(Realestate.com.au) – Property prices are finally increasing in Sydney and Melbourne, digital banks may disrupt the system and building approvals are up. What else is happening across the country?
Sydney and Melbourne moving on up
It is hard to get excited about sub 1% price growth, but it does look like Sydney and Melbourne pricing is beginning to move.
Both cities went into positive price increases over the quarter. Search activity on our buy site in both cities has been up since the federal election and the three interest rate cuts have also provided a boost.
There has also been a big shortage of housing stock available. NSW has had particularly low numbers of properties available – down 25% in September compared to the same time last year. Auction clearance rates have been high (again off low numbers) and premium suburbs have been pushing up for 12 months now.
Melbourne and Sydney have both seen positive price growth over the quarter. Picture: Getty
Elsewhere across Australia we are still not seeing positive year-on-year growth for our capital cities, but Canberra and Adelaide also saw price increases over the quarter. Other areas doing well are Geelong, Sunshine Coast and Wollongong.When is the best time to sell or buy? Property cycles explained
Is it time to ditch the big four banks?
Open banking could potentially lead to a big shake up in Australia’s home loan industry, primarily because of the number of digital banks that are now setting up in Australia as a result. They include Up Bank, Xinja, Truelayer, Volt, Judo and 86 400. These banks do not offer branches and have no physical presence, instead you interact with them completely online.
Open banking was only introduced in Australia in July this year as part of a trial stage but will be officially launched in February 2020. For mortgage products, open banking won’t come into play until mid 2020 for the big four banks and not until early 2021 for other mortgage providers.
The big four banks could be in trouble with the introduction of open banking. Picture: Getty
It is still early days for these digital players in Australia, although many have been operating in the UK for some time. There was a significant switch by consumers in the UK to digital banks since open banking was launched at the start of 2018. The UK is now considered the most competitive market for these new operators. It has also upped the game for existing banks and has made them improve their digital offering.
While competitive pricing is one aspect of the change, the use of apps has improved the way that people can track their money. Ultimately, most digital banks see this as their key advantage, not just as a cheaper way to provide banking services.
Building approvals picked up in September
Building approvals picked up significantly in September, increasing by 7.6%. While building approvals do not mean the buildings will be completed, the uptick is great news for the development industry, particularly for unit approvals, which are down 70% from the peak.
It will take a very long time for development activity to get anywhere near back to peak – investor finance is picking up slightly (again way off peak), Chinese buyers are gone (although Hong Kong is very active) and there are still a lot of confidence issues to resolve.
Developers will breath a sigh of relief as building approvals increase by 7.6%. Picture: Getty
The pick-up was primarily in units and was strongest in the smaller markets of Queensland, South Australia and ACT. As discussed last month, rental search activity on our site suggests that Melbourne and Brisbane are no longer in over-supply for apartments.
It may only be a matter of time before we see an increase in Melbourne. Sydney meanwhile continues to see problems with low rental demand in high supply areas – this will take some time to resolve, particularly given the majority of quality problems were in this city.