Raine & Horne: Market Report July 2017

July, 2017

NSW Real Estate Review

In NSW, auction clearance numbers fell in June, yet buyer demand remains strong and vendor expectations remain predictably high, according to Angus Raine, Executive Chairman, Raine & Horne.

“The revamped first home buyer grant is seeing buyer demand surge in many regional centres,” said Angus. From 1 July, stamp duty on all homes up to $650,000 was abolished, while there’s stamp duty relief for properties up to $800,000. For those first timers building a new home, there’s a $10,000 grant for properties valued up to $600,000. Insurance duty on lenders mortgage insurance was also abolished.

Raine & Horne Bathurst Principal Michelle Mackay welcomed the subsidy changes, saying it would provide a real boost for local first homebuyers. “I think it’s absolutely terrific, it will bring a lot of people into the market,” she said. “It will certainly give first homebuyers a helping hand. “That sort of money goes a long way.” The median house price in Bathurst is $347,500.

In Tamworth, first home buyers are flocking into the market, according to Bryan Bolitho, Principal Raine & Horne Tamworth. “We are finding that the cut to stamp duty means that first home buyers are able to buy a little more with their money,” said Bryan. “We had a young couple, who bought a house in South Tamworth for $370,000. They wanted to build a shed on the property for some of their toys. The stamp duty saving allowed them to buy the property and build the shed.”

Queensland Real Estate Review

The March 2017 quarter has delivered the Brisbane LGA’s first $2 million suburb, as Teneriffe reached a median house price of $2.075 million, according to the REIQ’s March Quarter Queensland Market Monitor.

Additionally a record number of $1 million-plus suburbs as 15 suburbs (including Teneriffe) hit the median milestone, up from 10 suburbs in the December quarter.

House prices annually have grown 4% in the Brisbane LGA, taking the annual median to $650,000. REIQ CEO Antonia Mercorella said the Brisbane house market had once again proven itself to be a solid performer. “This market consistently performs well for property owners, while maintaining its affordable status,” she said.

Outside the capital, the Gold Coast and Sunshine Coast were the two strongest performing markets in Queensland again in the March quarter, outperforming Brisbane (as they did last quarter). “The Gold Coast has benefited from the investment delivered for the 2018 Commonwealth Games and this has significantly improved the infrastructure in the region, transforming it into an international hub,” Ms Mercorella said.

The Sunshine Coast continues to grow and, along with the Gold Coast, these centres formed the top two most popular migration destinations for people moving within Australia in 2016. More than 12,000 people moved to these two coastal destinations (excluding overseas immigration) last year, according to ABS data.

Noosa was the top annual median house performer with an annual growth of 9.2% compared with March 2016. This has positioned Noosa as the second-most expensive house market with an annual median sale price of $615,000.

The housing market in Fraser Coast, Bundaberg and Cairns held steady for the 12 months to March 2017.

Victoria Real Estate Review

Melbourne’s reputation as the auction capital of the world remains intact with a record number of homes going to auction and selling under the hammer in 2017.

REIV data shows more than 17,630 homes were auctioned in Melbourne in the first six months of 2017 – smashing the previous record set in 2014 when 16,654 auctions were held. Of those that went to auction, a record-breaking 13,980 homes sold under the hammer, 7% more than in 2015 when 13,092 sold.

REIV Acting President Richard Simpson said 2017 is shaping up to be the biggest on record with the current 79% clearance rate on par with 2015 and 2010 – both of which were notable years for price growth. “It’s been a remarkable year for the state’s property sector, particularly in Melbourne, with more homes going to auction than ever before,” he said. “Solid price growth has been recorded across the city this year, driven by strong buyer demand and unprecedented population increases.

“This year also marks the first time we’ve seen more than 10,000 auctions held in metropolitan Melbourne in the June quarter.”

Auction volumes and sales were also up statewide with more than 1,400 homes going under the hammer in regional Victoria in the first half of the year – more than 840 of which were in the June quarter.

Western Australia Real Estate Review

A resurgent jobs market in Western Australia is good news for the local property market, according to Craig Abbott, General Manager WA, Raine & Horne.

The latest ABS employment figures show that WA’s unemployment rate fell to 5.5% in May, the second lowest in Australia after New South Wales at 4.8%. “Lower unemployment is sure to impact consumer confidence in Western Australia, which could encourage some people to jump into real estate,” said Mr Abbott.

Underscoring the improving economic news, Western Australia’s Consumer Sentiment Index remained constant in May, at 91.9. “In addition, the ‘Family Finance’, ‘Economic Conditions’ and ‘Time to Buy Major Household Items’ indexes increased above 100 in May,” said Craig. “The Deloitte Access Economics report predicts that economic conditions in Western Australia will stabilise from 2018,” he said. “In combination, these elements will underpin real estate activity.”

Craig is tipping Morley, which is about 8 kilometres north east of Perth, to be a suburb to watch over the next 12 months. “Morley is close to everything and has good schools, and is just one bus ride into the city.”

Moreover, with a median house price of $515,000, Morley is affordable for entry- level buyers and upgraders. The suburb has good turnover, while price discounting is down, which means current values are realistic, noted Craig.

South Australia Real Estate Review

Adelaide flies under the radar screen of most real estate investors, according to the Money Magazine real estate guide.

But according to Money, Adelaide markets have been busy in the past couple of years and some pockets have delivered good price growth. “There is also solid infrastructure spending especially on major road links around the Adelaide metropolitan area. There are prospects for improved economic performance from defence projects, energy developments and a revival in the resources sector.”

At the same time, while Adelaide’s median dwelling price is an affordable $440,000, is it growing at a steady annual pace of around 2.4%. As a result, Adelaide still offers many properties around $500,000, according to valuation firm Herron Todd White. “Popular areas that offer properties around $500,000 include suburbs such as Pasadena, Hope Valley and Croydon Park.”

Tasmania Real Estate Review

Hobart continues to perform strongly, recording the highest growth of any capital city in June.

The Tasmanian capital produced growth of 2.8%, faster than Melbourne with 2.7% and Canberra with 2.6% growth in June, according to the latest CoreLogic Home Value Index.

Kingston is reported to be Tasmania’s fastest growing region, according to valuation firm, Herron Todd White, and is a 25 minute commute to Hobart via the southern outlet. It is a self-contained satellite centre with major and local shopping centres, public and private schools and recreational facilities.

Recent sales in Kingston indicate that purchasers with $500,000 to spend could expect to buy an older style home with a living area ranging from 120 to 160 square metres. If you can push the budget closer to $600,000 you could purchase a modern, 200 square metre home on a 900 square metre block.

For those wanting to be in Central Launceston residential homes can still be purchased for around $500,000 however such homes tend to be on the periphery, require renovation and are often in very steep locations.

Northern Territory

Raine & Horne has recorded a staggering 75% more sales in Darwin in June, than the same time in 2016.

“A large number of sellers are investors, which could suggest end-of- financial year tax planning might have accounted for some of the early June sales, however many of the properties that sold were on the market for some time,” said Glenn Grantham, General Manager, Raine & Horne Darwin. “To get these properties moving, we introduced the vendors to the reality of the Darwin market place, which for many agents can be a difficult conversation to have with owners. However, the proof of our direct approach is in the pudding, as our early June sales results demonstrate.”

Three of the properties sold by Raine & Horne Darwin in the first week of June were located in the Palmerston area. “Palmerston is a competitive market with plenty of properties for sale. It’s a price driven market, with entry-level properties available from the low $300,000s,” said Glenn. For example, a 2-bedroom villa at 8/14 Duwun Road, Roseberry went to the market for offers above $315,000. At this price, it went immediately under contract.

“These pricing levels didn’t exist at the start of 2017 but at this price point, this villa found a buyer very fast,” he said. “The sweet selling spot for entry level homes in Palmerston is between $300,000 and $450,000 and $400,000 – $600,000 in the popular northern suburbs of Darwin.”