Welcome to this week’s 2 Sense where the Australian Property Podcast team discusses the latest news headlines and breaks down what it means for your property.
This week Buyer’s Agent, Pete Wargent and Mortgage Broker, Chris Bates shrinking lot sizes, price surges, mortgage resets & new proposed policies,
Story 1 – Lots shrink and prices surge
- Land prices up significantly over the past decade, according to the HIA
- Particularly large increases in Sydney and Hobart with the lowest in Perth
- Lot prices have also shrunk. Price per square meter is up 200% in Sydney
- How are smaller blocks affecting the housing market?
- What are the drivers? Population growth, slow land release, or both?
- What does it mean for housing going forward?
Story 2 – Mortgage cliff a mirage
- Fixed-rate mortgages will reset from 2% to 6% for many borrowers, meaning a total of $350bn of loans in total to reset (out of $2tn mortgage debt in Aus)
- What does it mean?
- Will we see a reduction in consumption, and some will go into arrears to be forced to sell?
- Are we halfway through the cliff now? Arrears have increased a bit (CBA results, Bendigo Banks, etc), but not too much so far
- How long to go? The rest of 2023, but looks promising to date, so will the market drop as a result?
Story 3 – New housing supply target
- The government has increased the target to 1.2m homes over 5 years to 2029, and a renewed focus on renter rights
- Prime Minister has backed away from the rent freeze (reduction in supply)
- Why is it proposed? Undersupply is looming, and record population growth
- Will it happen? We have never built over 225k in a year before, so 240k a year for 5 years is a huge ask.
- What about the quality? Defects, leaks, structural issues? There will be increased pressure on materials prices and we don’t have enough skilled labour.
- What does it mean for property? The big push for land release and rezoning. Caveat emptor with new builds.
