Housing – Early signs of a recovery

Housing – Early signs of a recovery

For the first time in 40 years, the net rental yield on investment property is approximately equal to the funding costs.

A few other data points:

1. Households have become less “cautious” in their attitudes. The “time to buy a dwelling” index has surged to a 3yr high, suggesting upside to our forecast 150k dwelling commencements in FY13/14;
2. The share of households saying that the “wisest place for savings” is to repay their debt has dropped to just above a 5yr low while attitudes towards putting savings into property have picked up;
3. RBA rate cuts are starting to gain traction with dwelling prices +1.3% in March.

Additionally, the potential increase in the concessional tax rate for super contributions on incomes >$300k increases the attractiveness of property investment (and negatively geared strategies).

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