Property Value-To-Income Ratio Hits Peak
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Property Value-To-Income Ratio Hits Peak

Data from ANZ and CoreLogic shows a record high in the June quarter.

By Terry Christodoulou
Mon, Nov 29, 2021 2:39pmGrey Clock 2 min

The national dwelling value-to-income ratio reached a record high in the June quarter according to a new housing affordability report from ANZ and CoreLogic.

Based on median income data from ANU against property statistics from the research specialist, the report found the national dwelling value-to-income ratio reached a record high of 7.7 in the June quarter above the decade average of 6.3 and up from 6.4 in the September 2020 quarter.

Houses saw a sharper ratio when compared to units, leading to the widest gap on record. For houses, the ratio had risen from 6.7 to 8.1 while units experienced a mor moderate increase from 6.2 to 6.8.

Focusing on capital cities, the dwelling value-to-income ratio was recorded at 8 — the highest reading on record. The combined capital city ratio had trended consistently higher since the September quarter last year.

Across the combined capital cities, the median dwelling value, as at June, was %727,427, a 52.1% premium on the equivalent median value across regional Australia.

Sydney had the highest value-to-income ratio, at 10.1, followed by Melbourne and regional NSW, both at 8.5.

Dwelling values across regional Australia rose by 18.1% between March 2020 to June 2021 — against a lift of 11.2% in combined capital city values.

In regional Australia, the median dwelling value-to-income ratio was 6.8. The ratio for houses went from a record low of 5.7 in September 2020 quarter to a record high of 5.7 in June 2021.

There are further property rises expected against household income in the coming months, as Australian house values rose a further 6.8% in the four months to October.

Between March 2020 and June 2021, CoreLogic data indicted the national median housing values have risen by 12.6%.

In the meantime, ANU income modelling suggested the median household income has fallen relatively flat, with an increase of 0.2%.

Based on households saving 15 per cent of their gross annual income, it would now take the typical household a record high of 10.2 years to save a 20 per cent deposit for an Australian dwelling, as at the end of June.

For houses, that means saving a 20% deposit would require a time frame of 10.8 years vs a nine-year period for units. Elsewhere, across capital cities, the average time frame to save a deposit has lifted to 10.7 years — 11.7 years for houses and 9 years for the median value unit.



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The Knight Frank Luxury Investment Index reveals investments of passion are paying strong dividends, in some areas at least

By Bronwyn Allen
Tue, Apr 9, 2024 4 min

Art was the investment of passion that gained the most in value in 2023, according to Knight Frank’s Luxury Investment Index (KFLII). This is the second consecutive year that art has risen the most among the 10 popular investments tracked by the index, up 11 percent in 2023 and 29 percent in 2022. Art was followed by 8 percent growth in jewellery, 5 percent growth in watches, 4 percent growth in coins and 2 percent growth in coloured diamonds last year.

The weakest performers were rare whisky bottles, which lost nine percent of their value, classic cars down six percent and designer handbags down four percent. Luxury collectables are typically held by ultra-high-net-worth individuals (UHNWIs) who have a net worth of US$30 million or more. Knight Frank research shows 20 percent of UHNWI investment asset portfolios are allocated to collectables.

In 2023, the KFLII fell for only the second time, with prices down 1 percent on average.

Despite record-breaking individual sales in 2023, a surge in financial market returns contributed to a shift in allocations impacting on luxury asset value,” the report said. “… our assessment reveals a need for an ever more discerning approach from investors, with significant volatility by sub-market.

Sebastian Duthy of AMR said the 2023 art auction year began with notable sales including a record price for a Bronzino piece. But confidence waned as the year went on.

“It was telling that in May, Sotheby’s inserted one of its top Old Master lots – a Rubens’ portrait – into a 20th Century Modern evening sale. But by then, it was clear that the confidence among sellers, set by the previous year’s record-busting figures, was ebbing away. In the same month, modern and contemporary works from the collection of the late financier Gerald Fineberg sold well below pre-auction estimates.”

The value of ultra contemporary or red-chip’ art contracted the most in 2023.

“Works by a growing group of artists born after 1980 have been heavily promoted by mega galleries and auction houses in recent years. With freshly painted works in excess of £100,000 almost doubling in 2022, it was little surprise that this sector was one of the biggest casualties last year. There is a risk there are now simply too many fresh paint artists with none really standing out.”

In the jewellery market, Mr Duthy noted that demand was strongest for coloured gemstones of exceptional quality, iconic signed period jewels, single-owner collections, and items with historic provenance in 2023. In the watches market, Mr Duthy said collectors chased the most iconic and rare timepieces.

A Rolex John Player Special broke the model record when it sold for £2 million at Sotheby’s in May, double the price for a similar example sold at Phillips in 2021,” he said.

Although whisky was the worst-performing collectable in 2023, it has delivered the highest return on investment among the 10 items tracked by the index over the past decade, up 280 percent. Andy Simpson of Simpson Reserved, said 2023 was a challenging year but the best of the best bottles gained 20 percent in value. In my opinion some bottles that lost significant value in 2023 will return through the next two years as they are simply so scarce and, right now at least, so undervalued, Mr Simpson said.

Whisky was the worst performing collectable in 2023 but it had highest return on investment over a 10-year period. Image: Shutterstock

Classic car expert Dietrich Hatlapa said the 6 percent fall in collectable vehicle values in 2023 followed a 22 percent surge in 2022. The strong performance of other investment classes such as equities may have dampened collectors’ appetites it’s a very small market so it only takes a minor change in portfolio allocations to have an effect, and there has also probably been a degree of profit taking. However, we have seen some marques like BMW (up 9 percent in value) and Lamborghini (up 18 percent), which appeal to a younger breed of collector, buck the trend in 2023.”

Mr Duthy said a dip in the share price of the top luxury handbag brands last Autumn appeared to spook investors. Last autumn it was possible to pick up an Hermès white Niloticus Himalaya Birkin in good condition for under £50,000. The recent slide reflects a general correction at the upper end that’s been underway for some time rather than changing attitudes to the harvesting of exotic skins.

According to Knight Frank’s Attitudes Survey, the top five investments of passion among Australian UHNWIs are classic cars, art and wine. Fine wine values gained just 1 percent in 2023 as the market continued its correction, said Nick Martin of Wine Owners. “It’s been a hell of a long run, so I’m not that surprised. Some wines from very small producers that had enjoyed the most exuberant growth have seen the biggest drops. It had got a bit silly, £50 bottles had shot up to £200 or £300.”

Favourite investments of passion: Australia vs Global

1. Classic cars (61 percent of Australian UHNWIs vs 38 percent of global UHNWIs)
2. Art (58 percent vs 48 percent)
3. Wine (48 percent vs 35 percent)
4. Watches (42 percent vs 42 percent)
5. Jewellery (18 percent vs 28 percent)

Best returns among investments of passion (10 years)

1. Whisky 280 percent
2. Wine 146 percent
3. Watches 138 percent
4. Art 105 percent
5. Cars 82 percent

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