Property prices stabilizing after another boom, with rents still going up, especially on apartments

The property market appears to be stabilizing in key regions after the latest boom, according to the latest monthly figures, with analysts forecasting that prices will not keep rising as quickly next year.

The median national property price is now at a record high of $753,654, according to CoreLogic, although it is much higher in Sydney at more than $1.2 million.

Key markets Sydney and Melbourne were fairly flat over the past month, but prices were still rising strongly in Brisbane, Adelaide and Perth.

“They’re continuing to see housing values ​​rocketing along,” CoreLogic’s chief economist Tim Lawless says.

“Below the surface there’s a lot of diversity here.”

Interest rates have been rising since May last year, with some economists tipping another rate rise in February.

Mr Lawless says property value growth is slowing as buyers at the top end of town ease up on paying eye-watering prices.

“We’ve seen a real reduction in borrowing capacity. And we’ve also seen serviceability constraints becoming more pressing,” he explains.

This includes units and apartments, with prices on these still rising strongly in most markets.

In every capital city except Darwin the median price for an apartment is now more than $450,000. In Sydney, it is much higher at $836,000.

“We’re moving into this burgeoning under-supply across the medium to high density sector of Australia’s housing markets, and that probably will support prices across the unit sector to some extent,” Mr Lawless said.

Loading…

Thirty per cent of income now going to rents

Asking rents, which is the price a place is advertised for lease, have now been rising at a national level for 40 months straight, and the biggest gains in most markets over the past year have been for apartments or units.

November marks the first time in six months where CoreLogic’s figures show rents have risen at a faster rate than home values.

Vacancy rates are still around record lows at just 1 per cent nationally.

“Rental markets are still as tight as a drum,” Mr Lawless notes.

However, he believes demand is easing off, simply because households can’t pay anymore.

“Which means we’ll start to see a forced restructuring of rental demand,” he says.

“Probably renters are looking for more affordable housing options like units over houses, or looking further afield from where they work or where they socialize.”

Apartment rents now so high you may as well buy

First home buyers are getting back into the market, the latest lending figures indicate, with Mr Lawless of the belief that some “are looking at any way out of the rental market”.

A large proportion of renters in many major capital cities would now be financially better off buying the apartment or unit that they live in, according to fresh data this week from rival housing data firm PropTrack.

This trend was literally on display at an apartment viewing in Melbourne this week.

With an advertised range of $500,000 to $530,000, a first home buyer purchasing it with a 20 per cent deposit and an interest rate of 6.24 per cent on a 30-year term would be repaying it at just under $600 a week.

The apartment would likely rent out at $630 per week, according to estimates provided by its selling real estate agent.

One first home buyer viewing the apartment told ABC News they had been doing exactly these kinds of numbers.

“You’ll be on par and at least you’re not paying somebody else’s mortgage. You’re paying your own.”