Property Market Insights – Q1, 2018
Property Market Insights
Quarter 1, 2018
Welcome to the Q1 Market Insights for 2018 from National Property Buyers, where our local agents provide expert analysis of property markets across the country.
National Property Market Overview
There has been persistent media headlines about the impending crash in the property market since late last year. But what is really going on at ground level? Is the market slowing?
In both Melbourne and Sydney, our buyer agents are seeing more properties being passed in at auction, with many of the homes selling via private negotiations the following week.
However, no matter what the papers print, properties located in prime locations within quality suburbs, access to local public transport, high ranking schools and lifestyle features such as beaches, café’s and shops are still drawing motivated crowds on auction day. With this grade of property there are no bargains and you will need to be prepared to pay the price due to the high level of competition.
Similarly, in Adelaide at a grassroots level, our buyer agents are seeing properties for owner-occupiers in the $1M+ market selling extremely fast and not all are making it to market. So you need to have all of your ducks lined up and be prepared to move confidently with negotiations or you will miss the opportunity to buy a home in tightly held areas.
Brisbane is not dissimilar to the other States, with our local buyer agents being involved in regular “Multiple Offer” scenarios whilst trying to secure sought-after properties where competition is high. Once again with this type of negotiation, you will need to be in a position to move quickly and you must know the local market and competition as your offer is ‘first and final’ and you may not get a second chance which can put inexperienced buyers at a disadvantage.
At a macro level and according to CoreLogic’s hedonic home value index, national dwelling values were unchanged in March, with the steady month on month reading comprised of a 0.2% fall in capital city dwelling values while the combined regional markets saw values rise by 0.4%. Six of the eight capital cities have recorded a fall in values over the first quarter of 2018, ranging from a 1.8% drop in Sydney values to a 0.1% fall in Darwin. So is this bad news?
Sydney has enjoyed 75% growth in the last 4 years, which is an average growth rate of 18% p.a., not surprisingly, this break neck speed is unsustainable long-term and growth has slowed. The current slowing of the market can only be a good thing for the long-term affordability of Sydney.
First home buyers have surged back into the New South Wales and Victoria housing markets boosted by stamp duty concession that took effect in July of last year. Alternatively, increased stamp duties for foreign investors continues to make it more difficult to buy in the Australian market, which is only good news for locals.
APRA and the ATO have worked hard to increase the affordability of property, and a slowing in the more expensive markets means they are achieving their goals.
But what about investors? The good news is that investors that have bought well, will continue to enjoy solid capital growth. Properties that represent some sort of scarcity will always perform well. Whether that be a quality family home, an inner-city terrace house, middle ring townhouse or an art deco apartment in a quality low-density block.
Markets within Markets
There are always markets within markets and you need to dig below the surface of the macro statistics to truly understand what is happening on the ground. For example, Corelogic reports that the unit sector across Sydney and Melbourne has shown stronger conditions relative to detached housing. More significant differences between houses and units can be seen in Sydney and Melbourne where housing affordability pressures are more evident relative to other cities. Sydney unit values are up 1.9% over the past twelve months, while house values are down 3.8%. Similarly, in Melbourne, unit values are 6.6% higher over the past twelve months while house values are up just 4.9%.
There are a number of factors which are likely to influence the direction of the market over the coming months, including migration trends, labour market condition, credit policies and mortgage rates. Victoria continues to enjoy the highest net interstate migration flow whilst housing demand from interstate migration is picking up for Queensland. Unemployment rates remains reasonably low at 5.6% whilst wage growth continues to be “feeble” at 2.1%.
There is speculation that the banks have reduced investment related credit growth well below the required 10% by APRA and may be able to loosen their lending policies for investment purposes.
Financial Services Royal Commission and RBA
The Financial Services Royal Commission is currently underway and in the background lenders have been making adjustments to their living expenses calculations. In the past more often than not living expenses were based on a national average of the Household Expenditure Measure (HEM) which takes into account the number of loan parties (joint, single, etc), number of dependants, cost of food, clothing, motor vehicle running costs, utilities, etc. However, changes are being considered as it has been questioned whether or not living expenses have been underquoted. Moving forward you will see more banks and brokers drilling down on the ‘actual living expenses’ of applicants which can impact the applicant’s serviceability and borrowing power. This could definitely have a further impact on investors getting access to further funds to build their portfolio as they may fail serviceability.
Following the Reserve Bank meeting in March 2018, the cash rate was left unchanged at 1.5 percent, as it has been since August 2016. This is a pleasing result for all home owners and presents an opportunity to take advantage of the low rates and pay down debt.
In summary all of the macro numbers in the table above point to a cooling market with the exception of Hobart, which is true across the board. However, at a local level our buyer agents can assure you that when it comes to negotiating the purchase of a highly sought after owner occupied or investment property, don’t believe the headlines in the newspapers…..if there is competition you will need to pay the price for a quality asset that will continue to grow in value for many years to come!
Please read on for further insights into Sydney, Melbourne, Brisbane and Adelaide, including suburbs to watch in 2018.
Quarter One is typically renowned for it slow starts and was no different this year. School holidays continued in January and people were off holidaying enjoying the glorious weather. The real action in the auction market didn’t start until February 17th.
The media continues to comment on the state of the market and a macro level there has been a softening in the Melbourne market. However, this is not deterring the market. Despite auction volumes declining during the Labour Day long weekend, March was one of the strongest months on record with more than 3,000 homes going under the hammer before Easter.
There is a good level of supply in the market which means options for buyers and as a result the market conditions slightly favour the buyer. Quality property is still selling well, and would do so in almost any market. Quality property represents a scarcity in the market, whether it is family homes, inner city townhouses, or land that offers development potential.
The number of bidders has reduced at auction on average. We are typically seeing 1 to 2 bidders as opposed to 3 or 4+ and this is due to the healthy level of stock on the market. 3 out of 10 properties are now passing in at auction instead of being sold under the hammer and are being sold that day or week.
Melbourne’s property value has withstood the market fluctuations better than Sydney and this is due to the continued interest of both investors and owner-occupiers. We are seeing a number of Sydney investors looking in Melbourne who are recognising the value offered by our market. And any softening in the Melbourne market is more prevalent at the higher end of the market, 2+ million.
The North East Link project continue to develop steam and is a long-term project that will have short and medium effects on property along its route.
The North East Link will be the biggest transport project in Victoria’s history – finally building the missing link in Melbourne’s freeway network and is expected to create around 10,000 Victorian jobs.
It will begin on the Eastern Freeway at Springvale Road and head west to Bulleen. It will run north alongside the existing Greensborough Highway before seamlessly connecting to the M80 Ring Road at Greensborough. There will be multiple road widenings, additional lanes, and connections along the way.
Travel times between Melbourne’s north and south will be cut by up to 30 minutes in each direction, with massive travel time savings for people travelling to Melbourne Airport from the south and east.
Congestion on local roads in the north eastern suburbs will also be slashed, with up to 15,000 trucks taken off local streets a day, and more than 9,000 vehicles taken off hotspots like Rosanna Road.
Ardeer - “The next best thing”
Domain tipped Ardeer as “the next best thing” and one of the bridesmaid suburbs of Melbourne. And if you don’t get in quickly you will miss the opportunity to buy at an affordable price. Ardeer is 15 kilometres west of the CBD and on the right side (city side) of the Western Ring Road.
Ardeer is an older suburb in Melbourne’s west and is bordered by Deer Park, Sunshine North, Sunshine West and Albion.
Its 2900 residents know they are onto a good wicket. Ardeer is a quiet and peaceful residential pocket and is currently being enjoyed by families with children, which are the majority of its residents.
Kororoit Creek traverses through the middle of the suburb and is surrounded by walking and cycling trails. Whilst Ardeer is a little light on amenities and services it is only a couple of minutes away from Sunshine, Deer Park or Highpoint Shopping Centre 7 kilometres away which all amply provides these services. It has 3 local primary schools, kindergartens, childcare and sports fields.
There are so many routes into the city that you are only a stone throw away from the CBD. It also offers an easy commute to the airport at only 15 minutes for travellers or employees. There are easy transport links with Ardeer train station (V/Line) or Albion station (Zone 1). Multiple bus routes are also available on its border on Forrest Street and Ballarat Road.
We highly recommend having a further look into Ardeer. With 74.6% of Ardeer still owner occupiers it represents a great opportunity for new owner occupiers or smart investors. Ardeer has been sitting on the sidelines for too long and it’s now its turn to shine.
According to CoreLogic the median price of a house in Ardeer is $594,00 and for a unit $487,500.
Trend in Growth for Houses
Trend in Growth for Units
A 4 bedroom, 1 bathroom house with large rooms. A good entrance point into the market with great capital growth potential. Over 600 squares allows for future subdivision potential (STCA). Purchased for $624,000.
View the agent listing here.
Cheltenham – “Whats not to love”
Cheltenham is located 19 km south-east of the CBD and is home to two major shopping centres Southland and the DFO (Moorabin), it has two train stations (Cheltenham and Southland) and it is close to some of the best schools in Melbourne (Mentone Grammar, Mentone Girl’s Grammar, Haileybury).
Locals rave on Homely.com.au that Cheltenham is very family friendly, with schools, parks, shops, childcare options and play centres. Cheltenham is a “fantastic place to bring up a family, we love it!” “The neighbourhood is quiet and safe”.
Cheltenham is right in the centre of the sand belt for Golfers, parts of the Royal Melbourne and Sandringham Golf Clubs are in Cheltenham, as well as all of the Victoria and Cheltenham Golf Clubs. That’s one suburb that has 4 golf courses in it!
Cheltenham is the location of Moorabbin Airport and depending where you live you can get some aircraft noise during the day, however, aircraft noise at night is minimal to non-existent. Do your research about flight paths before buying a property in Cheltenham. In the right location you will get very little noise during the day and in fact, Aspendale and Dingley Village can bear the brunt of the aircraft noise during the day.
Interestingly, if some local residents get their way a new tiny suburb will be carved out of Cheltenham consisting of just 20 streets. Residents are petitioning for the small patch to be renamed “Pennydale”
Like all suburbs, you need to do your homework before buying in Cheltenham, consider carefully your proximity to industrial areas or the airport. If your budget allows the Golden Triangle between Nepean Highway, Centre Dandenong and Warrigal Road or the South side of Nepean highway are always popular.
According to property data from Corelogic the median price of a house in Cheltenham is $1,160,250 and for a unit $755,000. Cheltenham is enjoying the ripple effect of some of its more prestigious neighbours pricing, forcing buyers to look next door.
Current Median Pricing 2018
Trend in Growth for House Pricing
Trend in Growth for Unit Pricing
Excellent entry level buying for a young couple/family or investor. Ideally located in a peaceful position in Cheltenham’s coveted Golden Triangle, this impeccable home is within the Mentone Girls’ and Parkdale Secondary zones and is close to shops, parks and transport. Purchased as a set and forget investment property with future capital growth. Purchased for $850,000 and rented for $490 achieving a rental yield of 3.01%.
View the agent listing here.
by Antony Bucello
Director and Victorian State Manager
Antony is married with 2 children and lives in Lower Templestowe, Victoria. Educated at Swinburne University, his sales and marketing career has spanned over 30 years in both the Financial Services and Property sectors. Having been involved in countless property purchases for his clients over the years, he is now a leading Melbourne Buyer Advocate.
0418 131 950 or email me
The Brisbane market is moving strongly. Interstate migration continues to be strong with jobs transfers and the eternal quest for warm weather.
The areas that we are buying in are still very much a sellers’ market and this is largely due to a shortage of good quality stock. Typically, in these areas, the buyers are finding it difficult to negotiate their ideal price as sellers are receiving multiple offers. Outer lying regional areas are much more stable and less competition means that buyers have more influence on the market price, however typically with a lower growth and lower overall yield.
Recovery in the top-end of the market has been quite astounding. The top end has been flat-lining since about mid-2016 to mid-2017 but is now making some great strides in the right direction. The demand for these properties is a mix of interstate buyers and cashed up local buyers upsizing in their own suburbs.
The family home on a large block is still a dream for many! People are paying a premium for land in good locations. For example, in the inner city rings, blocks over 600 msq+ are attracting multiple offers and therefore a higher price tag. The actual house on the block is secondary to the land and location as people plan to renovate or rebuild in the future.
The unit market is still in free fall with diminished demand for units in high rises as they are not proving to be smart investments, currently. That said they are still selling but at a greatly reduced price from what was forecasted.
Our typical customer base is investors or owner occupiers and for Quarter 1 this has been a 50/50 split. Our role call at the moment currently consists of local owner-occupiers, expats buying to invest then occupy in the future, and interstate investors that are looking for high capital growth opportunities with decent rental yields but without the price tag of our more expensive capital cities.
We have had considerable interests from expats living in the UK who want to buy now with a view to relocating in 3 to 4 years. It makes buying more complicated, as emotions start to play a part and it can’t just be a cold investment calculation. Expats are typically favouring coastal areas such as Redcliffe Peninsula and Sunshine Coast and not the CBD. Must be all those cold winters driving them to sun-drenched coastlines. However, if you are an expat trying to buy in Australia be aware that banks have reduced your loan/ value ratio. APRA requires that Expats pay a larger portion of the property value as their deposit. This means expats need more cash upfront to buy.
The mood in Brisbane is high at the moment with four major announcements this quarter. These projects will result in hundreds of job being created in Queensland and increased economic activity.
- Queensland awarded $5 Billion Defence Contract to build tanks
- New flights direct from Ho Chi Minh City to Brisbane announced
- Proposal for a fast rail between the Sunshine Coast and Brisbane (45-minute commute)
- Proposal for Brisbane Metro a high-frequency rapid transport connection designed to cut travel times and reduce CBD bus congestion.
The tank production factory will be located in Ipswich and will result in 300 jobs being created. Direct flights will be great for tourism and perhaps the property market also – as Vietnamese students may choose to reside in Brisbane now as opposed to Melbourne or Sydney.
There are high hopes a Queensland proposal for a fast rail project between Brisbane and the Sunshine Coast will receive funding to develop its business case. The North Coast Connect project, which has the support of the state’s 26 Federal Coalition MPs, hopes to develop a 45-minute rail commute from Nambour to Brisbane.
The Brisbane Metro has been listed as one of just six projects listed as a “high priority” in Infrastructure Australia’s latest priority list, boosting its chances of receiving significant federal funding. It was the only Queensland project in the top tier list, with the Beerburrum (SC) to Nambour (Brisbane) rail upgrade appearing in the “priority projects” list.
Monthly Auction Clearance Rates
Year on year comparison for monthly auction clearance rates demonstrate the market is behaving consistently with the year before when it comes to clearances. The jury continues to be out in Brisbane on whether it is an auction-driven market, but we can see that clearances hover around the 40th percentile and there has been a significant increase in the numbers of houses sold at auction from 2016 to 2017.
Monthly Clearance Rates
Monthly Auction Sold Houses
Riverhills - "Astonishing Value"
Situated in the “Centenary Suburbs” South West of the CBD, Riverhills is set to become very prominent on home buyers shopping lists in 2018 and is currently one of the most undervalued suburbs in Brisbane.
Situated less than 15 kilometres south-west of the CBD it still offers up 80`s style predominantly brick homes for under $500k. The fact that these properties are typically on a good size 500msq+ block of land makes it a very attractive proposition to not only first home buyers but too smart investors as well.
Surrounded by golf courses, shopping centres, and a selection of schools the decision to live here is an easy one.
Access to the CBD has long been a bit of a grind but recent improvements to the centenary motorway and legacy way have eased the strain for CBD commuters a little. A regular bus service to the CBD and surrounding suburbs is also a great convenience for Riverhills dwellers.
With over 50% of the population of Riverhills earning salaries in the higher income bracket $78-130k the fact that median values are still under $500k is astonishing but very good for buyers right now as the market is moving fast in the centenary suburbs.
What is another major factor in the sustainability of the suburbs value is that the Occupancy mix is over 70% owner-occupiers.
Riverhills is still sitting on a median of $471k so is well under the $500k which is a great price for a suburb this close to the city. Corelogic has the median price of a unit at $345,000 and a house at $471,500
Trend in House Pricing Growth
Trend in Unit Pricing Growth (2017 only)
Great First Home or Investment. This three bedroom house has been well looked after. It has a large bathroom and generous sized bedrooms and a recently renovated kitchen. There is plenty of space for entertaining outdoors and for kids to play safely on this 620m2 fully fenced block. This corner block is flat and flood free. It has a Lock-up garage with space in front for one more car. Sold for $435,000 renting for $370/week. View the agent listing here.
Bulimba - "A village in the city"
Bulimba has always been a popular suburb for those seeking lifestyle options, recreational dining, and family values and is now one of the leading suburbs in Brisbane. Median Price values have increased in excess of $350k in the last 3 years which is a terrific testament to the growing popularity of the suburb.
Being only 4kms north east of the CBD and nestling along the banks of the river makes it easy for the city commuters to take to the cycle pathways or the water taxi as alternate modes of transport to the city. Peak hour on the road can get congested, so it great to have alternatives to get you into work.
Bulimba also provides great access to the motorways taking you into the Sunshine and Gold Coast. Its proximity to the airport is great for travellers or commuters, however, depending where you live you may get some aircraft noise during the day.
Currently, 55.2% of Bulimba is owner-occupied, so savvy investors have already seen the value in Bulimba already but we still believe there is plenty of opportunity in Bulimba, especially if you purchase a property that represents a desired scarcity (eg. decent land size).
With some of the best schooling and education in Queensland, the ease of access to CBD, the riverway and the leisure/recreational facilities on offer combined with the café-restaurant scene Bulimba will continue to be a popular suburb with property values increasing.
According to Corelogic the current median price for houses is $1,270,000 and units $593,750
Trend in House Pricing Growth
Trend in Unit Pricing Growth (2017 only)
Purchased for a family relocating from Sydney. 4 Bedroom, 3 Bathroom home on 405m2. Situated in a quiet and peaceful location convenient to the vast array of dining and retail options of Oxford Street and within immediate proximity to an abundance of lifestyle, parks, transport and schooling options within a few minutes walk. Purchased for $1.275 million, previously sold in 2013 for $950,000.
View the agent listing here.
by Stephen McGee
Queensland State Manager
Stephen is married and lives in a bayside suburb of Brisbane. Stephen brings over 15 years of experience in residential property to National Property Buyers QLD, including residential property investment and small-scale developments. Stephen is a Committee Member of the REIQ Buyers Agent Chapter and was voted “Best Buyers Agent in Queensland” by his clients in the Investors Choice Awards of 2015.
0488 501 170 or email me
The first quarter of the year always starts off slow with people still enjoying their summer holidays. South Australians are generally busy enjoying their time down the coast or along the Murray River with their families until the kids are back at school. There were minimal new listings until early February when the property market resumed in full.
The feeling in the market is that there substantial competition for quality stock, with large numbers of people coming through open homes and interstate investors competing to get into the Adelaide market.
The economy is performing well despite moderate levels of population growth which continues to hold the Adelaide housing market in good stead for 2018.
Indicators show a stabilisation in demand for existing dwellings which is driven by the ongoing increase in semi-detached and subdivision approvals across the Adelaide Metropolitan area.
Investors continue to look away from the Eastern States to other options for property investment with stronger rental returns and signs of steady growth. This leaves Adelaide well placed to benefit from interstate investors ongoing.
Growth sits steady at 3.99% average across the board with very low vacancy rates for rentals at 1.4%. While some suburbs have seen extreme growth sitting at 19.2 % in Glenelg South and 16.8% in Everard Park. These western suburbs are continuing to be sought after by owner-occupiers and renters alike, which make them a great option for investors with a larger budget.
As of 1st January 2018, foreign purchasers of residential property within South Australia incur a 7% increase in Stamp Duty charges. This move is sure to assist the mum and dad investors and first home buyers get into the growing market without international competition.
Demand for apartments has shown signs of cooling while we continue to see much more competition for detached dwellings.
Properties are moving quickly once hitting the market in many areas across the metropolitan area. Prestige suburbs like Unley and North Adelaide that offer lifestyle and easy access to the city, along with some perfectly positioned suburbs between the city and the beach such as Park Holme and Findon are popular and in high demand.
Small-scale medium density housing projects are expected to be popular with first home buyers and investors which is in line with the increase in demand for semi-detached dwellings. These projects are expected to become a more prominent part of infill projects within metropolitan Adelaide.
Monthly Auction Sold Houses
Monthly Clearance Rates
Our office has been receiving a healthy influx of inquiries of late as Adelaide’s employment opportunities continue to open up with German company Sonnen establishing a battery production plant and the $535M expansion of the Osborne naval shipyard which combined is anticipated to bring more than 1,000 job opportunities to the local area.
Flinders Park - "Family living near the beach and city"
What makes all the residents of Flinders Park talk so warmly about it? Is it because it is nestled between the city and the beach with an easy journey to both? Is it the warm and friendly neighbourhood with a mix of homes from the early 1900’s to the 50’s and 60’s? This western suburb, located 5.1km from the CBD has a lot to offer its 4600 residents and at 10 minutes to the CBD and 5 minutes to the beach it is an ideal place for busy professionals who don’t want to live in the city.
Flinders Park is largely owner-occupied at 74%, which is great news for owner occupiers and investors alike. Households in Flinders Park are primarily families with children. And this can be attributed to not only the convenient location of the suburb but the excellent education facilities on offer. Flinders Park Primary School, a government school and Nazareth Catholic College, are both located in the suburb. With public transports options, shopping facilities close by and green spaces lying along the River Torrens this makes Flinders Park a great place to live and escape the city, whilst still in it.
Flinders Park is becoming the next option for those being priced out of West Croydon and Torrensville. Although, these suburbs still offer affordable buying compared to other areas.
Flinders Park is an up and coming suburb, in a very convenient location and definitely a hot suburb to be watching for investors.
Flinders Park has enjoyed consistent year on year growth and represents excellent value for money.
Currently, the median sales price of houses in the area is $590,000 for house and $460,000 for units.
Trends in House Price Growth
Trend in Growth of Units (Months)
Campbelltown- "Carefree Affordable Living"
Located on the east side of Adelaide near the foothills of the Mount Lofty ranges Campbelltown has a lot to offer its 7500 resident. Campbelltown is a leafy area, with parks covering nearly 12% of the suburb and beautiful views of the Adelaide Hills.
Campbelltown is predominantly owner occupier at 57.9% and families with children occupy the majority of homes. Campbelltown offers a great lifestyle with numerous shops, restaurants, medical facilities, schools and public transport options.
Locals rave about nearby Linear Park, which is regarded as a national treasure. It follows the River Torrens from the Torrens Gorge Weir, through the CBD and on to the River’s outflow at Henley Beach. It is no better place to escape the city while still in it.
Locals or previous residence also rave that it is a great place to raise a family. There are many playgrounds and parks along Linear Park and it offers a fantastic place to go for a bike ride. And if you are looking for an option just for the adults enjoy Lochiel Park Golf at Geoff Heath Par 3. Considered to be one of Adelaide’s most picturesque and scenic par 3 golf courses, it is set amongst beautiful gum trees with Fourth Creek as a feature.
Some people complain about the somewhat boring streetscapes with the majority of homes being yellow brick homes. However, as new families and homeowners move-in, the suburb is enjoying a facelift with new homes being built. In addition, these yellow brick homes offer astute investors a solid property for investing in.
Campbelltown is also home to Lochiel Park, a model green village and home to over 150 residents enjoying sustainable living using the best sustainable technologies available. Lochiel Park exemplifies South Australia’s strategic plan environmental targets to reduce our greenhouse gas emissions and begin preparing our economy and society for climate change and a carbon constrained world.
Campelltown is suitable for a family or an astute investor! And at 10 kilometres from the CBD, it offers a cheaper alternative to Hectorville, Norwood and St Peter.
According to Corelogic the current median sales price of houses in the area is $550,000 and a unit $459,000.
Trend in House Pricing Growth
Trend in Unit Pricing Growth
by Katherine Skinner
Buyers Agent and Senior Property Manager
Katherine Skinner began her career in property over a decade ago in Melbourne working in Buyer’s Advocacy and Property Management. Returning to her home town of Adelaide in 2009, Katherine quickly established a reputation as an exceptionally thorough and diligent practitioner, providing outstanding customer service coupled with a calm and positive attitude while working with some of Adelaide’s most highly regarded agencies.
0438 729 631 or email me
Is it all doom and gloom in the Sydney property market? Is the media analysis correct, are we experiencing a downturn in property prices and should buyers be expecting to pick up property at bargain prices?
The fact is at ground level, the market is still positive in New South Wales and experiencing lots of activity. In areas that have historically performed well, there is still good competition and good results. The media speculation has buyers thinking they will secure a bargain property in popular areas and although vendors are not achieving the record sales of the past few years, competition is driving prices at fair market value. Like all cities, there are always markets within markets and properties located in less popular areas are experiencing less competition as buyer numbers have started to decline.
Sydney has enjoyed 75% growth in the last 4 years, which is an average growth rate of 18% p.a., not surprisingly, this breakneck speed is unsustainable long-term and growth has slowed. The current slowing of the market can only be a good thing for the long-term affordability of Sydney.
First home buyers have surged back into the New South Wales housing markets boosted by stamp duty concessions that took effect in July 2017. This is represented in the number of First Home Buyers we have secured properties for, this group of buyers are beginning to realise the advantages of working with a Buyers’ Agent to negotiate the complex process of buying a quality first home. First Home Buyers are also rent-vesting as a way to get on the property ladder if they can’t afford to buy and live in a home in their desired location.
Unrest in Buyers Lending Market
We have previously reported on changes brought about by APRA and the ATO tightening policies to make it more difficult to source competitive home loans and changing depreciation deduction laws. What we are now experiencing is a crackdown on bank valuations.
Some banks have tightened their valuations and completing more physical valuations over desktop valuations. We recently purchased a property for one of our clients at auction and the desktop bank valuation came in $50K under our client’s contract price. Even though our client has a long-term relationship and multiple loans with their bank this lender insisted on completing a physical valuation of the property.
Of course, the property valued at the contract price after a physical inspection, interestingly, when we approached another big bank they valued the property at the contract price on a desktop valuation! Lending laws have certainly changed and there are now noticeable differences between financial processes and products, make sure you find a good mortgage broker in this market climate.
Knowledge is key to reducing holding cost
Investors are becoming savvy when it comes to reducing the holding costs of investment property. Recent changes to depreciation laws mean investors can no longer depreciate existing assets in an established property. People are now turning their eye to un-renovated or tired properties that could benefit from a refresh. In addition, some clever buyers are taking advantage of zoning laws that allow the construction of a secondary dwelling such as a Granny Flat that can be leased separately which provides dual income opportunities and higher rental yields. Although this process has been going on for 10 years it is becoming more common.
Mortdale, South Sydney - "Ticks all the boxes"
Mortdale is located 20km south of the Sydney CBD in the St George area. It is a larger suburb with a population of approximately 9,702.
Mortdale is well serviced by a train line which offers services to the Sydney CBD every 15 minutes and a bus service to the Hurstville town centre and out to Bankstown. This suburb is predominantly residential area with a small commercial and industrial development in the North West corner. There is a quaint shopping strip near the railway station that offers residents all the modern essentials, as well as traditional style bakeries, patisseries, cafes, restaurants and the old Mortdale Hotel, is located at the end of the strip. The suburb borders Oatley, South Hurstville, Bexley and Hurstville Grove which are tightly held family community areas. Mortdale is starting to reap the ripple effect in property prices as buyers who want to live in a suburban area with the convenience of easy access to the shops and train station start to move into the area.
Mortdale offers residents the peacefulness of a sleepy suburb with easy access to the Hurstville CBD that is home to the largest shopping precinct in the St George area and the suburb is easily accessed by car via King Georges Rd. Residents also have easy access to the beaches at Brighton Le Sands and Cronulla.
There is an even mix of units (40%) and houses (43%) in the suburb and a smaller proportion of (highly sought after) semi-detached villas (16%).
The population is predominantly couples with children (48%) followed by couples with no children (34%) and to a lesser extent, single parent families (15%). A high proportion of people are aged 20-39 years.
The current median house price in Mortdale is $1,400,000 and for a unit $630,000 making this a very affordable suburb for first home buyers wanting to the convenience of city transport as well as access to shops and good schools.
Current Median Pricing 2018
Trends in Growth for Units
Trends in Growth for Houses
Excellent entry level buying for a young couple or young family, this unit is only 11 years young and offers spacious top floor living with a North West aspect. Oversized with a huge balcony, main with ensuite, good size separate kitchen and large tandem garage with additional storage space. Only a 6 minute walk to the shopping strip and train station and in a good primary schools catchment, this property is an excellent first young family home. Last purchased in 2011 for $530,000, then 2015 for $761,000 and recently sold for $822,000.
View the agent listing here.
Seaforth, Northern Beaches - "Bluechip Beaches"
Seaforth is located 12km north-east of the Sydney CBD on the Northern Beaches. It is a larger suburb with a population of approximately 7,139.Seaforth is well serviced by a bus line which offers express buses to the CBD, a service to all beaches along the peninsula as well as the upper North Shore suburbs. This suburb is home to many northern beaches young families, professionals and downsizers. Only 5-10 minutes from the hustle and bustle of Mosman, Seaforth offers community style living within close proximity to the beautiful beaches of Clontarf, Forty Baskets, Fairlight and of course, Manly. The recent upgrade to Sydney Rd at the Seaforth end has seen the establishment of more shops and eateries for locals and the recently completed Stocklands shopping centre in Balgowlah means residents have a greater variety of shopping to choose from.
There is a vast range of styles of property in the Seaforth ranging from exclusive homes on the Middle Harbour waterfront to beautifully renovated large family homes located in the pocket bordering North Balgowlah. Locals are blessed with a 5-minute drive to the beaches and amenities of Manly, Fairlight, and Balgowlah, just far enough away to also enjoy a quiet lifestyle away from the hustle and bustle of the peninsula. Residents also enjoy easy access to the new Frenchs Forest Hospital and Chatswood shopping precinct.
Northern Beaches Projects
Seaforth will benefit greatly from the Northern Beaches Tunnel project initiated by the NSW Government. This $500 million upgrade to the roads around the new Northern Beaches Hospital and the advent of the new tunnel will mean a bypass of the current arterial road, Frenchs Forest Rd, and a widening of the Wakehurst Parkway which will steer traffic directly up to the new hospital area. Seaforth will likely become a quaint village area for locals.
The long-awaited Northern Beaches Tunnel will connect to the Inner West making it easier for residents to travel between the beaches, CBD and suburbs of the Inner West. The NSW Government has revealed a preferred route for the Beaches Link and Western Harbour tunnels. Motorists using the tunnels will bypass up to 19 sets of traffic lights and cut up to 40 minutes in travel time between Brookvale and the CBD. The tunnels will also slash up to 45 minutes between Manly and Parramatta!
The majority (86%) of properties are houses, with a very small proportion of semi-detached properties (9%) and units (5%).
The population is predominantly families (63%), with a smaller proportion of couples with no children (27%) and one parent families (10%).
The median house price in Seaforth is $2,700,000 and for a unit $1,680,000 making this a more affluent Northern Beaches suburb.
Current Median Pricing 2018
Trend in Growth for Units
Trend in Growth for Houses
This gorgeous family home in the convenient pocket of Seaforth close to North Balgowlah shops offers resort-style indoor/outdoor living with a huge entertaining area. Newly renovated and offering a large master suite with an impressive balcony overlooking the pool, this home offers elegance and all the creature comforts needed for a well-proportioned family home. Within minutes’ walk to an express CBD bus, and a 15-minute drive to Warringah Mall, Manly Beach and Frenchs Forest this is a centrally located home for the budding North Shore family. Last purchased in 2008 for $1,565,500 and sold in March 2018 for $2,900,000! View the agent listing here.
by Simone Luxford
State Manager New South Wales
An outstanding analytical approach, dedication and attention to detail, as well as her sound work ethic and desire to achieve a positive outcome for her clients are Simone’s distinctive personal qualities within her field of expertise. With a Bachelor of Business degree, Simone has a background of over 17 years experience as a Senior Research Consultant in corporate marketing and 10 years experience researching the property market.
0429 039 558 or email me
We have prepared four case studies on properties we purchased in Q1 for our client’s.
Set and Forget Investment (VIC)
Suburb: Glenroy Address: 24A Isla Avenue
Client type: First-time investor
Agent Listing: http://bit.ly/2GCEVpq
Property: Townhouse, 3 bed, 2 bath
Purchase: Purchased at auction for $720k, under the hammer.
Solution: Client was a first time investor and wanted a low maintenance set and forget property.
We identified this property due to its vast appeal to owner occupiers, investors and downsizers alike. This appeal would ensure future capital growth opportunities.
The townhouse is located on a sub-divided corner block on its own title and enjoys street frontage. Originally built 15-20 years ago for an owner occupiers it benefits from large rooms and quality fixtures and fittings. With a low maintenance courtyard and a good floorplan (including the option to have a bedroom or study downstairs) it has been well thought out. We estimated the value of the property at $700 to $740k and secured it for our client at $720k. Currently advertised for rent at $460 pw which would achieve a rental yield of 3.33%.
A property with a twist (NSW)
Address:1/7 Fairlight St
Purchase Price: $1,150,000
Agent Listing: http://bit.ly/NPBCSNSW
Client type and budget: Our client was looking for a new home close to Manly and were hoping to be within walking distance to the hub of Manly, or at least only a 5 minute drive away. Living in Manly offers a lifestyle full of eclectic shops, cafes, restaurants, pubs and beach side dining. Residents enjoy a ferry or fast cat ride across the Sydney heads to the CBD which takes only a maximum of 30 minutes each way (12 minutes on the fast cat). This young family wanted to be within walking distance of all Manly’s amenities and CBD transport. A 2 bedroom, ground floor apartment with an outdoor area and car space were essential criteria to their brief. As our search progressed, our clients changed tact a little and decided to opt for a renovation opportunity.
Property: A partially updated 2 bedroom, 1 bathroom ground floor unit with a lock up garage (worth gold in Manly!). Oversized with opportunity to add value through renovation – our clients will convert the unit to a 3 bedroom, 2 bathroom unit. Located in small block of only 4 units and all owner occupied, these opportunities don’t come up often in this area.
Solution: This property ticked all our client’s buying criteria and was identified as the perfect home and long term investment in the heart of Manly. It is within 2 minutes walking distance to Manly Wharf and the Corso…the perfect location for our clients!
Purchase: After missing out at an auction in December 2017, we identified this property as coming to market in early January. We kept in close contact with the selling agent and our clients were the first to inspect the property before it hit the market.
Unfortunately, there was no opportunity to negotiate prior to auction because the property was held by the Public Trustee, so we had to wait 3 long weeks for auction day! Nonetheless, we used this time wisely to do our due diligence on the building and met with builders onsite to discuss renovation ideas. Come auction day we were ready to bid with confidence and suffice to say we were the winning buyers, after such a long wait this was a welcome relief for our clients who are overjoyed with their new home and renovation project!
Buying with your SMSF (SA)
Suburb: Hove Address: 2B Railway Terrace
Agent Listing: http://bit.ly/NPBCSSAr
Client type and budget: SMSF purchaser with budget up to $530k – very specific with requirements of set and forget property with minimal outgoings while being in the Brighton High School Zone
This young family wanted a comfortable, modern home with light-filled rooms which can quite often be difficult to find in these suburbs due to the large trees and surrounds. They also needed a relatively flat, usable area suitable for young children to safely play and explore.
Property: New 3 bedroom, 2 bathroom home close to the beach, public transport and within the sought after Brighton High School Zone
Purchase: Managed to secure a private inspection for my client on a Tuesday afternoon with negotiations commencing immediately. We ended up securing the property well within budget for a very happy client. With a strong rental yield of 5.2%, depreciation benefits and warranties that come along with a new home, this was the perfect fit as an investment for a SMSF purchase.
The Negotiation (QLD)
Suburb: Kangaroo Address: 9 “The Residences at Yungaba”
Agent Listing: http://bit.ly/NPBQLDCS
Client type and budget: Home Owners, $2.6 Million
Property Type: 3 bedroom Townhouse
Scenario: Interstate clients were planning on relocating from Victoria to Queensland. We meet with them in September 2017 to discuss our full service and our assess and negotiate service if they located a property themselves.
In early November during another visit to Brisbane, they found their dream home in Kangaroo Point. They immediately engaged us to assist them with our assess and negotiate service. However, they quickly arrived at a decision to “halt” as the plan to move states was placing too much emotional stress on them and they felt they were not quite ready.
However, in December after consulting with their family and an active fear of losing their dream property they confirmed they would like to re-commence the assessment and negotiation of Kangaroo Point.
Our clients explained that the conditions of purchase would not only be price but was contingent on the successful sale of their property in Toorak, Victoria. I consulted with my colleague in Victoria, Antony Bucello who took lead as vendor advocate for the sale of their property.
After reviewing our initial inspections and preparing an updated assessment report on the current market value the client approved us to commence negotiations for the property. Although, he did express reservations about our value range as it was substantially lower than the agent had suggested to him:
- Selling Agent Quote: offers over $2.55k (suggested start price for negotiations was $2.36+)
- NPB Price Range Quote: $2.15 – $2.35m
Our client indicated that if we could secure the property in my reported range he would be extremely happy.
We began negotiations and opened with an offer of $2.20m that was rejected by the sellers and they were reluctant to provide a counteroffer (the property has previously sold for $2.75m). However, it was an opening to begin communication with the sellers via the agent.
The sales agent had previously mentioned another “interested party” who may have placed an offer we asked about the status of this offer. We were not fully convinced with his reply so we elected to hold for a while before we made the next move. We then submitted an offer of $2.25 Million with a firm indication to the agent that this was our top.
As half expected the sales agent informed us that the sellers had rejected our offer. The agent also included a request that the client’s Victorian property be sold first which would remove the need for the purchase here to be subject to the sale of it. He added strength to his statement with the justification that a “cash offer would stand more chance with the sellers than a subject to sale offer”.
We immediately advised him that if we halted our current negotiations to sell the Victorian property we would definitely come back to submit a cash offer. However, given it would be a cash offer it would be at the original offer price of $2.2 Million. We suggested to him not to dismiss this but rather go back to his sellers and advise them of our intent if we sold first.
The next day – we had an agreement at the $2.25M. Our client was incredibly happy with the negotiated price as it was substantially lower than the selling agents quote and that an exact replica in the complex sold for over $2.75M weeks prior to this purchase. A massive amount saved for our client – by strong negotiation tactics.
The Victoria property in Toorak sold last month and the client has been able to go unconditional on this purchase now with settlement due for the end of March.
Our 3 local Property Managers provide an overview of the rental market in their home states including what’s hot and what’s not, what tenants want and the vacancy rate in the local market.
Melbourne Rental Overview
REIV Q1 Average Vacancy Rate 2.1% – NPB Q4 Average Vacancy Rate 1.7%
Victoria has consistently enjoyed some of the lowest vacancy rates in Australia. And Q1 has one of the busiest months of the year for Property Managers. The month of January is the month that landlord leases should come up for renewal as there is a large volume of tenants looking for properties due to employment or study changes. There’s also the general sense of new beginnings at this time of the year that can bring people to the rental market. One property we had open in January had 50 people turn up and it was let in a day. This increased competition can also drive up rent prices for landlords. Demand for the rest of Q1 was steady until Easter.
Tenants are consistently looking for security in their leases and requesting 24 months leases initially. This can be a win, win for tenants and landlords. We are also finding the Northern Suburbs continue to be a desirable location for tenants; Thornbury, Coburg, Preston, Pascoe Vale, Northcote, Brunswick are all hotspots. No properties are needing more than 2 Open for Inspections (OFIs) to lease and if a property is tenanted OFIs can run in the last 2 weeks of the tenancy thus minimising vacancy.
Victoria’s vacancy rate stands at 2.0 percent in February 2018. The weekly median rent for houses in metropolitan Melbourne remained at $450 in February. In regional Victoria, the weekly median rent for houses also remained stable, at $320 per week in February. The weekly median rent for units remained at $420 per week in metropolitan Melbourne while the median rent for units in regional Victoria fell to $240.
In our last quarterly, we referred to a comprehensive review being conducted on the Residential Tenancies Act (RTA). The review is due for completion this year and is aimed to amend the RTA to meet the expectations of current and future landlords and tenants in Victoria. The changes are to increase rights of the tenants but there are concerns by some that is taking the rights of property owners away. More can be read here on the proposed changes here.
by Ivonne Di Perna
Brisbane Rental Overview
Brisbane Q4 Average Vacancy Rate 3% – NPB Q4 Average Vacancy Rate 2%
Welcome to 2018! It has been a very busy few months as anticipated with NPB renting 15 properties during the month of January. This time of the year, properties in all areas were in great demand with many having a tenant secured prior to the previous tenant’s vacating date which minimised the vacancy time for our owners.
Our vacancy rate at the end of January was an amazing 1.3% compared to the Brisbane average of 3.8% – this again is due to our commitment to get as many enquiries through the properties as soon as possible and have an application secured prior to the enquiries viewing other properties on the weekend.
The second half of the quarter was slower, and history suggests that this will continue for the next couple of months. Agents are again reducing rental rates, and offering incentives on properties to prospective tenants.
We also found that some tenants that have been on lease for over a year are requesting rent reductions on renewals. These have been mainly on the inner city rim of units – houses have been steady or have increased slightly.
by Tracey Farrell
Adelaide Rental Overview
Adelaide Q1 Average Vacancy Rate 1.9% – NPB Q1 Average Vacancy Rate 0.01%
The rental market is sitting quite steady, with low vacancy rates but without much increase in rent amounts which just reflects how savvy tenants are today with what they feel they should be paying. Tenants know what they want – quality properties which are low-maintenance or provide a specific lifestyle, whether that be beachside, tranquil in the hills or close to the city. These factors are always strong drivers in the Adelaide rental market.
A good quality listing in a desirable area can expect to be leased in the first open with multiple applications, giving the landlords plenty of choice for their “perfect tenant”.
Vacancy rates are sitting at 1.9% while NPB currently has 0% vacancy with most listings being tenanted within 7 days.
We had a tenant break her lease due to purchasing her own home. This property was one we purchased for an interstate investor in Largs Bay and we had 15 groups through the open home with numerous applications ready to move in immediately after the current tenant vacated. This made for a very happy landlord as well as an outgoing tenant who was left with minimal outgoings due to breaking her lease.
by Katherine Skinner