Sellers are breathing a huge sigh of relief, but developers aren't joining them
Yesterday ANZ revealed updated forecasts showing a recovery during CY2019. Today, the NAB Residential Property Survey for Q2 saw confidence among property professionals jumped 7 points - the highest it's been in 12 months.
Short-term sentiment is guarded, but longer-term expectations are far more optimistic. The survey also showed that foreign buyers are coming back into the market, with market share rising to 7.1 per cent nationally and a whopping 12.1 per cent in Victoria. This may have something to do with an increasing number of buyers out of Hong Kong (via Singapore) concentrated heavily on Melbourne.
ABS statistics were also released yesterday showing that home ownership has dropped in 20 years. In 1998, 70 per cent of households owned their homes; today, it's 66 per cent. The reason for this is can be laid at the door of the rising real cost of housing; over that period, housing costs have increased 40 per cent for home owners with a mortgage.
It's interesting to note that according to CoreLogic, homes in many of Australia's regional coastal markets are more affordable at the moment. If you're prepared to look beyond the Gold Coast, Sunshine Coast, Tweed, Byron and parts of the NSW and VIC surf coast regions, there are some cracking deals to be found right now.
Cladding the foundation of bigger problems for governments, insurers and developers
The Daily Telegraph has today published a full list of buildings in and around the Sydney CBD requiring replacement of flammable cladding. It's exactly what assessors didn't want to see happen; an extremely tough job will now be made a lot harder.
With state and federal governments and insurers playing the blame-and-shame game to try and mitigate the cost of rectifying a national problem likely to cost billions, the public conversation is more focused on the realities of rectification rather than the cause of the problems. But developers and their key service providers in the building industry are up against it, with the double-whammy of prohibitive costs of insurance and the looming likelihood of cost liability overshadowing previous and future projects. The Victorian government is even considering joining class actions to try and recover some of the cost of fixing the 500 privately-owned buildings it's having to part-fund rectification works for.
This is a problem that will cascade down to all builders, not just apartment developers.
The federal government is meeting with the states today to try and hash out a taskforce to deal nationally with building industry reform, but QLD and VIC in particular are baulking at the proposals - which admittedly need quite a bit of work to be seen as anything more than a bandaid job. More likely, everyone will be making a beeline back to drawing boards after today's tete-a-tete.