Decade High Annual Growth In National Rents
Although there are signs the sector is slowing in some markets.
Although there are signs the sector is slowing in some markets.
There is seemingly little reprieve across the residential market for both home buyers and renters according to the latest report by CoreLogic.
In the CoreLogic Rent Review for June 2021 quarter, the national rental rates are 6.6% higher than they were last year – enjoying the highest annual growth in dwelling rents since January 2009.
CoreLogic’s national rent index recorded a 2.1% rise in the three months to June 2021, down on the 3.2% rise over the March quarter.
National gross rental yields were recorded at 3.41% in the June quarter – down from 3.55% over the March quarter and 3.73% the year earlier – proving the results are slowing.
Outside of the nation’s capital, regional rents are rising at an unprecedented level rising by 2.7% in quarter two, compared to a 1.9% rise in capital city rents – down quarter-on-quarter.
While the above indicates easing growth in recent months, regional Australia’s annual rental growth hit 11.3% in June 2021 – the highest annual growth result on record, with CoreLogic’s rental index commencing in 2005.
“Following subdued rental performance through much of the 2010s, the Australian rental market has seen an increase in values due to many of the same factors that have led to the current housing price upswing,” said CoreLogic’s Head of Research Australia, Eliza Owen.
“These factors include increased government stimulus through COVID-19, accumulated household savings through lockdown periods, the swift economic recovery seen as restrictions eased, and a lack of rental supply in some markets have also exacerbated rental price increases, particularly in major centres of regional Australia.”
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The insurance premium gap between flood affected and non-flood affected homes is significant
Climate change is already affecting home values due to the impact of more severe weather events and rising home insurance premiums, and the cost of building is likely to rise as regulatory changes designed to enhance climate resilience alter building codes and zoning laws, according to a new report.
The National Housing Supply and Affordability Council describes climate change as an emerging trend that is raising the cost and complexity of supplying more housing. In its newly released State of the Housing System report, the council discusses how climate change is reducing the value of some homes when major weather events cause flooding or other natural disasters.
“The price differential between flood-affected and non-flood affected homes has been estimated to be up to 35 percent a year after a flooding event,” the report says. “Furthermore, the RBA estimates around 7.5 percent of properties are in areas that could experience price falls of at least 5 percent due to climate change by 2050.”
More than one million households are struggling to afford home insurance, and rates of non-insurance are increasing due to the cost. For example, the Australian Competition and Consumer Commission estimated that 40 percent of homes in Northern Western Australia were uninsured in 2020.
“Climate change is causing home insurance premiums to rise across Australia, adding to already elevated housing costs. Homeowners in areas considered at–risk of natural disasters are expected to see insurance premiums rise further or have difficulty obtaining insurance due to heightened risks.”
More frequent and severe weather events such as cyclones and bushfires, as well as coastal erosion and flooding from rising sea levels, present risks to housing safety. More than 3,000 homes were lost in the 2019-20 bushfire season, causing $2.3 billion in insurance losses. The report says the predicted direct cost of natural disasters to the economy and housing will be $35.2 billion per year by 2050.
Climate change and net-zero targets could raise the cost of building new homes, the report says. “Regulatory changes to enhance climate resilience will alter building codes and zoning regulations.
Developers facing higher compliance costs may have difficulties meeting updated standards, potentially delaying or reducing housing availability.”
However, the report says the increased cost of building a home with climate-resistant materials and eco-friendly features is more than offset by lower energy costs over a property’s lifetime. The current minimum energy efficiency requirements within the National Construction Code are estimated to deliver a household–level benefit-to-cost ratio of 1.37, according to the report.
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This stylish family home combines a classic palette and finishes with a flexible floorplan