Australia’s residential housing stock has gained $1 trillion in value in just five months, even as the number of people in work falls back to pre-coronavirus levels with lockdowns in NSW and Victoria dragging down the national jobs market.
Record-low interest rates, reduced spending opportunities for cashed-up Australians and government grants to first home buyers have contributed to the fastest increase in property values on record.
CoreLogic data shows just how quickly the property market has appreciated over recent years.
It estimates the total value of residential property reached $9 trillion in September. It had climbed to $8 trillion in April.
Despite the biggest economic downturn since the 1930s due to the pandemic, the value of Australian property has climbed by more than $2 trillion in about 14 months.
“This puts housing values around 28.2 per cent higher than the estimated value of superannuation, the ASX and commercial real estate combined,” CoreLogic head of research Eliza Owen said.
Data released on Friday by the federal government shows its first home loan deposit scheme is bringing more people into the market.
In its first 18 months of operation, the scheme has helped almost 6000 essential workers – of which 35 per cent were nurses – into their first home. Almost 60 per cent of those using the scheme were aged under 30, bringing forward their purchase by an average of 4 years.
The Australian Prudential Regulation Authority this week announced a tightening of bank lending standards due to growing concerns about the state of the financial system related to the surge in house prices.
Banks must test whether new customers could manage their repayments at an interest rate 3 percentage points higher than the actual rate on the loan. Until now, banks have added 2.5 percentage points – known as a “serviceability buffer” – onto the rate of the loan when assessing a customer.
APRA said it believed its actions would reduce new customers’ borrowing capacity by about 5 per cent.
Treasurer Josh Frydenberg said APRA’s move was well-targeted, arguing it was likely to affect investors more than other borrowers.
“What has been pleasing in this cycle compared to previous cycles is that more first homeowners, more owner-occupiers are coming into the market. And this move will affect investors more than it will affect first home buyers,” he told the Seven Network.
As NSW, Victoria and the ACT approach key dates for their re-opening out of COVID-19 lockdowns, payroll figures from the Australian Bureau of Statistics released on Thursday showed the total number of people on business payrolls has fallen below its pre-virus levels, with women and young workers again suffering the most from the pandemic restrictions.
The number of people on business payrolls fell by 0.7 per cent in the fortnight to September 11, after a 1.5 per cent drop in the fortnight before that.
Victoria (down 1.8 per cent) and the ACT (down 2.3 per cent) took the biggest hits while NSW slipped another 0.3 per cent.
Since going into lockdown, there has been a 9.2 per cent drop in the number of people on NSW business payrolls. There’s been a 10.2 per cent drop in NSW women on the state’s payrolls while people aged between 15 and 19 have suffered a 28 per cent fall.
It’s s similar story in Victoria with its lockdown, which started several weeks after NSW. Total jobs on payrolls are down by 7.2 per cent, with women (minus 8 per cent) doing worse than men (minus 6 per cent).
The worst-hit area has been the ACT where jobs have tumbled by 12.2 per cent.
Westpac senior economist Justin Smirk said small and medium-sized businesses were taking a bigger hit to jobs than previous lockdowns.
“There clearly is a lot of pressure on small businesses in NSW and Victoria but overall the recovery has a strong base to build on given the strength of larger firms,” he said.
Article Source: www.brisbanetimes.com.au
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