The QBE Australian Housing Outlook for 2018-2021 has been released.
Perth's 3-year view appears positive. See table below
Comments
Oversupply of Units/Apartments: Increased Supply in the Short-Term
Over the past year we have seen a number of off-the-plan developments reach completion, which has created an oversupply of units and apartments in most capital cities. This has caused a temporary drop in values as the developers adjust their prices to sell their stock; this then has a flow-on effect to houses as new buyers consider well-priced apartments over houses. Similarly, the oversupply forces the cost of renting down and renters choose to stay renting for a while longer, thus also increasing the gap between supply and demand.
Lower Demand from Investors: Decreased Demand in the Short-Term
APRA have imposed stricter lending guidelines which has seen investors being hit with higher rates and assessed with lower borrowing capacities – making it harder and more expensive to add new properties to their portfolio.
Similarly, lending to foreign investors has been heavily restricted with many lenders pulling out of the market, and now we see many of them ceasing to offer Self-Managed Super Fund (SMSF) loans, with none of the major banks now financing residential property via SMSF. These factors, combined with the effect of oversupply has slowed investor activity.
However as the economy picks up (see below) and demand catches back up with supply, investors will swing back in to the market spurred on by capital growth prospects, rising rents and a low interest rate environment.
Key Economic Indicators
The Economics Indicators here show a stable and gradually improving economy – there’s certainly no boom on the horizon, however things are expected to move in the right direction.
CPI is expected to increase and hover around the target mid 2-3% range which is a sign of a stable and healthy economy – too high can lead to bubbles; too low can lead to recession.
The cash rate is expected to increase by 0.5% over the next 3 years - it has remained at 1.5% for a record 2 years and 1 month now. The banks will follow suit and increase their rates too, which we have already seen them doing lately (out of cycle) citing higher funding costs.
Download the Report
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Information Provided By Chris Smith – Finance Manager, Mortgage Broker Gungor & Partners https://www.gungorpartners.com.au/
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