Australian Property Market Update: June 2019

https://www.youtube.com/watch?v=py5RvAHu91c Welcome to my Australian property market update for June of 2019 where we dive into the housing data as well as look at the news and things that may have an effect on the property market. 2 Properties to Financial Freedom Strategy 0:00 - Introduction0:53 - Major changes that have happened4:00 - Looking globally4:46 - Potential global recession looming6:33 - Let's jump into the data. Dwelling values down 0.5% last month8:03 - Sydney is declining faster than Melbourne - -0.5% vs -0.3%8:34 - Monthly changes of the capital cities9:53 - Changes from peak of the capital cities11:00 - It's been 19 months of national decline11:43 - Transaction numbers remain lower than average12:46 - Rental growth continues to slow14:15 - Rental yields are growing significantly15:16 - Day on market are currently dropping15:57 - Monthly value or new finance commitments are trending downways16:40 - Lowest cash rate since the 1960's17:15 - Percentage of interest only loans has plummeted since 201718:02 - Sydney housing data20:22 - Melbourne housing data21:08 - Brisbane housing data23:05 - Adelaide housing data23:58 - Perth housing data25:48 - Hobart housing data27:25 - Darwin housing data28:43 - Canberra housing data29:54 - Do I think the bottom has hit? 2 Properties to Financial Freedom Strategy Martin North + John Adams YouTube Martin North's YouTube Recommended Videos: Australian Property Market Update: May 2019 2 Properties to Financial Freedom Transcription: Ryan 0:00hey you amazing humans and welcome to my australian property market update for june of 2019 where we're gonna dive into some of the data behind the australian housing market look at what's happening in the current market as well as what are some of the changes that have taken place which could affect the property market and property prices so if you're looking at investing in property or if you've already invested in property it's very important to keep your finger on the pulse and this will help you do that obviously i don't have a crystal ball i'm looking at the data just like you are not a fancy economist or anything like that but i'll look at it see what i can learn from it see what trends we'll be watching you can follow along and obviously make your own assumptions from the data this isn't financial advice but this is something that i love to do each and every month to keep on top of things so without further ado let's talk about some of the recent changes that have happened in australia which could affect the property market it's pretty rare that we have this much news and one monthly update but we did just have the federal election and obviously liberal got in or liberals stayed in labor did have some proposed changes to negative gearing for purchases of existing properties or new purchases of existing properties to basically remove the negative gearing benefits in that as well as reduce the capital gains tax discounts for investors as well so this was seen to likely have a negative impact on the australian housing market and so given that liberals got in that is now out the window and not going to happen at least for this term of government so that has definitely put confidence back into the market in terms of investors just not having that potential negative coming through liberal have also offered a new first homebuyers scheme where first homebuyers can purchase a property with just a 5% deposit but how much this is going to affect the market is pretty unclear because it is limited to just 10,000 people per year i believe and those borrowers still need to actually be able to qualify for a loan so not sure exactly whether or not this is going to have a positive impact of that definitely doesn't seem to be like a negative we've also got some changes with apa and how the banks assess people for loans so previously banks would look at people at a 7.25% interest rate i think it was and to say can you afford this loan at 7.25% now obviously there'd be very few people that actually paying 7.25% a lot of people are paying in the three percents the 4% maybe 5% but they're being assessed on this higher level so abra is now saying that they're going to change that from that fixed 7% or 7.25% to two and a half percent above the base rate so this may mean that it will give people a boost in their borrowing capacity and people who have gone to try and borrow in the past that said sorry you can't afford a loan might just scrape through and be able to borrow or i know clients who have been able to borrow but just not enough to get the property that they wanted and may be able to get a little bit more so that may mean more people are in the market there's also anecdotal evidence that the banks are starting to loosen their lending assessments or loosen how harsh they are when it comes to lending money so nothing i guess has really formally come through that but there have been videos out there and people talking that were rejected for loans before the election that are now being approved for loans post election so obviously more people being able to get loans means more people in the market we also have rba cutting the cash rate at the start of june by 0.25% it looks like the banks will be passing all on most of this on to people as well meaning mortgages will be more affordable so a lot of news on the local scale looking globally before we go ahead and jump into the data is obviously a much more complex situation and much more complex but something overarching to keep in mind is that if the rba is dropping the cash rate that is not necessarily a good thing while it might sound like a good thing for the housing market they're only going to be dropping the cash rate if the economy is struggling and that's going to try and boost the economy but we're getting into very low territory 1.25% at the moment not that far to go until we're at negative interest rates as well so yeah cutting interest rates while it might sound good might mean that our economy isn't as strong as we thought and so that's something to think about especially given other indicators as well that there may be a global recession looming now remember we haven't really had a global recession since back in 2008 and there are some signals now that indicate that in the next one two maybe three years that a global recession may hit as well. So there's a lot of overarching things that you need to think about. I'm not an economist, go and talk to them or go and follow their sort of stuff. I'll leave links below to john adams and Martin North who talks about it. So we're about to jump into the data. But I just want to say that to say that globally, there's so many things that can happen. And while we're looking at these trends in local data, something major could happen globally, which would then have a huge impact on the data and wouldn't necessarily follow trends. And so there's always things to think about when it comes to investing, there's so many things that can happen, I don't have a crystal ball. So we're about to jump into the data here. But as you'll see, we are currently still in a decline, and currently still in turbulent times in the Australian property market. So it's really important that if you are going to invest, you do have a strategy that can work in turbulent times, Gone are the days where you can just invest and get guaranteed capital growth, your property's going to double in seven years, that is definitely not clear, which you'll see as you look at the data. So it's very important to have a strategy that is going to work in this current climate. If you're interested in a strategy that can work in these times go to onproperty.com.au forward slash two properties. And I'll link up to that in the description down below. And you can learn about the two properties to financial freedom strategy, where you can invest in Metro markets and get positive cash flow as well. It's quite a low risk strategy. So go ahead, check that out, if you want. But now let's jump into the data here. Okay, grab your caffeine for a little pick me out because the housing market is still shahara. In decline, nationally, housing values have fallen by 0.5% for the month of May. So we'll be looking at amazing data. Now you have to remember that the election happened in mid May, or just after mid May the RBA rate cuts were in early June. So we don't have the data base of that. And then the changes that are coming through, they're coming through in June as well. So the positive stuff we talked about is kind of late May or happening in June. So the data won't reflect that. So down 0.5%. As we can say, and I've been talking about this for months now, we have this continuing of a slowing in the rate of decline. So the rate of decline was actually the slowest. It's been since back in May of 2018. So a year ago now, so we're continuing to see this decline. If we look back, this shot not showing as much data in this video. But if we look back here in 2010, and 11, we did see the rates slow, have a slight positive and then go back into an extended period of decline. So this slowing rate of decline here, we want to get it back to zero to see a stabilized market and then hopefully grow. But it's no guarantee that if we get to zero, it won't go back down. So this is something to watch. And this is obviously a positive sign. Seeing that slowing rate of decline in the market. Something really interesting is here. Sydney is actually declining faster than Melbourne. So Sydney peaked earlier than Melbourne so has been in decline for longer, and actually went down 0.5% for the month where Melbourne only went down 0.3%. So I'm not sure exactly what to make of that Sydney has had larger drops than Melbourne and is still dropping faster than Melbourne. So that's really interesting to see. And that one will be interesting to watch as well.