Pete Wargent blogspot

CEO AllenWargent Property Buyers, & WargentAdvisory (institutional). 6 x finance author.

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Thursday, 21 July 2016

Mind the gap!

Dwelling prices up in Q2

House prices rose +1.5 per cent nationally in the June quarter, and unit prices by +0.7 per cent. 

Median Sydney house prices rose by +2.4 per cent in the second quarter to $1,021,968, with apartment prices also up by +0.6 per cent to a record $669,030. 

Meanwhile, Brisbane house prices and unit prices have diverged to record the widest gap in twelve years, according to Domain Group

In fact, at $370,251 the median unit price is Brisbane is still more than $10,000 below where it was in June 2010. 

The typical home loan rate five years ago was also around 2.5 per cent higher than it is today.

Thus apartments in Brisbane have become considerably more affordable over the past half a dozen years as household incomes have steadily increased. 

There is plenty of high-rise apartment stock still under construction in each of the largest capital cities, so the gap between median house and unit prices in Brisbane is likely to widen further still over the next year. 

Of course, the situation is rarely quite as clear cut as implied by median prices.

Quality units and townhouses with a high land value content (generally, smaller developments) in some of the more popular and supply-constrained suburbs such as Newmarket, New Farm, and Teneriffe have generally performed well, but units and apartments in some other areas have performed poorly. 

In the end it comes down to the areas and property types that people really want to leave in, and finding properties with genuine scarcity value. 

I had a yarn with Domain about it - see here (or click the image below): 

The immediate outlook for property markets will to some extent be determined by next week's inflation result.

A softer than expected result could see interest rates cut to a record low level.

However, there is a fair chance that the rebound in fuel prices could keep rates on hold.