Sydney Property Market Update

By: Whitehouse Capital Partners

Constant delays for new developments are the result of inefficient government procedures and the tightening of financial requirements by lenders. Both have created a situation where housing demand is outstripping supply, as can be seen by the low 1.3% vacancy rate. Rental yields are healthy and improving. The past year’s growth is on the back of a general stagnation in prices over the last 5 years.  

 Sydney Property Market Update

Melbourne Property Market Update

By: Whitehouse Capital Partners

Despite modest growth in the past year, Brisbane remains a solid market. With low vacancy rates, healthy rental yields and being backed by a buoyant economy and government investment in infrastructure, Brisbane is expected to experience further price increases in the second half of 2010. The March quarter showed improving property price growth.

 Melbourne Property Market Update

Brisbane Property Market Update

By: Whitehouse Capital Partners

Despite modest growth in the past year, Brisbane remains a solid market. With low vacancy rates, healthy rental yields and being backed by a buoyant economy and government investment in infrastructure, Brisbane is expected to experience further price increases in the second half of 2010. The March quarter showed improving property price growth.

 

 

 Brisbane Property Market Update

Australian Property Market Outlook - August 2010

 By: Prosper Group

 The outlook for the next 1 – 2 years

Property is a medium to long term investment and the housing cycle in Australia is generally over a 7-10 year period; during which there are always high growth spurts, lows and steady patches. The chart above shows that many capital cities have enjoyed double digit price growth over the past twelve months. Price growth going forward is generally forecast by many experts to be single digit over the next couple of years – but still price growth never the less.

RP Data’s director of research Tim Lawless said he believed concerns in some quarters about a big market correction taking place are overstated. 

“The market’s underlying fundamentals are such that any material fall in home values is unlikely.  Housing supply remains very low at a time when housing demand is healthy, interest rates appear to be on hold for the foreseeable future, and the Australian economy is performing well compared to all other developed countries”, he said.

“People feel that house prices in Australia are quite high, and that’s quite often because the ratio of house prices to income that are published for Australia tend to focus mainly on prices in the cities, and they are quite elevated. But, if you look across the whole country, the ratio of house prices to income is not that different from most other countries…

The house prices in cities aren’t high relative to the income in the cities because most of the figures you see published on house prices to income – what they do is they measure house prices in the city and express it as a proportion of income of the whole country. But, if you do house prices relative to the incomes of the people living in those areas, then the prices in the cities also are quite reasonable.”

Tim Lawless said RP Data-Rismark’s May index results reinforce mounting speculation that the Australian real estate market is transitioning towards a lower and more sustainable growth path, which will be encouraging for the RBA.

“This second consecutive month of single-digit annualised gains sends a signal that the double-digit growth rates recorded since January 2009 are behind us. The signposts have been in the market for several months now with lower auction clearance rates, fewer housing finance commitments, and weakening consumer confidence,” he said

Rismark International managing director Christopher Joye, expects to see more of the same over the remainder of the year.

RP Data-Rismark’s new “Rest of State” Hedonic Index, which was developed for the RBA, shows that the disconnect between the capital city and non-capital city markets, is as wide as ever.

Rismark’s Christopher Joye added, “This is simply a function of demand and supply. The demand for homes is stronger in the major conurbations whereas the supply of new dwellings has been weak. In comparison, the smaller metro and regional markets have relatively less demand combined with much more elastic housing supply.” 

 Australian Property Market Outlook - August 2010

Australian Property Market Update – July 2010

By: Whitehouse Capital Partners

The March quarter saw more investors returning to the market as first home buyers were phased out as a result of increasing interest rates and the scaling back of the First Home Owner Grant Boost.

A diminished selection of property for buyers in inner city locations has led to an increased focus on off the plan purchases. Over the last 12 months stock on the market in Sydney has fallen 30% (March 2010 vs March 2009), with new home starts being at record lows.

The RBA has kept interest rates on hold for the last few months, however minor increases are expected in the near future. Nevertheless, the critical housing shortfall and fall in new private sector home starts is expected to continue to keep an upward pressure on prices.

A downturn in auction clearance rates in May was noted in all capital cities. This phenomenon is not unusual during this period and is not of major concern. Furthermore, Sydney auctioneers report that a number of areas have maintained solid growth as a result of pressure from local and overseas investors. We see this as a good indication that the market is stabilising from the double digit growth it had in 2009 – 2010.

SUPPLY AND DEMAND

There is a widening gap between low supply and high demand, especially in NSW. This is mainly due to obstacles faced by developers (long approval periods for new projects; high charges by local councils) and the lack of bank funding available. Lenders now require a higher percentage of pre-sales, in some cases up to 100% of debt, before they will release funds. This is expected to underpin property prices in the next few years and place further pressure on supply and, consequently, upward pressure on prices.

Urban Taskforce’s chief executive, Aaron Gadiel said last month that “NSW private sector home starts were at about 64 per cent of the long-term average for the March quarter – that’s a long way to go before we return to the construction levels necessary to replenish the state’s housing supply”. The current row between Local and State Governments over capping of developer contributions is another obstacle likely to add to delays in development of residential properties, placing further upward pressure on prices.

The rental market is understandably strong with industry sources noting that rents have increased by 30% in the last few years. The lack of affordability for first home buyers will add further pressure to rentals. This is further supported by Herron Todd White who indicate a ‘shortage of available property relative to demand’ as an ongoing concern especially in Sydney.

 Australian Property Market Update – July 2010