Sydney's supply struggles
New home sales were stronger again in Queensland in August, up +3.8 per cent, following a strong +15.6 per cent increase in July.
Over the past 3 months, new home sales in Queensland have been +53.5 per cent higher than for the corresponding period in the prior year.
Interstate migration, investors, and retirees are all driving very strong demand in the coastal markets.
New home sales in Western Australia and South Australia were down in August, on the other hand, albeit from high levels.
Source: HIA
The Housing Industry Association speculated that investor activity for new homes in WA may be slowing down after a boom period.
And housing supply in New South Wales is struggling. Noted the HIA:
“New home sales in NSW remain weak as the cost of delivering a new ‘house and land’ package in Greater Sydney remains elevated by regulatory changes and land prices.
“It has been more than ten months since the last rate increase. The continued undersupply of homes and robust labour market conditions are assisting a return of consumers to the new home market."
Macro trends
Alongside interest rates and immigration, there are two other big macro trends set to drive property market dynamics over the coming decade.
One is the unprecedented transfer of trillions of dollars of wealth from Baby Boomers to younger generations, which will be ongoing for the next 15 years.
The other is the battleground surrounding working from home.
In the UK, the government argues that allowing workers the right to work from home, could boost productivity, which seems like a long bow to draw (but that's Europe for you!).
On the other hand, Amazon announced that office workers will be mandated back into the office 5 days per week from January 2.
Amazon's stock price has been meandering around for the past 4 years, and it seems that the time has come for a few skulls to be cracked by management.
Amazon employs more than 1½ million workers worldwide, and noted in a release that the past 15 months of being back in the office 3 days per week had only strengthened convictions around the benefits of personal interaction.
Closer to home, Tabcorp has seen its share price crater 57 per cent over the past year, and has also demanded that workers return to the office 5 days per week.
This will impact around 1,500 employees in Sydney, Melbourne, and Brisbane.
In Australia, there has been a gradual return to the office, but it's been comparatively slow, and with the unemployment rate still holding firm at 4.2 per cent, employees have retained an upper hand in bargaining power for a long while Down Under.
To date, office valuations in Australia have declined by -22 per cent from their highs, a bigger decline than was seen during to the global financial crisis.
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