Australian rents soar to record highs as housing crisis bites
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Australian rents soar to record highs as housing crisis bites

The humble share house is back on the table as renters wrestle with rising rental costs

By KANEBRIDGE NEWS
Mon, Jan 22, 2024 1:52pmGrey Clock 2 min

National median rents for Australians have reached record highs, CoreLogic data shows.

The median rent rose to $601 per week in December, or $31,252 a year, and increase of more than $160 since August 2020. 

Average rent growths were 9.1 percent over the past three calendar years compared with 2 percent in the 2010s. Sydney recorded the highest median rent at $745 per week, while Hobart was the lowest at $535. Hobart recorded a -3.5 percent drop in median rents. Along with Canberra, which fell -1.9 percent, they were the only markets to experience a decline.

Author of the Rental Market Update and head of research Australia at CoreLogic, Eliza Owen, said factors such as an upswing in migration numbers since 2022 and the overall decline in the average size of households were contributing factors to the rise in prices.

It noted that the reduction in available social housing had placed further pressure on the private rental market, especially at the lower end.

Source: CoreLogic

While the figures are alarming to renters, the report noted that the rate of growth has slowed compared with recent years. Last year, rent values rose 8.3 percent, down from 9.6 percent in the year to September 2022. The contrast is even greater in regional areas where rents increased by 4.3 percent last year compared with 13.4 percent in the year to August 2021.

“The easing in rent growth is good news with regard to inflation, but there was a slight pick-up in annual growth once again in the final quarter of 2023,” Ms Owen said in the report. “This ‘re-acceleration’ in rents was most consistent across the capital city house markets, but was also evident in regional rent markets.”

However, she said cost of living pressures were causing some renters to re-think household arrangements. 

“As noted in previous quarters, part of the explanation for an uptick in house rent growth may be in part due to households re-grouping into share houses,” Ms Owen said. “Additionally, the premium of house rents over units has narrowed in the past two years, from $63 per week at the median level to $38. 

“This ‘catch up’ in unit rents could be making them less appealing, diverting tenants back to houses.” 

 



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Hong Kong Takes Drastic Action to Avert Property Slump

The city’s real-estate market has been hurt by high interest rates and mainland China’s economic slowdown

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Fri, Mar 1, 2024 3 min

Hong Kong has taken a bold step to ease a real-estate slump, scrapping a series of property taxes in an effort to turn around a market that is often seen as a proxy for the city’s beleaguered economy.

The government has removed longstanding property taxes that were imposed on nonpermanent residents, those buying a second home, or people reselling a property within two years after buying, Financial Secretary Paul Chan said in his annual budget speech on Wednesday.

The move is an attempt to revive a property market that is still one of the most expensive in the world, but that has been badly shaken by social unrest, the fallout of the government’s strict approach to containing Covid-19 and the slowdown of China’s economy . Hong Kong’s high interest rates, which track U.S. rates due to its currency peg,  have increased the pressure .

The decision to ease the tax burden could encourage more buying from people in mainland China, who have been a driving force in Hong Kong’s property market for years. Chinese tycoons, squeezed by problems at home, have  in some cases become forced sellers  of Hong Kong real estate—dealing major damage to the luxury segment.

Hong Kong’s super luxury homes  have lost more than a quarter of their value  since the middle of 2022.

The additional taxes were introduced in a series of announcements starting in 2010, when the government was focused on cooling down soaring home prices that had made Hong Kong one of the world’s least affordable property markets. They are all in the form of stamp duty, a tax imposed on property sales.

“The relevant measures are no longer necessary amidst the current economic and market conditions,” Chan said.

The tax cuts will lead to more buying and support prices in the coming months, said Eddie Kwok, senior director of valuation and advisory services at CBRE Hong Kong, a property consultant. But in the longer term, the market will remain sensitive to the level of interest rates and developers may still need to lower their prices to attract demand thanks to a stockpile of new homes, he said.

Hong Kong’s authorities had already relaxed rules last year to help revive the market, allowing home buyers to pay less upfront when buying certain properties, and cutting by half the taxes for those buying a second property and for home purchases by foreigners. By the end of 2023, the price index for private homes reached a seven-year low, according to Hong Kong’s Rating and Valuation Department.

The city’s monetary authority relaxed mortgage rules further on Wednesday, allowing potential buyers to borrow more for homes valued at around $4 million.

The shares of Hong Kong’s property developers jumped after the announcement, defying a selloff in the wider market. New World Development , Sun Hung Kai Properties and Henderson Land Development were higher in afternoon trading, clawing back some of their losses from a slide in their stock prices this year.

The city’s budget deficit will widen to about $13 billion in the coming fiscal year, which starts on April 1. That is larger than expected, Chan said. Revenues from land sales and leases, an important source of government income, will fall to about $2.5 billion, about $8.4 billion lower than the original estimate and far lower than the previous year, according to Chan.

The sweeping property measures are part of broader plans by Hong Kong’s government to prop up the city amid competition from Singapore and elsewhere. Stringent pandemic controls and anxieties about Beijing’s political crackdown led to  an exodus of local residents and foreigners  from the Asian financial centre.

But tens of thousands of Chinese nationals have arrived in the past year, the result of Hong Kong  rolling out new visa rules aimed at luring talent in 2022.

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