{"id":10780,"date":"2017-03-22T07:00:29","date_gmt":"2017-03-21T20:00:29","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=10780"},"modified":"2017-03-22T07:00:29","modified_gmt":"2017-03-21T20:00:29","slug":"not-all-smooth-sailing-cameron-kusher-core-logic","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/not-all-smooth-sailing-cameron-kusher-core-logic\/","title":{"rendered":"Not all smooth sailing &#8211; Cameron Kusher (Core Logic)"},"content":{"rendered":"<p>The property markets around Australia have recorded more record growth according to Core Logic but it is not all smooth sailing. We look at what is ahead this year with <strong>Cameron Kusher<\/strong>, what is behind the continuing growth in Sydney and Melbourne, what\u2019s ahead for buyers and the facts about affordability.<br \/>\n<strong>Transcript:<\/strong><br \/>\n<b>Kevin:<\/b>\u00a0 The monthly CoreLogic Home Value Index reported a further rise in the value of capital city dwellings in February, with values rising 1.4% over the month, with Sydney continuing as the overall capital gains leader. Joining me to talk about the report and what\u2019s happening in the property market around Australia, Cameron Kusher from CoreLogic.<br \/>\nCameron, thanks for your time.<br \/>\n<b>Cameron:<\/b>\u00a0 Thanks, Kevin.<br \/>\n<b>Kevin: <\/b>\u00a0Sydney, how it continues to grow, is that a surprise to you, or did you expect this?<br \/>\n<b>Cameron:<\/b>\u00a0 Probably didn\u2019t expect it to accelerate to the magnitude we\u2019ve seen, but we did expect that with really low interest rates and obviously the investor segment of the market coming back, you\u2019d continue to see growth. But over the last year values are up 18.4%, which is the fastest annual rate of growth for Sydney since the end of 2002.<br \/>\nYou can obviously see why people are a little bit concerned with this, given that this grown phase is more than four and a half years old and we\u2019re now getting the highest level of growth we\u2019ve seen in more than a decade.<br \/>\n<b>Kevin:<\/b>\u00a0 Yes. I think it\u2019s been something like how many continuous months \u2013 like 58 months or something \u2013 we\u2019ve had this growth?<br \/>\n<b>Cameron:<\/b>\u00a0 It has been. The growth phase has been running for 58 months and we\u2019ve seen values rise significantly, and even if we go back a little bit further than that from the previous growth phase \u2013 which started in the end of 2008 \u2013 to now, values in Sydney are up about 105%.<br \/>\n<b>Kevin: <\/b>\u00a0The legislators, of course, and politicians are really rubbing their hands together \u2013 well, not so much rubbing their hands together in glee but in worry saying, \u201cHow can we slow this down?\u201d What are some of the triggers that they could pull to pull it back a bit, Cameron?<br \/>\n<b>Cameron:<\/b>\u00a0 If we look at what was happening 12 months ago, the market in Sydney and Melbourne was actually slowing, and what we were seeing at that time was that they were cracking down on the investor lending. APRA had brought in the 10% cap of credit growth annually, and that was slowing things down, but we also had interest rates 50 basis points higher than they are at the moment.<br \/>\nGiven the experience 12 months ago, I\u2019d say that they\u2019re probably the two main areas to really target. Higher interest rates, now, the Reserve Bank said that they don\u2019t necessarily want to lift interest rates and they\u2019d maybe even put them lower if it wasn\u2019t for the Sydney and Melbourne housing markets. But also more focus on the investor market and slowing the level of demand there. The 10% cap, maybe it needs to be lowered to 6% or 7% to try to slow this thing even further.<br \/>\n<b>Kevin:<\/b>\u00a0 It\u2019s great for homeowners but it\u2019s a great challenge for prospective buyers, isn\u2019t it? The affordability of getting into the markets, particularly in Sydney and Melbourne?<br \/>\n<b>Cameron:<\/b>\u00a0 It is. And the challenge is not servicing the debt for most people, because you have the lowest interest rates we\u2019ve seen in generations, so once you can actually get into the home, the servicing of the mortgage \u2013 at least at the moment \u2013 is relatively easy. The challenge is saving up a big enough deposit to actually enter into the housing market.<br \/>\nIf you look at Sydney at the moment, the median dwelling price \u2013 and that\u2019s the combined houses and units \u2013 is $795,000, so a 10% deposit is $80,000. You have wages growing at the lowest level on record, so it\u2019s difficult to see how people can actually save up a big enough deposit and keep chasing the market at the moment to enter in if they don\u2019t already own.<br \/>\n<b>Kevin:<\/b>\u00a0 We talk about a booming market around Australia, but there are different markets, aren\u2019t there? You look at Perth and Darwin, where it\u2019s been particularly slow. In fact, I think according to your report, they actually slipped back in that quarter, did they?<br \/>\n<b>Cameron:<\/b>\u00a0 They have. Perth values fell 0.9% over the last three months, Darwin down 6%, and they\u2019re both down at least 10% from where they were at their previous peaks. While Sydney and Melbourne are booming, Perth and Darwin are really struggling.<br \/>\nThen if we look at the other cities, Brisbane and Adelaide, you\u2019re continuing to see just fairly moderate rates of growth, and there\u2019s definitely been an acceleration in growth over the last 12 to 18 months in both Hobart and Canberra.<br \/>\n<b>Kevin:<\/b>\u00a0 We\u2019ve had growth over the last 58 months, as you pointed out. What\u2019s the growth been in real terms, say, in the Sydney market in that period? Have you have any figures on that?<br \/>\n<b>Cameron:<\/b>\u00a0 In terms of the real growth, we only calculate that each quarter in terms of inflation-adjusted growth, but if you look from when this growth phase started, the values are up about 75% in Sydney. If you adjust for inflation, they\u2019re probably up around 55%. In Melbourne, they\u2019ve increased by about 47% or 48% over the same period of time.<br \/>\nIt really is all about Sydney and Melbourne, at the moment, in terms of the growth we\u2019re seeing, and all the other capital cities have lagged significantly behind.<br \/>\n<b>Kevin: <\/b>\u00a0I want to talk to you about stock levels in just a moment. Before I do, can I just swing the attention to the rental market because that\u2019s obviously a double-edged sword, isn\u2019t it? When we talk about affordability of getting into a house, but we also have to make rentals affordable, too. What have the rental returns been like in Sydney and Melbourne with these rapid price increases?<br \/>\n<b>Cameron:<\/b>\u00a0 They\u2019re historically low. Obviously, you go around Sydney, go around Melbourne, go around Brisbane and see all the new apartment stock coming online. Most of that is ultimately going to end up as rental accommodation. At the moment, the rental yields in Sydney for a house is at 2.8% \u2013 that\u2019s a gross figure \u2013 3.7% for units, and in Melbourne, it\u2019s 2.7% for houses, 4% for units.<br \/>\nThey\u2019re gross figures, so the net figure is actually going to be significantly lower than that, and increasingly the challenge at the moment is also to ensure that your property is actually occupied for 52 weeks of the year with so much more stock coming online.<br \/>\n<b>Kevin:<\/b>\u00a0 We\u2019re seeing great results from auctions around Australia, too, and rapid selling times. What about stock on market? What\u2019s happening with that?<br \/>\n<b>Cameron:<\/b>\u00a0 It\u2019s quite low, and this is another driving factor of what\u2019s happening in Sydney and Melbourne. We calculate our listings on a 28-day basis each week. At the end of last week, in Sydney, there were about 21,000 properties for sale, which is 11.3% lower than it was 12 months ago, and that was already fairly low 12 months ago. In Melbourne, you have about 28,500 properties for sale, so more than Sydney, but the amount of stock for sale is 5% lower than it was 12 months ago.<br \/>\nYou have this combination of low cost of borrowing, strong population growth in Sydney and Melbourne, a very rampant investment market at the moment, and you have little stock to choose from, so people are making bids over and above the asking price at auctions or the listed price for private treaty sales and pushing values higher just because they need to get into the market because there\u2019s very little stock out there.<br \/>\n<b>Kevin:<\/b>\u00a0 How much of an influence is FOMO or fear of missing out? How much of a factor is that in the market currently, Cameron?<br \/>\n<b>Cameron:<\/b>\u00a0 I certainly think it\u2019s a big factor at the moment. I think people figure if they don\u2019t get into the market now, it takes them 6 to 12 months to actually find the property they want. They\u2019re going to have missed out on all that growth and they\u2019re also going to have to find all that extra money.<br \/>\nThe way I like to think of it is this: the common wisdom in real estate is you sell and then you buy a property, but if you sell now and it takes you 12 months to find your next property, in Sydney, if you did that 12 months ago, you\u2019ve missed out on 18% growth and you have to make that up somewhere. So I really do think there is a bit of a case of fear of missing out going on at the moment.<br \/>\n<b>Kevin:<\/b>\u00a0 What\u2019s your view going forward for the rest of the year? What do you think growth is going to be like, Cameron?<br \/>\n<b>Cameron:<\/b>\u00a0 Look, I think there\u2019s still going to be growth. I do think that there\u2019s just going to be too much pressure on the regulator to find more ways to slow this rate of growth in Sydney and Melbourne. So we do believe that over the second half of this year the rate of growth is going to slow, but it\u2019s going to be because APRA gets in and makes some changes to the housing market and lending policies rather than just a natural slowdown in the market.<br \/>\n<b>Kevin:<\/b>\u00a0 Always good talking to you, Cameron Kusher from CoreLogic. Thanks for your time, Cameron.<br \/>\n<b>Cameron:<\/b>\u00a0 Thanks, Kevin.<br \/>\n&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The property markets around Australia have recorded more record growth according to Core Logic but it is not all smooth sailing. We look at what is ahead this year with Cameron Kusher, what is behind the continuing growth in Sydney and Melbourne, what\u2019s ahead for&#8230;<\/p>\n","protected":false},"author":176692471,"featured_media":10784,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[10,11,13,36,22,25,27],"tags":[101],"class_list":["post-10780","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-kevin-turner-sponsored-channels","category-kevin-update","category-latest-story","category-property-investment-topic","category-research-topic","category-sponsored-channels","category-trends-topic","tag-podcast"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Not all smooth sailing - Cameron Kusher (Core Logic) - Realty Talk<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/channels.realty.com.au\/realtytalk\/not-all-smooth-sailing-cameron-kusher-core-logic\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Not all smooth sailing - Cameron Kusher (Core Logic) - Realty Talk\" \/>\n<meta property=\"og:description\" content=\"The property markets around Australia have recorded more record growth according to Core Logic but it is not all smooth sailing. 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