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March 2024 Newsletter

HEY NEIGHBOUR!

Welcome back to The Neighbourhood's newsletter for 2024!

The Neighbourhood team is thrilled to kick off the new year with renewed energy and optimism! Reflecting on the challenges of 2023, it often felt like navigating a turbulent wave for many, with five interest rate hikes and inflation looming large. However, amidst these challenges, there's a glimmer of hope as Australia reports its highest wage growth since 2009's March quarter. This promising development is anticipated to alleviate some financial burdens for households, with prospects of further interest rate adjustments on the horizon.

We're off to a promising start, with rental demand remaining robust, evidenced by just four vacant properties across our entire portfolio. While the sales sector anticipates constrained supply, we foresee a stable overall market, albeit with some sectors experiencing notable fluctuations - as detailed in the Market Insights article below. 

The year has begun with a whirlwind pace, and as we bid farewell to summer, we've been reminded of the unpredictable weather patterns wreaking havoc. It's a timely reminder for landlords to ensure they have adequate insurance coverage in place.

And, as the footy season beckons, it's impossible not to mention the excitement building around my beloved AFL team, the Mighty Blues!

Go Blues!

Have a great weekend from The Neighbourhood team.

Carmela

MARKET INSIGHTS
We strive to stay up to date on the latest market trends. Here are a few articles we think are worth reading.

• • Its not all doom and gloom. Is 2024 going to be a better year for real estate? Australia’s property market upswing continues as house prices and rents rise again | Housing | The Guardian
    Key takeaways from the article
    1. Continued Growth in Australian Property Market: Property values in Australia rose by 0.4% in January 2024, marking the 12th consecutive month of increases. Despite this, renters experienced pressure as rents also rose, with the national rental index recording its largest monthly increase since April.
    2. Regional Variations in Market Performance: While property values increased overall, there were variations across different regions. Some capitals, such as Perth, Adelaide, and Brisbane, saw values rise, while others like Melbourne, Hobart, and Canberra experienced declines.
    3. Rental Market Dynamics and Regional Trends: Rental growth accelerated in certain areas like Perth, while Darwin saw declines. Regional markets outpaced capitals in growth trends, with regional WA, SA, and Queensland leading in record-high dwelling values.

  • Will foreign investment return? Government introduces new legislation to shake up foreign investment | Australian Broker News
    Key takeaways from the article
    1. Government Initiative: The Albanese Government introduces legislative changes to prioritize local homeowners and expand affordable housing options by increasing fees for foreign investors acquiring established homes and reducing fees for Build-to-Rent projects.
    2. Industry Support: The Property Council of Australia welcomes the legislation, highlighting its potential to boost investment in new rental supply, particularly in Build-to-Rent housing, which could deliver 150,000 new rental homes over the next decade.
    3. Challenges Remain: Despite the positive response, challenges persist, including the disparity in fees between different types of property investments and concerns about the impact of tax adjustments on rental housing affordability. Further research suggests potential tax adjustments to expedite affordable housing construction.

  • Having the right exit strategy for when to sell - Melbourne suburbs where investment properties are selling at a loss (theage.com.au)
    Key takeaways from the article
    1. The biggest losses in investment properties were in the inner city and Stonnington, data shows.
    2. The premium houses were reaping compared to units meant investors were less likely to lose money when they sold a house.
    3. Some investors are back trying to buy, but the majority of investors in the market are sellers, experts say.

  • Continuing from the above – when is the right time to sell? Ex-rental listings jump as more landlords bail out (afr.com)
    Key takeaways from the article
    1. Increased Pressure on Landlords: Rising mortgage costs and stricter regulations may be prompting more residential landlords to sell their investment properties. The number of ex-rental homes listed for sale surged by 30% over the past year, potentially reducing rental supply and driving rental growth.
    2. Financial Challenges for Landlords: The widening gap between mortgage costs and rental income is squeezing landlords financially. Higher mortgage costs coupled with modest rental income increases are creating financial strain for investors, potentially leading to more property sales.
    3. Regional Trends and Impact on Rental Market: The increase in investor-owned listings is noticeable across various regions, with significant spikes in Tasmania, the Northern Territory, and the Australian Capital Territory. This surge in ex-rental listings could lead to a significant reduction in rental stock, intensifying competition among renters and driving up rents. Policymakers are urged to implement targeted policies to encourage the retention of properties within the rental market and address the potential shortage of rental properties.

  • Wage Growth is the highest since March 2009 - Wage growth drives inflation, average pay tops $100k (afr.com)
    Key takeaways from the article
    1. Wage Growth Driving Inflation: Confidential Treasury analysis reveals that wage growth, reaching a decade high and pushing the average full-time pay above $100,000, is the primary driver of consumer price inflation. This contradicts claims of widespread corporate profit gouging causing price rises, sparking inquiries and reviews into the matter.
    2. Implications for Monetary Policy: The analysis suggests that the Reserve Bank might need to maintain higher interest rates for longer due to concerns about wages, productivity, and inflation. Despite the dissipation of the risk of a wage-price spiral, the challenge now lies in managing entrenched wage growth above 3.5%, which could hinder achieving the 2%-3% inflation target.
    3. Policy Response and Interpretation: The nuanced analysis challenges assumptions about inflation drivers, indicating that pay rises have become the main driver of CPI. This contrasts claims of profiteering by local firms causing high inflation. Treasury analysis suggests that increased competition and the absorption of higher wages into lower profit margins might be influencing inflation dynamics.

  • One Can Only Dream - Canterbury’s expanded Shrublands estate returns to market for $49m (afr.com)
  • Only $3M to live in a celebrity’s home! Cate Blanchett sells her stylish Melbourne house for a tidy profit (theage.com.au)
   

COMMUNITY BULLETIN BOARD
What's new in your neighbourhood? These are a few recent updates that are happening in some of our local communities.

• If you want to enjoy some culture - Festival Africa, Event
• In its last week - When Robin Boyd Went to Japan | Exhibition | Robin Boyd Foundation

• Melbourne Fashion Festival (March)
• Melbourne Food and Wine Festival (March)
• Melbourne International Comedy Festival (late March–April)
• Formula 1® Australian Grand Prix (late March–April) 

CAUGHT OUR ATTENTION
Here are a few things that members of our team have stumbled across over the month. Whether thought-provoking, interesting or entertaining, we want to share them with you.

• What’s next for Melbourne’s Eiffel Tower? Melbourne Royal Exhibition Building Restoration (The Age)
• The Festival that keeps trending! Mona Foma 2024: How one of Australia’s best festivals keeps reinventing itself (theage.com.au)
• Our Matilda Girls had a 10/10 performance! Michelle Heyman is your new Matildas star (theage.com.au)
• Would you travel with a mummified monkey? A CBP dog sniffed out mummified monkeys at Boston's airport