The Development Digest | 8 November 2024

We are pleased to provide you with another edition of The Development Digest.

This update will cover:

• JLL Residential Reflections Research Report
• CoreLogic’s Home Value Index – October 2024
• Headlines of the Week
• Current & Forthcoming JLL Development Site Opportunities

JLL Residential Reflections Research Report

We are delighted to share with you another edition of the fortnightly JLL Residential Reflections research piece prepared by our leading JLL Research team and managed by Leigh Warner and his team.

Please see below this issue’s highlights, with the full report available upon request.

• Victorian Government announced multiple housing initiatives to stimulate market activity. Measures include stamp duty cuts for off-the-plan purchases and increased density near identified transport nodes.
• However, the boost to supply might still fall short of demand from high migration and foreign student arrivals.
• Summary of all ten initiatives included, sourced from Property Council of Australia.

Victorian Housing Initiatives

Victoria’s housing market was a powerhouse through the 2010s, with strong population growth and investor demand fuelling sustain high levels of construction. However, Melbourne has been lagging other major cities since COVID despite of the state’s population growth rebounding to extremely strong levels. Over the past two weeks the Victorian government has released ten major initiatives aimed at stimulating housing activity and construction.   

CoreLogic’s Home Value Index – October 2024

CoreLogic recently released their monthly Hedonic Home Value Index report – October 2024, that national home values increased rose 0.3% rise in October, the 21st month of growth since the cycle commenced in February last year. The subtle positive movement was supported by the mid-sized capitals, led by Perth with a 1.4% rise over the month, offsetting declines in Darwin (-1.0%), Canberra (-0.3%), Melbourne (-0.2%) and Sydney (-0.1%), as well as regional Victoria (-0.2%).

As the market cools, annual growth in national home values has continued to ease, reducing to 6.0% over the 12 months ending October, down from a recent peak annual growth rate of 9.7% in February.

The JLL team have provided a summary of this report below:

• Slower growth in home values has been accompanied by a rise in advertised stock levels, while the number of home sales look to be fading.
• Rental growth nationally bounced back by 0.2% in October, although unit rental declined in five out of eight Australian capitals over the past three months.
• Gross rental yields are under downwards pressure, sitting at 3.47% across the combined capitals.
• Despite rising holding costs and lower yields, investor activity in housing remains strong, with the value of lending up 34.2% over the past year—more than double the 16.8% rise in owner-occupier lending.
• With core inflation at 3.5% and price growth slowing, a rate cut looks likely early next year, supported by tight labour markets and limited housing supply to stabilise prices.

Headlines of the Week

The AFR – RBA thinks jobs market is too strong to cut rates

• The RBA's decision to hold rates at 4.35% is expected to dampen the east coast spring property market, delaying new listings and limiting buyer power.
• Sydney housing values fell 0.1% last month, their first decline in 21 months, while total new housing credit fell 0.3% in September.

The AFR – ‘Glut of empty bedrooms’ as units lag houses Summary:

• Australia continues to build more freestanding homes than apartments, with August data showing twice as many houses (9338) approved as apartments (4418).
• This trend persists despite 50% of households comprising single people or couples, while 72% of housing stock is detached housing.

The AFR – Rate call kills hopes for late spring bounce

• The RBA believes the job market remains too strong to cut rates, with the unemployment rate steady at 4.1% and labor availability still constrained.
• The RBA forecasts unemployment to rise slightly to 4.5% and estimates the current 4.35% cash rate is less than 1 percentage point above the neutral rate.

The AFR – Buyers switch to apartments amid costs crunch

• Demand for units in Sydney is outpacing supply, with unit searches increasing by 94.3% over five years while new listings only rose by 7.5%.
• In the past five years, house prices surged by 53.6%, while unit prices increased by only 15.1%.

Current & Forthcoming JLL Development Site Opportunities

We are proud to be handling some of the most exciting development offerings in the market, with the final on-market campaigns for the year now launched.

Should you wish to receive additional information or if you have a specific requirement or mandate you would like to discuss, please contact any member of the JLL team for a confidential discussion.

We hope you have enjoyed another edition of The Development Digest. Please contact our team if there is anything we can assist you with.

Jesse