydney unit markets have been characterised as having weak demand and high supply. It is driving a sharp drop in rents. Demand for inner city unit rentals has been significantly impacted by stalled overseas migration, especially from lower overseas student numbers, according to the latest data from CoreLogic.</p>

<p>Weak demand for inner city unit rentals has been exacerbated by a recent history of high rise apartment construction in Melbourne and Sydney, with the pipeline of new units that are still under construction remaining well above the decade average. Melbourne unit rents are down -7.6% over the calendar year and Sydney unit rents are down -5.7%.</p>

<p>The CoreLogic report posited that Weak rental conditions across the unit sector are likely to persist until overseas migration starts to ramp up and the higher levels of supply are absorbed.</p>

<p>Rental yields have been under some mild downwards pressure through the COVID period, with the gross yield across the combined capitals region reducing from 3.51% at the end of 2019 to 3.42% in December 2020, while yields across the combined regional areas have reduced from 5.03% last year to 4.83% this year. Despite the lower yield profile, with interest rates likely to remain at record lows for some time yet, the opportunity for positive cash flow properties is becoming more prevalent.</p>

<p>Opportunities for positive cash flow properties along with the potential for capital gains is likely to see investment activity consistently lift through 2021, CoreLogic noted.</p>

<figure><a class="colorbox colorbox-insert-image" href="https://res.cloudinary.com/dz9xllyip/image/fetch/q_auto:good/https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/jan_4_rents_1.jpg" rel="gallery-all"><img alt="" class="image-article-full-width-580px" height="327" src="/s3/files/styles/article_full_width_580px/public/pictures/article-images/jan_4_rents_1.jpg?itok=RQIFTQP6" width="580"></a></figure><p>However rental conditions have diverged substantially in 2020 from both a geographical perspective and across the housing types. From a geographical perspective, the annual change in rents has been strong in Perth and Darwin where house rents are up around 10% in both cities and unit rents are 6.8% higher in Perth and 7.6% higher in Darwin.</p>

<p>CoreLogic Research Director Tim Lawless attributes the strength in Perth and Darwin rentals to both strong demand and a recent history of minimal supply additions.</p>

<p>“Both Perth and Darwin have recorded below average levels of investor activity since housing market conditions started to cool in mid-2014 which has led to a shortage of rental stock. More recently, with stronger interstate migration driving housing demand, rental rates have been under substantial upwards pressure as demand for rentals outweighs supply,” he said.</p>

<p>Although rents are surging higher in Perth and Darwin, the longer term trend highlights the weak rental conditions that persisted prior to the recent upswing. Perth rents remain -10.4% lower than the previous peak in May 2013 and Darwin rents remain almost -20% below their 2014 peak.</p>
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Melbourne unit rents are down -7.6% over the 2020 calendar year and Sydney unit rents are down -5.7%

urban.com.au

Melbourne and Sydney unit rents are down over five per cent

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<p class="Body">Friday last week encapsulated all that’s wrong in the reporting of real estate in Australia. “Rental prices continue to soar” screamed one headline, while “Rental prices in Australia are going backwards” shouted another.<span style="line-height: 1.3em;"> </span></p>
<p class="Body">How did different media outlets come to such different conclusions? One published the press release on The Domain Rental Report and the other published the handout from the CoreLogic Rental Index.<span style="line-height: 1.3em;"> </span></p>
<p class="Body">As is so often the case, the statistics from one research source are different from those on the same subject from a competing source. Newspapers and other forms of media report each in isolation, often running the press release pretty much verbatim, without applying any journalistic oversight.<span style="line-height: 1.3em;"> </span></p>
<p class="Body">No one looks at the material on the one subject from all sources and analyses it to make some sense of it for readers.<span style="line-height: 1.3em;"> </span></p>
<p class="Body">Sometimes the numbers from two different sources aren’t that different. It’s just that one research entity will choose to place a negative slant on the figures and media will go with that, while another researcher will emphasise the positive.</p>
<p class="Body">The lack of genuine journalism on these matters is quite alarming. The content and tone of the press release is re-cycled to the public as news.</p>
<p class="Body">The result is confusion and misinformation, the curse of real estate consumers trying to figure out what’s really going on and make good decisions on investment.</p>
<p class="Body">So what can we make of the national rental data published by two major sources on the same day recently?</p>
<p class="Body">The reality is that they’re not actually so different. One chose to take a negative stance and the other decided to paint a brighter picture.</p>
<p class="Body">Here’s where Domain agrees with CoreLogic:</p>
<ul>
<li>Both see rents going seriously backwards in Darwin. The annual decline in rents is in double digits, according to both sources.</li>
<li>Rents in Perth are still falling, though not as much as in Darwin, according to both.</li>
<li>Both sources see only moderate growth in rents in Sydney.</li>
<li>Both sources see minor growth in Melbourne, around 2-3 percent in annual terms.</li>
</ul>
<p class="Body">And here’s where they don’t agree.</p>
<ul>
<li>Domain records 2-3 percent growth in Brisbane, but CoreLogic reports a marginal fall.</li>
<li>Domain sees minor growth in Adelaide, but CoreLogic has rents down 1 percent annually.</li>
<li>CoreLogic reports essentially no change in Hobart, but Domain reports a 6 percent annual rise in house rents and a 2 percent rise in apartment rents.</li>
<li>CoreLogic records a 1.2 percent rise in its Canberra Rental Index but Domain sees bigger increases in rents in the capital.</li>
</ul>
<p class="Body">It basically comes down to this: while there are a number of similarities, Domain’s figures overall are more positive than CoreLogic’s and it chose to take an optimistic outlet.</p>
<p class="Body">“Rents in most capital cities continue to rise, with falling vacancy rates indicating an ongoing shortage of rental properties,” said Domain chief economist Andrew Wilson.</p>
<p class="Body">“Despite the recent influx of home building, we can expect to see upward pressure on both houses and unit rents in most capital cities continuing in the foreseeable future.”<span style="line-height: 1.3em;"> </span></p>
<p class="Body">But the CoreLogic analysis said the “annual capital city rental change is in decline and is now the lowest since 1996”.</p>
<p class="Body">My take on all this, having observed the quarterly rental data coming from all the usual suspects over the past 2-3 years, is that capital city rental growth has been consistently low over that period. While there are occasional exceptions, the capital cities have failed to deliver strong growth in rentals for years – and, in the case of Perth and Darwin, rents have dropped substantially.</p>
<p class="Body">Domain has chosen to be upbeat on its latest figures, but really they show very little in the way of strong, meaningful growth in rents.</p>
<p class="Body">It provides further evidence that the “housing shortage crisis” consistently claimed by the developer lobby is another of real estate’s enduring myths.</p>
<p class="Body"><em>Terry Ryder is the founder of <a href="https://www.hotspotting.com.au/" target="_blank">hotspotting.com.au</a>. You can <a href="https://mailto:ryder@hotspotting.com.au" target="_blank">email him</a> or follow him on <a href="https://twitter.com/hotspotting" target="_blank">Twitter.</a></em></p>
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terryryder-YECXbqmri2

Housing shortage crisis an enduring myth: Terry Ryder

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<p>The release of the 2013/14 financial year taxation statistics by the Australian Taxation Office (ATO) will no doubt add further fuel to the ongoing debate over the who, what, where, and why of rental property ownership.</p>
<p><span>Since I work in the industry and view properties more or less all the time, I don't need to look at any stats to know that investment properties are owned by a wide range of Australian income earners, largely "middle Australia". </span></p>
<p><span>I know, because these people include my clients, because I can see it for myself every time I go to viewings, and most significantly, because I'm a property market insider.</span><span style="line-height: 1.3em;"> </span></p>
<p><span>The genuinely wealthy generally have better things to do with their cash then invest in low-yielding residential property.</span><span style="line-height: 1.3em;"> </span></p>
<p><span>Nevertheless, I would hopefully call out others on their useless anecdotes, so I shall do so on myself. </span></p>
<p><span>Here are the headline numbers!</span></p>
<p><a href="/images/2016/03/29/ATO1.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/03/29/ATO1.jpg" alt=""></p>
<p><span>The figures show that 15.7 per cent of those lodging a tax return or 2,033,973 individuals owned a rental in FY2014, with the vast majority owning only one or two properties.</span></p>
<p><span>The long run numbers speak for themselves, with rental property ownership becoming increasingly popular and accessible, and showing a fivefold increase since 1980, or a near-fourfold increase as a share of the total number of taxpayers. </span></p>
<p><span>So much for rentals only being for the rich - there are now, quite literally, millions of landlords.</span></p>
<p><span>Happily for landlords, fewer of them declared a net rental loss in financial year 2014. </span></p>
<p><span><strong>Rental market trends - how much?</strong></span></p>
<p><span>Adding a bit more texture on what happened to the rental markets and negative gearing deductions in financial year 2014, the ATO Taxation Statistics for 2013/14 showed that net rental income losses fell by more than half from $7.9 billion to $3.7 billion over the last two years. </span></p>
<p><a href="/images/2016/03/29/NG.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/03/29/NG.jpg" alt=""></p>
<p><span>The total rental loss claimed fell from $12.04 billion to $10.97 billion, but remember that negative gearing losses are a timing difference only, and as such these are not amounts which could be "saved" from the budget.</span><span style="line-height: 1.3em;"> </span></p>
<p><span>The share of those 2.03 million folk who own a loss-making investment property fell from 64 percent to 62 percent.</span></p>
<p><span>OK, so that's the summary data. </span></p>
<p><span>But what does it actually mean?</span></p>
<p><span>In terms of what this means in reality for the typical individual owning a property, the average rental loss has declined from well over five grand at $5,096 in the 2008 tax year to just $1,828 by FY2014, a whopping decline of more than 64 percent. </span></p>
<p><a href="/images/2016/03/29/NG2.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/03/29/NG2.jpg" alt=""></p>
<p><span>Furthermore, with the cash rate falling several times further since 1 July 2013, average net rental loss will decline for the next two or three tax years to come (just ask any capital city based landlord about their 2015 tax returns).</span></p>
<p><span><strong>Rental market trends - who?</strong></span><span style="line-height: 1.3em;"> </span></p>
<p><span>The Tax Office also served up some interesting data on who is recording net rental losses. </span></p>
<p><span>In terms of additional investors in the financial year, the numbers of individuals with a rental interest and a taxable income between $37,000 and $80,000 increased, if only moderately, with those within this taxable income bracket racking up a total of 707,000 taxpayers with a net rental interest. </span></p>
<p><span>However, the greatest increase in volume of overall investors was reflected in an extra 42,400 individuals in the taxable income bracket of $80,001 to $180,000.</span></p>
<p><span>By way of contrast there were only an additional 9,000 individuals with an interest in the $180,000 to $250,000 taxable income bracket, and an additional 5,000 individuals in the $250,000 to $500,000 bracket.</span><span style="line-height: 1.3em;"> </span></p>
<p><span>Looked at another way by income, 767,000 of those declaring a taxable income of under $80,000 accounted for 61 per cent of total net rental losses.</span><span style="line-height: 1.3em;"> </span></p>
<p><span>With the largest increase in net rental interest over the year, and it does confirm that to a substantial extent "middle Australia" is buying into residential investment property, and so doing is not only "for the rich".</span><span style="line-height: 1.3em;"> </span></p>
<p><span>It is worth highlighting here, however, that the "taxable income" declared on tax returns is reduced by negative gearing losses. </span><span style="line-height: 1.3em;"> </span></p>
<p><span>Thus for example it should be acknowledged  that a person declaring a net rental interest and taxable income of under $80,000 could theoretically have income of $81,828 before an average net rental loss is deducted.</span></p>
<p><span>The overwhelming majority of landlords continue to only own one or two rental properties. </span></p>
<p><span>Naturally when analysing the figures by age younger investors remain the most likely to rely upon negative gearing, with 82 per cent of all property investors aged between 18 and 29 declaring a net rental loss.</span></p>
<p><span>As the population ages it is little surprise to discover that more than one fifth of investors are now aged over 60, a share that will likely increase over time.</span></p>
<p><span>It goes almost without saying that the top 20 percent of income earners owe the bulk of investment housing debt, a point highlighted by the Reserve Bank of Australia as favourable for economic stability, since these investors are also best placed to service their debt. </span><span style="line-height: 1.3em;"> </span></p>
<p><span>Finally, one other interesting trend was the surge in sundry rental deductions, suggesting that with the rental market softening and becoming more competitive landlords have had an increasing propensity to spend on property improvements, which has been of significant benefit to the trades sector. </span></p>
<p><span><strong>The wrap</strong></span><span style="line-height: 1.3em;"> </span></p>
<p><span>Overall, the figures again showed that rental properties are owned by a broad range of Australians by income, comprising a total of well over two million taxpayers.</span><span style="line-height: 1.3em;"> </span></p>
<p><span>The good news from a budget repair perspective is that net rental losses have declined by well over half over the past two tax years alone.</span><span style="line-height: 1.3em;"> </span></p>
<p><span>What's more, with interest rates since falling to record lows, we can look forward to seeing further declines over the next few years of data.</span></p>
<p><span> </span></p>
<p><span><em>PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>.</em><br></span></p>
<p><em>His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>.</em></p>
<p><span> </span></p>
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pwargent-M4siyDbqQY

New rental market trends: Pete Wargent

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<div>The ABS Consumer Price Index figures confirmed that rental growth nationally has continued to be slow - and slowing - of late, as should generally be expected at this stage in the construction cycle. </div>
<div> </div>
<div>It's important to recognise, though, that the property market is cyclical. Always has been the case, and always must be! </div>
<div> </div>
<div><a href="/images/2016/08/02/8.3%20PROPERTY%20CONSTRUCTION%20CYCLE.jpg" target="_blank">Click to enlarge</a></div>
<div> </div>
<div><img src="/images/2016/08/02/8.3%20PROPERTY%20CONSTRUCTION%20CYCLE.jpg" alt=""></div>
<div> </div>
<div>With annual rental growth declining to +0.7 percent nationally, this was the slowest result in nominal terms since 1994. </div>
<div> </div>
<div>One of the outcomes we can expect to see in an era of low inflation and low interest rates is that things will actually decrease in value from time to time!</div>
<div> </div>
<div>Something that was of course far less likely in say the early 1980s when inflation was blazing along at 10 to 12 percent and interest rates were much, much higher (the typical home loan rate back then was an eye-watering 12 to 14 percent - yowsers). </div>
<p><a href="/images/2016/08/02/A1.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/08/02/A1.jpg" alt=""></p>
<p><br><span>The plus side for property investors in this era of lower inflation is that mortgage debt has never been so cheap, with ING releasing a record low variable rate product at just 3.79 percent last week. </span><br><br></p>
<div><strong><span style="text-decoration: underline;">City by city</span></strong></div>
<div> </div>
<div>The soft annual result was driven largely by sharp declines in the resources capitals. In Perth, annual rental growth declined by -5.2 percent over the year to June. </div>
<p><a href="/images/2016/08/02/A2.jpg" target="_blank">Click to enlarge</a></p>
<div class="separator"><img src="/images/2016/08/02/A2.jpg" alt=""></div>
<div class="separator"> </div>
<div>And in Darwin, annual rental growth declined to -6.4 percent. Of the smaller capital cities, Hobart and Canberra have both been somewhat soft rental markets in recent years, but both seem to have turned a bit of a corner, with rental growth in Hobart now picking up in response to tight vacancy rates. </div>
<div> </div>
<div><a href="/images/2016/08/02/A4.jpg" target="_blank">Click to enlarge</a></div>
<div> </div>
<div><img src="/images/2016/08/02/A4.jpg" alt=""></div>
<p><br><strong><span style="text-decoration: underline;">Reality check</span></strong><br><br></p>
<div>Slow rental growth seems to cause a good deal of excitement and sometimes hyperbole in reporting, but it is worth stressing that cyclical rental markets are an integral part of the property market and construction cycles. </div>
<div> </div>
<div>Moreover, although there are many ways to present data to show it in its most unfavourable light (such as cherry picking start dates, dodgy y-axis selection, adjustments for "inflation", or simply focusing on decreasing annual growth rates) over the long term generally rents do increase in areas where there is the strongest demand for housing.</div>
<div> </div>
<div>In fact, despite what you'd think from most articles on the subject, rents are actually at all-time highs in Sydney, Melbourne, Brisbane, Adelaide, and Hobart (even if you must adjust for inflation in the case of the two largest cities). </div>
<div> </div>
<div>Historically nominal rents have rarely declined since inflation was was generally stronger, but this may change in future cycles.<br><br>Plotted below are the rental CPI numbers indexed back to 1972. </div>
<div> </div>
<div class="separator"><a href="/images/2016/08/02/A3.jpg" target="_blank">Click to enlarge</a></div>
<div class="separator"><img src="/images/2016/08/02/A3.jpg" alt=""></div>
<p> </p>
<div>Naturally enough city-wide figures mask diverging underlying trends. After taking a bit of a look around Sydney last week - see <a href="https://petewargent.blogspot.com.au/2016/07/traffic-traps-and-infrastructure-gaps" target="_blank">here</a> - I'm fairly sure that off-the-plan unit rents are struggling in the Parramatta LGA, for example. </div>
<div> </div>
<div>On the other hand, if you excitedly confronted renters in Manly with a 'good news story' about weak rents you'd likely be met with a hollow laugh.</div>
<div> </div>
<div>Another point worth acknowledging is that due to the compounding effect, small increases in rent in the short term tend to stack up to become very large increases over time. </div>
<p><a href="/images/2016/08/02/a5.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/08/02/a5.jpg" alt=""></p>
<p> </p>
<div>While I've personally been a fan of the idea of "rent-vesting" - renting and investing in multiple properties - I've also often furrowed a brow when media articles suggest that young folk should just forget buying a home and rent instead.<br><br>This might have worked if reporters were good at timing market cycles and people were good at saving, but generally speaking they haven't been, and they aren't. </div>
<div> </div>
<div>Ultimately home ownership is an effective means of forced saving, and should form an important part of a retirement plan. </div>
<div>
<br><strong><span style="text-decoration: underline;">The wrap</span></strong>
</div>
<div> </div>
<div>Broadly as expected, rental growth remains sluggish.<br><br>Looking at the pipeline of properties under construction this seems dynamic appears likely to continue for the next couple of years at the capital city level. </div>
<div> </div>
<div>
<p><span><em>PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>.</em><br></span></p>
<p><em>His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>.</em></p>
</div>
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Rental market cyclically sluggish: Pete Wargent

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<p class="p1"><span style="font-size: 12.16px;">Some interesting trends from </span><em style="font-size: 12.16px;">SQM Research</em><span style="font-size: 12.16px;"> and its asking rents index.</span></p>
<p class="p3"><span class="s1">In Perth house rents have declined by 24 percent over the past three years, before staging something of a bounce of late. </span></p>
<p class="p4"><a href="https://www.propertyobserver.com.au/images/2017/02/09/SQM.jpg" target="_blank">Click to enlarge</a></p>
<p class="p4"><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/02/09/SQM.jpg" alt=""> <span style="font-size: 12.16px;"> </span></p>
<p class="p3"><span class="s2"><em>Source: SQM Research</em></span></p>
<p class="p3"><span class="s1">In Darwin the median asking rent for houses is also down by 22 per cent over three years.</span></p>
<p class="p5"><a href="https://www.propertyobserver.com.au/images/2017/02/09/Darwin.jpg" target="_blank">Click to enlarge</a></p>
<p class="p5"><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/02/09/Darwin.jpg" alt=""> </p>
<p class="p3"><span class="s2"><em>Source: SQM Research</em></span></p>
<p class="p3"><span class="s1">Over three years Sydney (11 percent) and Melbourne (9 percent) have recorded moderate increases.</span></p>
<p class="p3"><span class="s2"><strong>Residex monthly update</strong></span></p>
<p class="p3"><span class="s1">In other news, <em>Residex</em> released its <span class="s3">January market update</span>, which showed quarterly gains for Sydney houses and units. </span></p>
<p class="p3"><span class="s1">Now a <em>CoreLogic</em> company, <em>Residex</em> has opted to no longer publish median prices for the cities.</span></p>
<p class="p3"><span class="s1">While mildly annoying for those of us that like to chart the figures, it may not be entirely unexpected.</span></p>
<p class="p4"><span style="font-size: 12.16px;">The Reserve Bank of Australia ditched median prices from its Chart Packs some time ago in favour of reporting the year-on-year change in prices. </span></p>
<p class="p3"><span class="s1">Median prices have not always been a useful contributor to the housing affordability debate, the inference often being that new entrants to the market should be able to afford a median priced house (whereas in the most expensive markets such as Sydney most of us entered through buying an apartment, often priced well below the median). </span></p>
<p class="p1"><span class="s1">PETE WARGENT is the co-founder of <a href="https://allenwargent.com/"><span class="s2">AllenWargent</span></a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/"><span class="s2">blogger</span></a>.</span></p>
<p class="p2"><span class="s3"><em>His latest book is </em><a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx"><span class="s2"><em>Four Green Houses and a Red Hotel</em></span></a><em>.</em></span></p>
<p class="p3"><span class="s1"> </span></p>
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Rents down in resources capitals: Pete Wargent

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<h3 class="post-title entry-title"><span style="color: #333333; font-family: Tahoma, Helvetica, Arial, sans-serif; font-size: 12.15999984741211px;">SQM Research reported that vacancy rates fell across most capital cities in the month of August 2017.</span></h3>
<div id="post-body-4819303965695860274" class="post-body entry-content">
<div> </div>
<div>The national vacancy rate of 2.2 per cent was marginally lower than the 2.3 per cent seen at the same time in the prior year. </div>
<div> </div>
<div>Melbourne (1.7 per cent) and Hobart (0.4 per cent) in particular are seeing sharp increases in median asking rents, while the vacancy rate in Adelaide was down to just 1.6 per cent from 1.9 per cent a year earlier.</div>
<div> </div>
<div>In fact, Hobart has the lowest vacancy rate on record for any capital city, and both rents and prices are exploding higher.  </div>
<br><div class="separator"><a href="https://www.propertyobserver.com.au/images/2017/09/21/SQM1.jpg" target="_blank">Click to enlarge</a></div>
<div class="separator"><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/09/21/SQM1.jpg" alt=""></div>
<div> </div>
<div>Vacancy rates ticked down from July in Brisbane (3.1 per cent) and Perth (4.6 per cent) in August.</div>
<div> </div>
<div>The rental market Perth needs to improve for landlords - median asking rents are some 34 per cent lower than at their peak according to SQM's asking rents index. </div>
<div> </div>
<div>Meanwhile Darwin has recorded seven consecutive declines in its vacancy rate, suggesting that the rental downturn may finally be over in the Northern Territory. </div>
<div> </div>
<div>Smoothing the last 6 months of figures suggests that the rental market is not deteriorating significantly in most capital cities. </div>
<div> </div>
<div><a href="https://www.propertyobserver.com.au/images/2017/09/21/SQM2.jpg" target="_blank">Click to enlarge</a></div>
</div>
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<span><br></span><span>Dwelling completions are expected to peak in early 2018, while immigration has picked up a notch.</span><br><span><br></span><span>SQM's Managing Director, Louis Christopher, noted:</span><br><div><strong> </strong></div>
<div>"We believe rents will likely rise at a faster pace 2018 than what has been recorded in 2017, thus far. </div>
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<div>We now have mounting concerns for significant rental shortages in 2019 in Sydney and Melbourne”.<br><br><span style="text-decoration: underline;">The delinquents</span><br><strong><span><em><br></em></span></strong>There is some correlation here with the performance in mortgage delinquencies.<br><br>Moody's reported that, by the month of May, 30 plus day delinquencies in Melbourne had declined to just 1.35 per cent, and in booming Hobart arrears had fallen very sharply to just 1.45 per cent.<br><br>In Sydney, the 30-plus delinquency rate was as low as 0.84 per cent, which is as low as we will ever see for Sydney as a city of more than 5 million persons, while the ACT had a reported delinquency rate of just 0.90 per cent.<br><br>On the other hand delinquency rates increased to 2.20 per cent in Adelaide, 2.66 per cent in Perth, and 2.82 per cent in Darwin.<br><br>And helping to tick 30-plus arrears slightly higher year-on-year from 1.50 per cent to 1.62 per cent, delinquencies were higher in the regional markets of all of the resources states and territories, including South Australia.</div>
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<a href="https://www.propertyobserver.com.au/images/2017/09/21/MOODYS.jpg" target="_blank">Click to enlarge</a><br><br><div class="separator"><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/09/21/MOODYS.jpg" alt=""></div>
<br>Despite these increases, thanks to the Sydney and Melbourne weighting nationally delinquency rates remain well below the levels seen in 2011 and 2012 of 1.87 per cent and 1.81 per cent respectively.</div>
<p class="p1"><span class="s1">PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank"><span class="s2">AllenWargent</span></a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank"><span class="s2">blogger</span></a>.</span></p>
<p class="p2"><span class="s3"><em>His latest book is </em><a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank"><span class="s2"><em>Four Green Houses and a Red Hotel</em></span></a><em>.</em></span></p>
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SQM sees rental shortages by 2019 

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<p>SQM Research released its latest vacancies and asking rents figures up to October 2015, which showed vacancy rates steady across much of the east coast but rising in the resources capitals. <br> <br>Reported vacancy rates were steady in Brisbane (2.6%) and Adelaide (1.9%), while Canberra (2.1%) saw a slight decline.<br> <br>The vacancy rate in Sydney declined to 1.6%, which has been reflected in moderately rising asking rents for houses (+1.9%) and units (+3.1%) over the year, although the rents figures may mask divergent trends at the sub-regional level.<br> <br>While both Melbourne (2.4%) and Hobart (1.1%) saw vacancy rates ticking up in October, over the past year both have recorded declines, and as such asking rents have been rising solidly in these cities too. </p>
<p>Click to enlarge</p>
<p><img src="/images/2015/11/18/Screen%20Shot%202015-11-19%20at%2010.43.38%20AM.png" alt=""></p>
<p>Resources woes</p>
<p>On the other hand vacancy rates rose further still in Perth (3.8%) and Darwin (3.5%).</p>
<p>Asking rents for houses in Darwin have tanked by more than 20% over the past year according to SQM, with Darwin set for a significant price correction.</p>
<p>Asking rents are down for houses in Perth too (-6.4%), albeit by a less dramatic margin.</p>
<p>Perth has reportedly seen the price of premium property fall sharply this year, although prices at the bottom end of the market have not shifted too much to date.</p>
<p>Perth will become an attractive buyers' market again in time, but most data - including the iron ore price which was walloped by another 4.5% overnight to be down by a stonking 76% since 2011 and 36% this calendar year alone - suggests that this time is not yet upon us!</p>
<p><span><em>PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>.</em><br></span></p>
<p><em>His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>.</em></p>
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Vacancy rates a mixed bag: Pete Wargent

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<div>It's quite commonly argued that if dwelling prices aren't rising then investors will rush to the exits in order to sell their properties, particularly those recording net rental losses. </div>
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<div>It was a popular but flawed argument in 2011 too, come to think of it.</div>
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<div>However, while a significant number of new negatively geared investors in Sydney and Melbourne <em>are</em> making painful losses right now - some of them by design, even! - most investors are not, particularly in the prevailing low interest rate environment. </div>
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<div>This is partly because cash flows on investment property generally improve over time, with only a small share of the total number of investment property owners having bought their asset in the past year.<br><br>It is also partly because the losses reported by the Australian Taxation Office (ATO) include non-cash costs, which aren't incurred annually by the owner.<br><br><strong><span style="text-decoration: underline;">Reported losses</span></strong>
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<div>Superficially it would appear that a high proportion of investors are losing a good deal of cash, with more than 1.25 million taxpayers claiming net rental losses in FY2014, the most recent tax year for which detailed figures are available to date. </div>
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<div><a href="/images/2016/05/25/NG4.jpg" target="_blank">Click to enlarge</a></div>
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<div>However, all is not quite as it first appears.</div>
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<div>One of the reasons for this is that non-cash costs (specifically capital works and depreciation allowances) account for a goodly chunk of the reported losses. </div>
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<div>Indeed through increased awareness capital works claimed have increased substantially by 42 per cent since FY2011 to $2.7 billion.</div>
<p><a href="/images/2016/05/25/NG2.jpg" target="_blank"> Click to enlarge</a></p>
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<div>This has been one of the contributing factors in reducing the average net rental loss by 64 percent since 2008, although of course the predominant influence has been falling interest rates. </div>
<p><a href="/images/2016/05/25/NG3.jpg" target="_blank">Click to enlarge</a></p>
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<div>
<br><strong><span style="text-decoration: underline;">Example</span></strong><br><br>As an example of why most informed investors for whom cash flow is a key consideration need not consider selling even if house prices are stagnant for a period of time - or even falling - refer to the below hypothetical example of a two year old house bought recently by an investor in Brisbane.</div>
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<div>After the mortgage interest repayments and other cash holding costs the investor is making a small loss of a couple of hundred bucks in the first year. </div>
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<div>Yet because the house is relatively new the depreciation and capital allowances deductions are generous, allowing him or her to record a significant loss on their lodged tax return, thereby saving significant tax at their marginal rate.<br><br>Note that since tax is saved at the marginal rate, this strategy is particularly beneficial to higher rate taxpayers. </div>
<p><a href="/images/2016/05/25/NG1.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/05/25/NG1.jpg" alt=""><br><br><span>The depreciation and capital allowances are clearly beneficial to the investor in this example.</span></p>
<div>Although the land component does not qualify for a capital works or a decline in value deduction, the total capital works and plant and equipment deduction claimable over 40 years might be around half of the total purchase price of the property (in th<span>is case, <span>~</span>$360,000). </span>
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<div><span>The ATO provides a detailed list of depreciable items in its Rental Properties Guide document.</span></div>
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<strong><span style="text-decoration: underline;">Observations</span></strong><br><br>This is rarely well understood in market analysis, in all likelihood because much of the commentary railing against negative gearing is naturally enough undertaken by folk that have never owned a rental.</div>
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<div>The above example highlights a few things to me. </div>
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<div>Firstly, for investors wanting a strong cash flow or to reduce their tax liability, nearly new or newly renovated properties can be attractive for their depreciation benefits, particularly houses. </div>
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<div>Secondly, even if house prices are flat or fall for a period of time the investor in the example above is unlikely to be motivated to sell, particularly having already paid a lump sum of stamp duty and when considering the other entry and exit transaction costs. </div>
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<div>And thirdly, it seems obvious to me that (although I'm not campaigning for them myself) if it were deemed necessary there are a raft of potential avenues to tweak tax legislation to make property investment less attractive without taking a sledgehammer to the market. </div>
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<p><span><em>PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>.</em><br></span></p>
<p><em>His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>.</em></p>
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Property investor average net loss reduced by 64 percent since 2008: Pete Wargent

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<p>Vacancy rates declined in January, after December's seasonal spike, according to SQM Research.</p>
<p class="p3"><span class="s1">All of the capital cities recorded a drop in January, not unusually for the time of year. </span></p>
<p class="p3"><a href="https://www.propertyobserver.com.au/images/2017/02/17/SQM.jpg" target="_blank"><span class="s1">Click to enlarge</span></a></p>
<p class="p3"><span class="s1"><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/02/17/SQM.jpg" alt=""></span></p>
<p class="p3"><span class="s1">Nationally the vacancy rate of 2.4 percent was the same as one year previously.</span></p>
<p class="p3"><span class="s1">The tightest market was Hobart at 0.7 percent, the Tasmanian capital recording strong gains in median asking rents, while the highest vacancy rate was in Perth at 4.8 percent. </span></p>
<p class="p3"><span class="s1">Although the figures aren't seasonally adjusted, below I've smoothed them on a 4mMA basis to give some kind of feel for the trend. </span></p>
<p class="p3"><a href="https://www.propertyobserver.com.au/images/2017/02/17/SQM2.jpg" target="_blank"><span class="s1">Click to enlarge</span></a></p>
<p class="p3"><span class="s1"><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/02/17/SQM2.jpg" alt=""></span></p>
<p class="p3"><span class="s1">Perth and Darwin have continued to record declining rents, while SQM noted that inner city apartments in Brisbane have seen declines of 2.5 to 5 per cent in asking rents, something I can confirm from having witnessed it first-hand. </span></p>
<p class="p3"><span class="s1">To date the Sydney and Melbourne apartment markets appear to be holding up better, with the reported vacancy rate in Melbourne actually lower than a year ago, and median asking rents higher in both of the most populous capital cities. </span><span style="font-size: 12.16px;"> </span></p>
<p class="p3"><span class="s1">After some truly diabolical declines in dwelling prices ranging anywhere from 50 to 90 per cent in some cases, SQM notes that the bust in some mining towns may now finally be bottoming out. </span><span style="font-size: 12.16px;"> </span></p>
<p class="p3"><span class="s1">Vacancy rates are down in a range of resources towns from a year previously.</span></p>
<p class="p3"><a href="https://www.propertyobserver.com.au/images/2017/02/17/SQM-1.jpg" target="_blank"><span class="s1">Click to enlarge</span></a></p>
<p class="p3"><span class="s1"><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/02/17/SQM-1.jpg" alt=""></span></p>
<p class="p3"><span class="s2"><em>Source: SQM Research</em></span></p>
<p class="p3"><span class="s1">No, still not a buy, before you ask! </span></p>
<p class="p1"><span class="s1"><em>PETE WARGENT is the co-founder of </em><a href="https://allenwargent.com/"><span class="s2"><em>AllenWargent</em></span></a><em> property buyers (London, Sydney) and a best-selling author and </em><a href="https://petewargent.blogspot.com/"><span class="s2"><em>blogger</em></span></a><em>. </em></span></p>
<p class="p3"><span class="s1"> </span></p>
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