We discover that millennial women are more likely to enter the property market than men. Coronavirus continues to threaten the residential sector’s success and the commercial sector is struggling amid Australia’s uncertain economic climate.

ARTICLE OF THE WEEK

International Women’s Day

Women leading the charge on the property ladder

The Real Estate Conversation
In the spirit of International Women’s Day last Sunday, Mortgage Choice reveals that more millennial women are planning and preparing to enter the property market than men. Read more…

NEWS SUMMARY

Key Themes:

• Markets and industry are beginning to prepare themselves for long-term alterations to process due to Coronavirus

• Melbourne’s house prices have officially reached the 2017 market peak

• Retailers continue their struggle to negotiate reducing their rents

• The ASX hit its lowest point since the GFC on Monday, triggering fears of a recession

REIV Coronavirus statement

The president of the Real Estate Institute of Australia, Adrian Kelly, has released a statement on COVID-19’s impact on the property market. Read about it on The Real Estate Conversation: REIA makes a statement in regards to Coronavirus.

Residential Sector

The Age reported that Melbourne’s property prices have returned to the market-high of 2017’s residential boom. According to the Department of Treasury and Finance the median house price for the December 2019 quarter was $901,951, equal to the peak in November 2017. (Melbourne’s real estate recovery is complete, Treasury boss says – Noel Towell, 06/03/20)

The AFR reported that regulators believe there is an increased risk of the property market overheating after the RBA cut official interest rates last week. The International Monetary Fund believes that looser financial conditions could accelerate house price inflation and expose vulnerabilities given high household-debt levels. (Regulators warned on ‘overheating’ house price risk – John Kehoe, 06/03/20)

The AFR reported that coronavirus has not dampened home buyers’ confidence, with high auction clearance rates last weekend. Sydney’s clearance rate was 76% from 537 auctions recorded. (Threat of coronavirus doesn’t stop house buyers – Ingrid Fuary-Wagner, 08/03/20)

Read more on the weekend’s auction results on The Real Estate Conversation: Partial public holidays put auction volumes on hold.

Commercial Sector

Offices

The Australian reported that experts remain uncertain about the effects of coronavirus on the office market. It is possible that significant disruptions will occur, with negative demand and supply chain delays affecting the entire industry. The impact will likely come from reduced economic growth and employment. Weak confidence in leasing decisions and reduced net absorption of office space are also areas of concern. (Coronavirus impacts on office market still unknown – Frank Gelber, 11/03/20)

The AFR reported on a slump in foot traffic at co-working spaces due to concerns over the coronavirus. Hub Australia revealed that the number of people in their co working facilities has dropped 20% since last Monday. (Virus drives visitors out of booming co-working spaces – Michael Bleby, 12/03/20)

Retail

The Age reported that the retail market remains in a tight spot, with retailers threatening to withhold rent due to empty stores.  Poor tourism, supply chain delays and weak consumer confidence are all impacting foot traffic at retail stores. (Retailers threaten to withhold rent as coronavirus concerns reach fever pitch – Dominic Powell, 10/03/20)

The Australian reported on the collapse of that luxury stationery brand kikki.K . The ever-increasing list of struggling retailers triggers more concern regarding retail rents, with tenants fearing that landlords will increase rents for remaining stores to compensate for their loss of income. (Shopping centres shrug off latest retail brand failure kikki.K – Gerard Cockburn, 11/03/20)

Hotels/Tourism

The AFR reported that a noticeable drop in Airbnb reservations is an indicator of decreasing numbers of visitors to Australian tourist hotspots. Discounts of up to 15% are being offered as encouragement to book accommodation. Tourism Transport Forum released a report which predicts Australia may experience a 40% drop in international visits between January and June this year making it likely that discounts and low occupancy rates will persist. (Airbnb hosts drop prices as bookings dry up – Nila Sweeney, 10/03/20)

The Urban Developer predicts that the tourism sector will bounce back from these setbacks. Read about Colliers’ 2020 Capital Market Hotels Investment report in ‘Hotel Sector to Recover Despite Coronavirus Shock’.

Finance

Lending

The AFR reported that new home loans are increasing at their fastest pace in over three years, with January seeing owner-occupiers and investors pushing average loan values higher. Mortgage activity has significantly increased since mid-2019 according to JP Morgan, with owner-occupier loans still outpacing investors. (Home loans growth picks up in January – Michael Bleby, 11/03/20)

According to The Real Estate Conversation, parents of first-home buyers have lent their children a total of $92 billion over the last two years. They are Australia’s fifth biggest lender after the big four banks: Best property lending coming from Mum and Dad.

ASX

The Australian reported that publicly-listed companies like Lendlease, Charter Hall and Goodman all experienced punishing share-price drops on Monday with low consumer confidence hitting hard. Concern regarding exposure to global capitals at a time when some are heading into lockdown, could be a significant factor in the crash. (Coronavirus fears rout property stocks – Ben Wilmot, 10/03/20)

The Urban Developer outlines the impact: ASX Plunges in Worst Day Since GFC.

Construction

The Australian reported that coronavirus’ impact on global supply chains could result in major building projects being temporarily shut down. Offices, shops, hotels and airports could all be affected. In addition, residential construction projects face delays of at least a month. (Coronavirus: Building shortages threaten site shutdowns – Rosie Lewis & Ben Packham, 09/03/20)

Construction businesses are expected to be hit hard. According to the AFR, building industry insolvency rates will rise again from a 3.5 year high at the end of 2019. With supply chains delayed, consumer confidence will weaken and make it more difficult for builders to secure funding and finance. (Coronavirus will increase construction failures – Michael Bleby, 13/03/20)

On the other hand, the AFR reported that coronavirus may have some positive economic outcomes. Read ‘Coronavirus gives local materials suppliers a boost’ on Commercial Real Estate.

DESIGN & ARCHITECTURE

Frank Gehry’s twisting Luma Arles tower nears completion in France

dezeen
The architect behind the Guggenheim Museum Bilbao, Frank Gehry, has created another aluminium-clad building. The structure, in the south of France, has been described as a ‘stainless-steel tornado’ as the cladding imitates limestone cliffs which surround the city Arles. Read more on dezeen…

To learn more about Debuilt Property please visit www.debuilt.com.au or email either Paul: pabrahams@debuilt.com.au or Daniel: dburger@debuilt.com.au.

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