Raine & Horne: Market Report March 2017

NSW Real Estate Overview

The latest CoreLogic Hedonic Home Value Index indicated that Sydney’s current housing growth cycle is into its 58th month. Since dwelling values started to rise in June 2012, the city’s average dwelling values have increased by 74.9%.

Sydney has remained at the top of the capital gain tables over the past two cycles. Since the beginning of 2009, Sydney dwelling values have more than doubled, rising by 104.5% compared to Melbourne where values are 87.7% higher. The next best performing capital city over the same period was Canberra where dwelling values have risen by a comparatively modest 37.4%.

CoreLogic Head of Research Tim Lawless, “The strong growth conditions across Sydney have provided a substantial wealth boost for home owners.”

On the rental front, REA Group’s Property Demand Index found that the Northern Beaches and Sutherland Shire suburbs continue to be popular with renters, with beaches, lifestyle and greater affordability the key drivers.

Interestingly suburbs on the New South Wales/Queensland border also featured strongly, because of their links to the popular Gold Coast.

A list anomaly in terms of geography is Wetherill Park, which is 34 kilometres west of the Sydney CBD. Other favoured rental suburbs in New South Wales are close to the coast. That said, Wetherill Park is home to a major shopping centre and offers good rental affordability.

Queensland Real Estate Overview

With the Brisbane property marketing beginning to turnover, Anthony Steinberg, Principal of Raine & Horne Mermaid said that the Gold Coast real estate market has returned to pre-Global Financial Crisis levels.

“In Mermaid Beach and surrounding suburbs, we saw significant price value falls in 2008 and 2009, however, it’s becoming increasingly difficult to find an entry level home in the area under $700,000.”

“Over the past few years, values have risen incrementally by 4-5% annually thanks to the economic impact of infrastructure developments supporting the 2018 Commonwealth Games, along with changes to local council planning regulations and fees, which have made it easier for developers to construct a residential building.

“In 2010, there wasn’t a crane in the sky, and now the Gold Coast skyline is littered with up to 30 cranes on any given day. Cranes are a great indicator of the health of the Gold Coast economy.” Given the strong buyer interest in Gold Coast property, Mr Steinberg is tipping price growth of 5-10% in 2017.

Central Queenslanders are starting to breathe a sigh of relief after Queensland’s latest coal mine proposal, the Olive Downs project near Moranbah, moves a step closer to approval, according to a report in CQ News.

Managing Director of Raine & Horne Mackay and Raine & Horne Moranbah Des Besanko said that Moranbah real estate had already experienced the ripple effects of increased activity in the mining sector. “Leading into the end of the last calendar year we saw a bit of activity, this announcement will increase that activity again,” he said.

Des said he could see a correlation between houses selling and increased coal prices, noting that mine job openings were already bringing more people to the area. “Moranbah is very affordable now. Given how cheap houses are, workers are choosing to relocate and have family close by instead of living away from them,” he said.

Western Australia real estate overview

Sales activity in the Perth metropolitan area increased in February, with reiwa.com data showing volumes were up 8% compared to January.

REIWA President Hayden Groves said it was pleasing to see activity collecting speed. “It’s good to see buyers returning to the market after the festive season. For anyone thinking of trading up to a new home, buying their first home or purchasing an investment, 2017 is the year to take advantage of favourable conditions..,” said Hayden.

Indeed, the latest Adelaide Bank/REIA Housing Affordability Report showed that first home buyers in WA are making a move. According to the report, the number of first timers in Western Australia increased to 3,809 in the December quarter, an increase of 1.3%. Of all Australian first home buyers over the quarter, 16.4% were from Western Australia while the proportion of first home buyers in the state’s owner-occupier market was 21.0%.

In February, Canning Vale was Perth’s bestselling area for house sales, followed by Duncraig and then Ellenbrook. Baldivis, Willetton, Ballajura, Hamilton Hill and Thornlie also enjoyed strong sales.

Victorian real estate report

Stamp duty will be abolished for first home buyers purchasing properties valued below $600,000, a move the Victorian Government is claiming will help thousands into a first home.

Those buying a home valued between $600,000 and $750,000 will also be eligible for a concession, applied on a sliding scale. The exemption and concession will apply to both new and established homes, in a move that is expected to help 25,000 Victorians find their first home.

At the same time, a Vacant Residential Property Tax will address the number of properties being left empty across inner and middle suburbs of Melbourne. Under the changes, owners who unreasonably leave these properties vacant will instead be encouraged to make them available for either purchase or rent.

The Vacant Residential Property Tax will be levied at 1%, multiplied by the capital improved value of the taxable property. For example, if the property has a capital improved value of $500,000, the amount paid will be $5,000. There will be several exemptions, recognising there are some legitimate reasons for a property being left vacant, including holiday homes, deceased estates and homes owned by Victorians who are temporarily overseas.

Northern Territory real estate report

After two consecutive quarters of strong sales activity, Darwin prices are set to head north, according to Glenn Grantham, General Manager, Raine & Horne Darwin.

“There was a bounce in buyer activity in the second half of 2016, which is contributing to a boost in the prices of quality, well-located properties in Darwin’s northern suburbs,” said Glenn. “Desirable houses in Jingili, Karama and Anula, are attracting 30-40 groups to open homes, with many selling within 3 weeks of reaching the market.

“Historically when values in the northern suburbs improve, this creates a ripple effect that eventually flows south to Palmerston,” he said.

Glenn said that while values in Darwin’s north will rise in the medium term, vendors with properties in the city and the south must be patient. “Regardless of where you live, to cash-in on current market activity, a property must be well-presented and priced sensibly to sell,” he said.

Other hurdles to a swift sale might include rental properties with long-term tenants, which are not realising competitive yields. “A Darwin property generating a gross yield of less than 4% will be harder to shift in the shorter-term,” said Glenn. “The bottom line is that properties with a few flies on them will be more difficult to sell now. However, when the momentum picks up across Darwin, they’ll wash through the market too.”

South Australian real estate report

Adelaide’s northern suburbs are offering rental returns of more than 5%, which are proving popular with investors nationally, according to a recent media report.

Andrew Harvey, Principal of Raine and Horne Salisbury told news.com.au that he estimates some 35% of his buyer inquiries come from people seeking investment properties. “We get a good mix (of investors) from around Australia — the north has a name,” he said.

The median unit sale price Adelaide’s outer northern Salisbury and Playford council areas are $249,950 and $145,000 respectively, while in neighbouring Tea Tree Gully it is $265,000.

Andrew warns against anything too bargain basement if you want good and steady tenants. “Look for family homes more so than the low-end properties,” he told news.com.au. “Even though the low-end properties have a better rent ratio, they also have higher vacancy rates and higher rates of default and possible damage too.”

Tasmanian Report

Hobart continues to hold onto the mantle as Australia’s most affordable capital city in the country, new data reveals.

The latest CoreLogic Home Value Index showed Hobart had a median dwelling price of $374,000, despite it producing capital growth a tick under 6% for the three months to the end of February. Incidentally, this result made Hobart the fastest growing capital city real estate market, ahead of Melbourne (5.5%) and Sydney (4.5%). The next most affordable Australian capital city is Adelaide, with a median price of $435,000.

The CoreLogic report confirmed Hobart continues to have the highest rental yields for units (6%). For houses in Hobart, the median gross rental yield is 5.0%, which is behind Darwin, which is generating yields of 5.1%.