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The residential sector continues its apparent recovery in the media this week. The AFR predicted that Sydney and Melbourne house prices will hit record highs by April 2020 if the market continues to rise at its current rate. Hobart and Canberra have already reached new peaks. CoreLogic suggested that low interest rates, improved sentiment, credit availability, the federal election results and low supply all contribute to the increasing prices. This recovery should support the economy and boost household wealth. (Duncan Hughes and Jonathan Shapiro, 09/11/19 – Sydney, Melbourne prices to hit new highs by April) SQM Research predicted 15% increases in Melbourne house prices next year. They also tipped large supply increases in Hobart in 2020. (Nila Sweeney, 14/11/19 – Sydney, Melbourne prices to surge up to 15pc). Read more on The Urban Developer: House Prices Set to Rise 7 to 11pc in 2020: SQM. CommSec’s latest report revealed that Australian house sizes are shrinking but apartment sizes are increasing as buyers shift away from McMansions. Read more on the Urban Developer: Apartments Appetite Up as McMansions Fall Out of Favour. Another theme this week was an added challenge to the high-rise apartment market already burdened by declining construction rates and the media attention on construction defects. The Age reported on residents fearing for their safety and security in apartment complexes as a result of uncontrollable short-term tenants. (Charlotte Grieve, 10/11/19 – Why one Southbank resident keeps baseball bat near his door) First-Home Buyers The Morrison government’s First Home Loan Deposit Scheme has been critiqued after suggestions that some banks may charge higher interest rates to those who participate in the scheme and buy a home with as little as 5% deposit. As reported in the Australian, the agency administering the Scheme denies these home buyers are more likely to default. The agency says it will not permit lenders to charge higher interest. (Joe Kelly, 11/11/19 – Home scheme to keep loans fair for buyers) On the other hand, the AFR reported that the Scheme will force more upward pressure on house prices as it will make the market more competitive. It suggested that previous first-home buyer initiatives increased bidding pressure at auctions and contributed to price rises. (John Kehoe, 11/11/19 – First-home loan scheme to increase prices) Urban.com.au looked at another way of purchasing a first home in ‘Rent-to-buy: The housing model helping first home buyers into the property market’.
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