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Housing market surging back as people flock to Queensland

Business

Queensland is welcoming a wave of COVID-19 refugees from interstate and it’s helping prop up an already strong housing market boosted by First Home Owners’ Grants.

 

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After five months of falling housing values nationally they were on the rise again in October in every capital city but Melbourne, according to CoreLogic.

And there are a lot of good reasons for it. Historically cheap interest rates are the big factor and they are likely to get even cheaper after the Reserve Bank board meets and delivers what most economists believe will be another interest rate cut.

First homeowner grants are adding a stimulus to that end of the market while economists also believe travel restrictions have meant more people have the money to buy.

And Queensland is also enjoying a surge in interstate migration. More than 24,000 people came to the Sunshine State in the June quarter and 17,000 left for a net gain of 6800. Victoria had a net loss of 3000 and NSW 4000 and the other states had only small gains or losses

Dwelling approvals jumped 19 per cent in Queensland in the September quarter and the value of first home buyer lending has jumped 5.6 per cent nationally.

As strong as the dwelling approval figures were, they were dwarfed by Western Australia which recorded a 42 per cent rise and South Australia 28 per cent.

Dwelling values increased by more than 1 per cent in October in each of the smallest four capital cities with Brisbane, Adelaide, Hobart and Canberra housing values reaching new record highs, CoreLogic said.

There was also been a big surge in properties coming onto the market in the past month. Core Logic said the number was up 25 per cent.

Home sales were also higher through October with CoreLogic estimating a 7 per cent rise in home sales nationally over the month while over the past three months, nationwide sales activity was roughly 1.5 per cent lower than the same time last year, weighted down by an 18 per cent drop in sales across Melbourne over the same period.

Auction results have also been strengthening with CoreLogic consistently reporting clearance rates above 60 per cent over the past two months.

Brisbane’s median dwelling value was now $510,000. Sydney was $860,000 and Melbourne $666,000.

Regional housing markets continued to outperform the capital cities.

CoreLogic head of research Tim Lawless said the combined regionals index had held relatively firm through the worst of the COVID-related downturn.

“The past two months have reversed the previous mild falls across the combined regional areas. In the seven months since March, regional dwelling values are up 1.7 per cent while values across the combined capitals index have fallen by 2.3 per cent.

“The newfound popularity of working from home is only one factor helping to support regional home prices. More affordable price points, lower densities and lifestyle factors, are also under-pinning the relative strength across many regional areas of the country.

The October results also showed early evidence of a divergence between house and unit market performance.

“The rise in capital city housing values over the month was entirely attributable to a 0.4 per cent lift in house values which offset the 0.2 per cent fall in unit values,” Lawless said.

Through the COVID period so far, unit values have actually shown a smaller decline in values than houses, but this is likely to change.”

“Almost two-thirds of Australian units are rented, and rental conditions have weakened, especially in the key inner-city precincts of Melbourne and Sydney.

“Low levels of investment activity, relatively high supply of unit stock in inner-cities and international border closures are key factors that imply units will underperform relative to houses over the medium term,” he said.

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