Crane Count Hits Record High
The number of cranes dominating the skyline of capital cities has risen, with a record 685 structures around the country, according to the Rider Levett Bucknall fourth-quarter 2017 RLB Crane Index.
With 350 in Sydney, 151 in Melbourne and 116 in Brisbane and the Gold Coast combined, the construction boom does not appear to be abating.
Cushman & Wakefield’s research team has estimated there is $62 billion of development in Sydney alone, of which about $50 billion is in infrastructure projects.
John Sears, national director research, Cushman & Wakefield, said an unprecedented development boom is set to drive the Sydney CBD and its office market in particular over the next decade.
Nationally, the residential sector remains the busiest, while the non-residential index shows more volatility, but still highlights a positive trend.
Migration Drives City Markets
Sydney and Melbourne’s housing markets are performing more strongly than expected partly because of the large number of migrants moving to Australia’s two biggest cities, says ANZ’s Australian chief, Fred Ohlsson.
Thousands of new units are set to come onto the market in Sydney and Melbourne, but Ohlsson said demand had been surprisingly resilient in these cities, thanks in part to high migration.
ANZ has imposed more stringent criteria for lending on apartments in Brisbane and Perth, but not Sydney and Melbourne.
Recent research shows there will be strong population growth in NSW and Victoria, which economists say will put a growing strain on public infrastructure.
Victoria has the fastest-growing population, which is expanding by 149,400 a year, or 2.4%, while NSW is growing at 123,300 a year, or 1.6%.
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Medium Density Gains Traction
Buyers looking for an established house could find it a challenge this Spring, with listings falling compared to the same time a year ago.
New dwellings are also attracting interest with first-home buyers taking advantage of government grants in some states to purchase newly-built homes.
The interest in new homes follows rising prices for established dwellings in the east coast capitals, prompting a regulatory clampdown on lending to investors and interest-only borrowers to cool the Sydney and Melbourne markets.
The number of building approvals rose 0.4% in August from July, says the ABS. Approvals for detached houses fell 0.6% and multi-residential approvals rose 4.8%.
The growth in unit approvals was driven by medium-density product including townhouses, terraces and mid-low rise apartments, while high-rise apartment approvals fell sharply, Westpac senior economist Matthew Hassan said.
Hobart Overtakes Big Cities
Hobart’s property value growth has topped the nation for the second month in a row.
The annual growth in Hobart was 14.3%, a stronger result than Melbourne at 12.1% and eclipsing Sydney at 10.5%, according to CoreLogic RP Data’s September Home Value Index.
Hobart was also the strongest performing capital city in terms of monthly dwelling prices (houses and units combined) with 1.7% growth in September followed by Melbourne at 0.9% and Canberra at 0.6%.
CoreLogic head of research Cameron Kusher credited Hobart’s growth to interstate migration and affordability.
“It’s so much more affordable than the other capital cities,” he said.
“Businesses are now more open to people working remotely and a lot of people from Melbourne own properties in Tasmania and probably want to retire there.”
RBA on Hold, Economy Rises
The RBA is increasingly confident the economy is strengthening and will continue to pick up, but concerns over low wage growth and high household debt will keep it on the sidelines, economists say.
The Reserve Bank has kept the cash rate on hold at its historic low of 1.5% for the 14th consecutive month.
Governor Philip Lowe said both the global and domestic economies continued to improve, with GDP growing 0.8% during the June quarter. A big pipeline of infrastructure investment has contributed to this result and non-mining business investment is picking up.
“Slow growth in real wages and high levels of household debt are likely to constrain growth in household spending,” said Lowe.