Residential - Herron Todd White

Residential
Month in Review
June 2015
Sydney
In the first quarter of 2015 we have seen the market
continually grow from 2014, astonishing even some
of the most optimistic of followers. We are seeing
strong activity throughout all levels of the market
and this is especially evident below $2 million.
With interest rates at a record low there have been
no brakes and activity has remained strong. We have
seen record highs of auction clearance in the first
quarter of 2015 with the clearance rate averaging
80% in May from around 50% in January. Record
numbers of properties appear to be going to auction
instead of private treaty to capitalise on the demand/
supply ratio. Analysts have predicted that interest
rates will remain the same until 2016 or even 2017,
so we may see the market continue this way or even
possibly strengthen over the next 18 month period.
Given the range of property and value bands within
the Sydney metropolitan area we felt it worthwhile to
summarise as follows:
PRESTIGE PROPERTY MARKET IN SYDNEY
The prestige residential market in Sydney for both
units and houses is generally considered to comprise
properties with values in excess of $3 million.
Prestige houses tend to be located either within the
eastern suburbs and eastern beaches, lower and
upper North Shore, northern beaches, with some
waterfront localities in the southern suburbs and the
larger rural residential estates to the north-west of
Sydney.
Prestige units tend to be located within the eastern
suburbs and eastern beaches, lower North Shore and
CBD and fringe CBD locations.
Over the past 12 months, the prestige market has
shown very early signs of market recovery with an
evident minor increase in both buyer interest and
transaction activity.
We would consider this is reflective of a general
perception that the bottom of this market has
been reached, combined with improvements in the
share market, the implementation of the Significant
Investor Visa and cheaper Australian dollar.
Confidence in the prestige market is slowly reemerging, with moderate signs of a market recovery.
While we note the official cash interest rate was
reduced to a new record low of 2% in May 2015,
we consider interest movements have reduced
impact on prestige residential market performance.
More significant drivers of the prestige market
include the state of the equities market, stability in
global economic conditions, levels of business and
consumer confidence and overall business conditions
and the value of the Australian dollar.
Demand for premium apartments is largely driven
by overseas buyers and empty nesters seeking to
downsize from the family home. With weakness in
the prestige dwelling market post GFC and up until
early 2013, these empty nesters had been unable to
secure a premium price for their existing homes and
there was a subsequent reduced demand flow-on into
the prestige apartment market.
Over the past six to eight months, the market
for prestige dwellings has shown early signs of
strengthening, with increased sales activity and
selling agents indicating ongoing strengthening in
demand. Combined with the impact of the weakened
Australian dollar, there appears to be early signs
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Overview
Taking time to assess ‘where you’re at’ is a valuable
use of your minutes. By pausing and evaluating
what’s happened in the past, you’re often more
prepared to tackle the hurdles ahead. This month
we’ve used the excuse of June’s mid-year position
to reflect upon the first half of 2015 in property
markets. Each of our offices has handed in their
scorecard on how real estate is performing in their
area, and the results are compelling.
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Month in Review
June 2015
The Sydney prestige residential market, while highly
visible and reported upon widely by the media, does
not generally provide any significant indicator as to
the state of the general residential market, with both
markets moving in different cycles and influenced by
different drivers.
While we consider the general residential market
and the prestige residential market to have limited
influence on each other, we do consider that
emerging levels of confidence in the prestige market,
including increasing transaction numbers (and
an increasing number of trophy home sales), do
provide a level of perceived comfort and underlying
confidence to the state of the overall Sydney
residential market.
Given there has been some gathering momentum
in transaction volumes in this market sector, with
a corresponding reduction in stock levels and an
array of super prestige trophy homes transacting,
we would expect that 2015 should show a maintained
cautious optimism and confidence in the prestige
market and further tempered recovery.
With possible further weakening in the Australian
dollar and the possibility of additional interest rate
cuts (generally impacting the lower end of the
prestige residential market), there may be scope
for increased demand from overseas purchasers
(including expat purchasers) and further interest
from local high net wealth buyers.
Recent reported high profile sales include:
Villa Del Mare, 63 to 67 Wolseley Road, Point Piper
was sold in October 2014 for $39 million by Julia
Ross to a Chinese businessman after around three
years on the market. This near 1,500 square metre
non-water front site improved with a 6-bedroom,
8-bathroom high calibre Mediterranean style home
featuring expansive harbour and CBD views and
car accommodation for eight cars was recently the
focus of Treasurer Joe Hockey when he reportedly
announced in March of this year that this purchase
was in contravention of the current foreign
ownership laws and announced the forced sale of the
property.
112 Wolseley Road, Point Piper sold in June 2014 for
$37 million. This near 783 square metre absolute
harbour front site is improved with a high calibre
recently redesigned contemporary home providing
5-bedroom, 7-bathroom accommodation with parking
for four cars. Featuring expansive harbour and CBD
views with grounds including a private jetty, this
home was sold by the reported accused murderer
Ron Medich and was originally listed for sale in 2011
for $55 million.
PRESTIGE LIFESTYLE PROPERTIES
At the other end of the prestige scale on the fringes
of the greater metropolitan area is that section of the
market that is looking at lifestyle acreage parcels.
This prestige end paints the picture of improved
market certainty, lifestyle buyers looking to up size
in the confidence of a secure housing market with
lower finance costs and improved market activity at
the price point below. Buyers particularly in North
West Sydney are happy to up size onto lifestyle sized
acreage holdings as they are able to utilise familiar
services and amenities.
Currently lower interest rates are
bringing up sizers into the market
place who are happy to capitalise
on record low interest rates and
bracket creep in the suburbs.
Money spent on infrastructure projects is helping
to bring the fringe closer to suburbia. This is giving
lifestyle buyers security in the knowledge that
services are coming and they won’t feel isolated from
usual inner suburban amenities and facilities and
transport including the North West Rail Link, South
West Rail Link and expansion of major arterial road
links (Camden Valley Way, M5 duplication).
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of flow-through strengthening into the prestige
apartment market.
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Month in Review
June 2015
A snapshot of recent market activity within this submarket:
- Dural has had a minimum of ten sales exceed $3.5
million since July 2014 (two hectare holdings with
substantial dwellings and ancillary improvements).
- Denham Court in the south west has seen three
sales over $2 million since September 2014 (one
hectare holdings with large scale dwellings and
associated ancillary improvements).
- Mount Vernon has seen three improved sales in the
Capitol Hill estate exceed $2 million and two vacant
land holdings in this estate achieve over $1.1 million
(all on one hectare holdings).
- 71 Patterson Lane, Grose Vale achieved a new
record price of $2.3 million for the prestigious
Patterson’s Road community estate to the north of
Richmond (2.9 hectare holding). This shows that
buyers are looking a little further afield than the
traditional acreage districts.
WESTERN SYDNEY
The Western Sydney residential market is full steam
ahead with no signs of slowing down as we draw in on
the half-way point of 2015. This strong market is no
surprise to many, as inner ring suburbs have priced
many families, first time buyers and investors out of
the market.
This strong market in the past six months is a result
of perceived affordability, low interest rates and
improved infrastructure such as the South West
Rail Link, proposed North West Rail Link and further
development of the West Growth Areas.
A common theme is that agents have limited stock
and strong demand with property selling at record
prices. This has resulted in more properties being
sold via auction to maximise the selling potential in
this strong market.
The sub $500,000 class predominantly comprises
older style units, particularly in areas such as
Liverpool and Fairfield which are both strong regional
centres in the south west that have seen significant
gains in the past 12 months. Properties that in early
2014 were at the low $300,000 market are now up to
the $400,000 range.
The sub $800,000 is the largest portion of the
housing market in the south west and in the past six
months has been driven by families and investors due
to the low interest rates and affordability.
Examples of this include:
Hinchinbrook: A 1990s single level, 4-bedroom
2-bathroom dwelling with 2-car garage was sold in
March 2014 for $620,500. The same dwelling was
recently re-sold with the same agency for $737,000
with no significant work being completed. This
represents approximately 12% growth in a 12 month
period.
Northmead: A 2000s 2-level, 3-bedroom,
2-bathroom townhouse with 2-car garage sold in
August 2013 for $630,000 and has recently re-sold
in February 2015 for $750,000. This represents
approximately 18% growth.
Examples of this include:
Hamilton Road, Fairfield: A 1970s 2-bedroom,
1-bathroom unit situated in a low rise complex with a
dated fit-out recently sold in April for $390,100;
The Horsley Drive, Fairfield: A 1970s 2-bedroom,
1-bathroom unit situated in a low rise complex with a
renovated fit-out recently sold in April for $415,000;
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While interest rates remain low, prices at the level
below continue improving and the sector above in
all likelihood will follow suit. Buyers at the end of the
year will look a little further afield into their next ring
to find some value for money.
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Month in Review
June 2015
HILLS DISTRICT
The Hills are alive with the sound of a new railway
line under construction and the commencement of
this project has seen significant demand within all
submarkets along its new route.
Kellyville has grown up from the stigma of
McMansions World in the early 2000s. It offers a
wide variety of schools, churches, playing fields,
modern shopping centres and access to the adjoining
Norwest Business Park. There has been significant
demand from families for the classic 4-bedroom,
3-bathroom, double storey project home which will
shortly also be on a major transport line.
Since April 2015 there have nine agent advised
sales in Kellyville alone ranging from $1,260,000
to $1,650,000 on parcels ranging from 393 square
metres to 1000 square metres.
Castle Hill has long been the regional centre of the
Hills District and offers a substantial commercial
centre, light industrial park and a range of family
based facilities. Several train stations are planned
throughout the suburb with units adjoining the town
centre particularly seeing a benefit.
Widespread media attention was recently focused on
a proposed large scale residential unit development
which on completion in two years will see several
towers with some 20 plus levels completed. Located
opposite the proposed station and on the fringe of
the shopping centre, sales in the first weekend of
release exceeded $150 million.
Also benefitting from a station on the proposed train
line is Cherrybrook which just hit a new record with
a $2.2 million dollar sale of a Meadowbank home
with an inground pool and quality fittings. Perusal
of RPData records shows some 26 sales over $1.5
million in this suburb since the start of 2015.
NORTHERN BEACHES
Developers are buying large parcels of land in the
semi rural suburb of Ingleside in Sydney’s Northern
Beaches. Pittwater Council, in partnership with Urban
Growth and led by the Department of Planning and
Infrastructure, has established the Ingleside precinct
project plan to rezone large sections of the suburb to
make way for up to 2500 homes, sporting fields and
two new schools.
CBD FRINGE/INNER WEST
We feel that the CBD and city fringe may be one
of the strongest markets as the locality has a lot
to offer, having regular transport, a shopping
precinct, work opportunities as well as hospitals and
universities. One of the most popular products in the
Sydney CBD area is new units off the plan. We are
seeing dated contract prices at which we now believe
to be below market value. By the time these units are
ready for completion, they will have seen substantial
increases from the original purchase price. The
strongest performers in this sub market are
2-bedroom units with parking. A unit without parking
does not appear to be getting the same growth as
one with parking.
Units selling off the plan around
the CBD are selling in record time
and achieving record prices.
This market is particularly attractive to overseas
investors who are able to purchase new properties,
and local downsizers looking to secure a new
product.
SOUTHERN SUBURBS
As in most suburbs we have a seen a strong market
of owner occupiers, investors and developers in
the southern suburbs. The market is predominantly
stronger under the $2 million market with the
market above $3 million remaining stable. We have
seen some big results with one of the most popular
products and achieving record sale prices being sites
with potential development of either a duplex or
triplex. The most popular price point would have to
be the million dollar mark which is now the starting
price for a dated house in the southern suburbs,
although there is still a lot of demand for a semi
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Hughes Avenue, Ermington; A 2000 built single level,
3-bedroom villa which sold for $500,000 in 2013
recently re-sold for $800,000 in the same original
condition. Records show that it took 13 years to go
from an original purchase price of $300,000 to
$500,000).
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Month in Review
June 2015
Where will we be this time next year? And what will
be the catalyst for a change in market confidence?
Only time will tell.
Canberra
Near record low interest rates and low
unemployment levels have resulted in continued
strength in the ACT economy and property market,
particularly the residential sector. Despite market
uncertainty in the lead up to the September 2013
Federal election and the subsequent restructuring
and downsizing of the Australian public service in late
2013 and early 2014, the ACT property market and
broader economy have remained resilient.
The impact of Mr Fluffy asbestos contaminated
homes and the eventual removal of these properties
from the market will have a positive effect on the
broader ACT economy. Accordingly, demand for
residential property is set to increase.
Given current stock levels both for sale and rent,
softening dwelling commencement numbers and
increased demand levels we anticipate the residential
market in the ACT to tighten over the short term
with prices to firm. Small segments of the market
including units along the Flemington Road corridor
in Gungahlin are expected to remain soft plus those
properties situated in less sought after locations or
providing inferior accommodation.
Flinders and Brooks Reach Horsley also showing
appreciable rises in the past 12 months.
In the 2015 March quarter, Herron Todd White
research shows the median prices for standard
housing and medium density housing at $560,000
and $410,0000 respectively. A total of 1,908 sales
were recorded in this quarter which is considered
to be slightly below normal quarterly sales numbers
with the long term average at circa 2,070 recorded
sales.
Many of the new unit complexes are selling off
the plan even before any construction has begun.
Investors are keen to purchase new units as a result
of low interest rates while also benefiting from
government incentives.
Illawarra
The Illawarra residential property market has
continued its strong growth through 2014 to date.
Local real estate agents advise that they are
experiencing one of the best first six months in over
a decade with many properties selling above reserve
or asking price. Record low interest rates combined
with a limited supply of properties on the market
have contributed to this.
Both the bottom end and top end of the market
are seeing capital growth. Units, houses and rural
properties are all selling. Auctions are the flavour of
the day and if this method doesn’t suit the vendor,
marketing is generally on the basis of “offers over
...” as it is increasingly difficult for agents to price
properties in this buoyant market.
As in other sectors, we are seeing prices in new
residential unit complexes in Wollongong and vacant
parcels of land in the new estates of Shell Cove,
First home buyers are snapping up vacant parcels in
these new land estates and also benefiting from low
interest rates and government incentives. Overall
the fierce competition between investors and first
home buyers, combined with the low interest rates
and the limited supply of properties on the market,
is driving prices upward. Sydney buyers are entering
the market more and more as they are driven out by
the hot-house prices of Sydney.
Although confidence is still high in the market
as it was at the beginning of the year, from our
conversations with both vendors and purchasers
sentiment is that the current level of market activity
is bound to slow down soon. Some local agents and
valuers are predicting the market to ease towards the
end of the year, despite interest rates remaining low.
Supply in all areas is increasing as tends to occur
when confidence is high and this tends to regulate
prices. This will result in more properties on the
market, longer selling periods and auction clearance
rates declining.
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modern unit in the mid $600,000 range. In speaking
with local agents there appears to be a lack of stock
in all price brackets but a strong demand. We have
not yet seen any signs of the market slowing.
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Month in Review
June 2015
Unemployment is still high in
the region with talk that both
extractive and manufacturing
sectors have some redundancies
to go. This will also affect
confidence and impact on prices.
Southern Highlands
The Southern Highlands residential property
market has seen a marked increase in activity in
both volume and price over the past twelve months.
There has been a noticeable increase in activity by
investors; interestingly, rental levels are steady to
slightly increasing. The increasing price trend is
very strong at the lower end of the market, up to
$800,000. Properties in the up to $1.5 million price
bracket are also trading more briskly. There has
been good land sales activity in the now established
residential subdivision precincts such as Renwick
Estate (Mittagong), Bingara Gorge (Wilton) and more
recently smaller more affordable lots at Darraby
Estate (Moss Vale). This uptick in activity has seen
the emergence of residential infill developments
in the townships of Bowral and Mittagong, with
established larger land lots being subdivided into
smaller allotments which are keenly sought after.
New construction activity has also been evident,
most commonly project style homes within these
new residential estates. There has also been
renovation/extension activity in the well located,
older style and character homes within the townships
of Bowral and Mittagong. The increase in prices has
been at a steady rate and not as a spike in pricing, so
we consider these increases to be sustainable and
should continue over the next twelve months. The
upper end of the market has bottomed, albeit there is
still some caution evident, but we are now starting to
see an increase.
Southern Tablelands
The Southern Tablelands region is steady. Goulburn
has seen steady to increasing trends over the past
five years and has now plateaued. There have been
good land sales in the new, modern residential
estates in Goulburn, including the Belmore Estate,
Merino Country Estate and Mistful Park Estate. There
is good construction activity of new homes being
built. The market in Crookwell is also steady.
The rural residential property market (two to 100
hectares in land size) is steady throughout the
Tablelands.
Newcastle
Autumn is over and winter is fast approaching if
recent storms are anything to go by. What does this
mean for the Hunter region and its property market?
The yearly halfway mark is not far off and house
prices are still increasing. According to RPData, over
the past year we have seen a 14.5% increase in house
prices within the area. This is a substantial increase
over a one year period and we are left wondering
when this increase will show signs of slowing.
The Hunter region, being the largest coal producing
location in Australia, can become a slave to the price
of coal and a small pebble thrown in the world pool of
coal prices can have an enormous ripple effect on the
local Hunter economy. Coal prices were a significant
factor in the Hunter weathering the Global Financial
Crisis so well. Lately we have seen the price of coal
drop significantly and this has been a damaging
element to the Hunter property market, especially
within Singleton and surrounding suburbs. House
prices within this region are trending downwards
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The areas that have seen the most growth are
generally those where buyers and lenders should be
most cautious. Some areas south of Wollongong have
experienced a substantial increase in value over the
past 18 to 24 months for instance and may be pegged
back in any price correction scenario. As always the
top end will be the most susceptible to any slowing
in the market. Another sector that has suffered in
the past when things go awry is the beach house.
Buyers offloading the beach house to ensure they
can keep up the mortgage payments on the principal
residence is a situation we have seen before in this
coastal region.
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Month in Review
June 2015
The Newcastle market is still on the rise with house
prices seemingly ever-increasing especially in inner
city suburbs such as Cooks Hill, The Junction,
Merewether and Hamilton. The question is what is
driving these prices and we think it primarily comes
down to location and scarcity of stock. People want
to live close to the beach and within the CBD suburbs
and with interest rates taking another cut lately, that
makes it a lot easier for many families to justify the
move to inner city if they can find the right property.
That, however, is easier said than done.
Moving away from Newcastle and up north we
come to Nelson Bay, which could be described as
the Florida of New South Wales. Surrounded by
beautiful bays this is the perfect place to retire with
many serviced apartments available for occupation
as holiday retreats with beautiful views, excellent
facilities and handy to all the local amenities.
The property market here shows much stability
at present with mortgagee in possession sales
seemingly a thing of the past. You can live in a
tranquil beautiful serene location and still have the
advantage of being close to infrastructure and also
less than an hour’s drive to Newcastle.
The Hunter property market could be considered
reasonably volatile at present with different drivers
being exhibited in different locations, some good
and some bad. Given this, investors need to be wary
of where they invest, especially out of towners with
limited local knowledge. Our advice is to seek local
expert information and have a drive around the
localities in question. A simple drive around can
highlight things of note that are not evident from a
sterile sales ad.
NSW Mid North Coast
This month we are having a mid year review looking
at how the Mid North Coast has performed so far in
2015.
During the latter part of 2014 we noted increases
in residential sales activity and rising values in the
larger towns throughout the Mid North Coast region.
This trend has continued in the first half of 2015, with
the record low interest rates continuing to fuel these
markets. These increases have been predominantly
in the low to mid range of the residential market with
increasing sale rates and slowly increasing values.
The higher value prestige and rural property markets
in the region remain relatively slow. There have been
more sales numbers but fairly stable prices and there
remains a continuing oversupply of product available
for sale and limited demand combining to produce
generally static values. We expect this to continue
for the remainder of the year, with higher value
properties and rural residential properties increasing
at a slower rate.
Looking at localities:
Port Macquarie has seen sales often occurring
at or close to full list price after minimal time on
the market which indicates a rising market where
potential purchasers do not wish to be left behind.
A lot of this pressure is coming from investors. With
a currently very tight rental market and low interest
rates, these properties are often positively geared.
The rental market has tightened significantly in 2015
due to the infrastructure work underway in and
surrounding the town including the Pacific Highway
upgrade and the construction of the Charles Sturt
University, with rents increasing rapidly and almost
no vacancies. This stress on the Port Macquarie
market has seen neighbouring areas benefit as
purchasers and tenants look to smaller surrounding
towns to meet their needs. These areas include
Wauchope, Lake Cathie, Bonny Hills and the Camden
Haven areas.
Further south, Taree has seen sales rates and values
slowly increasing but to a lesser extent than that
of the larger regional towns, with rentals up but
less demand. After a stagnant market for the past
three years, the surrounding areas including Old
Bar, Wallabi Point and Harrington are finally seeing
improved activity and slowly increasing values. Most
of the new estates have seen increased sales of
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at present with no obvious growth prospects on
the short term horizon. Driving through suburbs of
Singleton supports this contention as most streets
have many properties for sale with little or no sold
stickers plastered on the sign boards.
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Month in Review
June 2015
Forster and Tuncurry are more closely linked to the
Sydney market with a longer lag time due to the large
amount of holiday accommodation. But it is starting
to pick up as demand has increased and has seen
prices start to increase as available stock is depleted.
A few higher end units and holiday units (over
$500,000) are starting to sell, which is an indication
of a rising market and more confidence.
Bathurst/Orange
Only recently in Bathurst an auction of vacant
residential allotments in a Council owned subdivision
was held where 42 out of the available 57 lots were
sold. Demand for new properties remains strong
among owner-occupiers and investors alike. Land
prices have shown some increases as the availability
of potential residential land around Bathurst
becomes limited subject to significant investment in
services, particularly water.
Numbers at open houses are solid
and sales activity remains steady
to strong in Bathurst and Orange.
The reduction in interest rates has likely helped
to maintain values and market activity. These
are positive signs at a time when the economy is
arguably not performing as well as it could. It is
particularly encouraging news for Orange which has
stabilised from a peak in 2014 which was due in part
to a local mining expansion. Realestate.com is listing
261 properties for rent and 924 for sale in Orange
which is indicative of a continuing buyer’s and
renter’s market despite the increased activity.
Based on our internal assessment rents have
declined up to 20% and property values up to 12%.
Unfortunately the floor of the market has not yet
been established with mortgagee in possession sales
continuing the decline as investors feel the squeeze
from high vacancy rates.
There are also some signs of a two-speed situation
with some smaller localities not performing as
well. Sales periods in surrounding villages remain
longer than average, particularly for properties
over $400,000. This is consistent with potential
employment concerns developing outside of the
major centres which are experiencing the majority of
the population growth.
The most hit property type appears to be the new
builds on small land areas with small floor plans.
Older larger properties appear to be holding their
values better.
Tamworth
Down down, prices are down. Coles has it right when
you refer to the current state of the Upper Hunter
property market, in particular Muswellbrook. Due
to a downturn in mining activity in the region the
market is on the decline after the 2012/2013 financial
year peak.
RPData reports 245 residential sales of less than one
hectare, between $200,000 and $600,000 in the
2012/2013 financial year. Using the same parameters
the 2013/2014 financial year reports 137 sales and
the current financial year to date is 48 sales. The
decline in the number of sales correlates to the
vacancy rate, rents and value.
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vacant land with increased prices and this is flowing
through to the established dwelling market.
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Month in Review
June 2015
Victoria
living area, comprises 4-bedrooms, 3-bathrooms,
swimming pool and a separate studio. The property
is situated on an above average 974 square metres of
land within the heart of Flemington.
Foreign investment is one of the drivers in the
current Melbourne market. Chinese buyers are
especially active and heavily involved in the eastern
suburban, prestige and off the plan property
markets. The suburbs being impacted heavily
are Doncaster, Balwyn and Templestowe. It is the
financial backing of some of these foreign investors
that is keeping local buyers out of the market.
Chinese investors are competing against one
another and are battling it out to enter any of these
markets at above market level costs. This impacts
the consistency of sale prices, making it particularly
difficult to determine what the true market levels in
some areas are. Foreign investment has encouraged
greater inner city high-rise development, which has
subsequently exposed a glut in supply of off-the-plan
apartments. This is evident particularly within inner
city suburbs such as Southbank and Melbourne’s
CBD.
Population growth is another major contributor
to the property market performing well. Victoria’s
current annual growth rate is 1.77%. This growth is
typically occurring on the outskirts of Melbourne in
newer suburbs such as Craigieburn, Point Cook and
Mernda.
Consider the suburbs of Northcote, Essendon and
Carnegie as examples to gauge current market
performance. The price point for all three suburbs
is medium to high. The main demographic is quite
similar, the majority being professional couples, some
with children and generally in the medium to high
income earnings bracket.
Housing in Northcote is excelling. Median house
prices rose 4.2% for the quarter to reflect a median
sale price of $943,000. Units are remaining flat
or even declining slightly. The median sale price
declined 1.81% for the quarter to $487,500.
Northcote’s popularity can be attributed to many
factors such as being seven kilometres from the CBD
and access to extensive public transport, Northcote
Shopping Plaza and High Street retail strip. The high
demand for housing in this area has forced entrylevel prices to rise. Last year entry level buyers could
afford partially updated properties in Northcote.
The increase in value has forced them into buying
houses in original condition. Another trend in the
Northcote housing market is investors and owneroccupiers starting to pay more for unrenovated
original properties, preferring to do the renovation
themselves rather than buying an already updated
property. A sale of note is 41 Union Street, Northcote
which sold for $1,003,000 on 28 February 2015.
This property is a single fronted Victorian gutted
shell, meaning the purchaser is buying the skeleton
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Melbourne
The Melbourne residential property market is
performing well across the board and is described
by many property analysts as hot. Units do not
seem to be reaching the same levels of growth in
some areas, however this can be explained by an
oversupply in the market. The overall positivity
within the residential market in Melbourne can be
attributed to many macroeconomic drivers including
the low interest rates, increased foreign investment,
population growth and job security. A specific market
sale that typifies the positivity of the Melbourne
residential property market occurred on 22 April
2015 when 55 Waltham Street, Flemington was sold
at auction. This property set a suburban record,
selling for $2.9 million. The two level, double fronted,
Victorian dwelling hosting 286 square metres of
29
Month in Review
June 2015
Essendon is another suburb that is
performing remarkably well.
Both housing and apartment markets are strong.
House values are steadily increasing at a yearly rate
of 9.25% to a $915,000 median price. Units also
rose 5.39% for the year to a median of $459,500.
The Essendon DFO shopping centre, Buckley Street
shopping strip and train line are contributors to the
popularity of this suburb.
Essendon has shown a higher rate of interstate
investors within the suburb alongside strong local
investment. This is due to many factors including its
further distance from the CBD and moderate level
of boutique low rise / low density apartments in
contrast to Northcote’s higher density apartment
market. You are far more likely to see local agencies
(e.g. Pennisi Real Estate, Raine&Horne) on the
contract than the development firm behind the
marketing campaign.
Another suburb we have found interesting to watch
this financial year has been Carnegie situated within
the City of Glen Eira. This suburb has reflected an
impressive 7.19% capital growth for the year in the
residential housing market. We saw the highest
median sales prices over the past three years at
$1,277,500 in March 2015. We predict this is due to
the suburb’s increased popularity due to the strong
investment in retail outlets such as Officeworks,
Spotlight and the all-round convenience of Carnegie
Central. Carnegie also has five major parklands
throughout the four kilometre radius of the suburb
reflecting close to 7% of the total suburban land area
according to CoreLogic RPData.
Overall, we have witnessed strong and positive
market performance throughout 2015 providing hope
for continued growth for the next six months. Foreign
investment has been particularly strong in the
Melbourne CBD and inner city suburbs, impacting the
consistency of apartment sales within these areas
as we struggle to find off-the-plan sales meeting the
current market range. This investment is predicted to
continue strongly over the next year especially while
the RBA cash rate remains low at 2%.
Murray Riverina
It’s a bit better than “steady as she goes” on the
residential front in Echuca/Moama with some
segments flat in the standard slightly older housing
areas and some more modern dwellings tight on
supply which is pushing up prices, particularly in
Moama. The big shift in the past six months has been
the increase in supply of land in Echuca and Moama
and this has seen most of the building providers
particularly busy as they look to keep up with
building demand.
Gippsland
The Sale area in general continues to be steady, with
well presented and well priced properties selling
well. Low interest rates are also motivating buyers,
in particular first home buyers in the $200,000
to $300,000 price bracket. The expansion of the
Exxon Mobil gas plant at Longford continues to drive
rental demand in the area, with asking rental prices
increasing as a result. Agents in the smaller regional
townships of Maffra and Stratford are also reporting
increased buyer enquiry and higher sale prices than
the previous quarter.
Latrobe
After a surprising increase in market activity over
late 2014 into 2015, the market has slowed slightly
with agents looking for listings. Prices remain
steady with no major fluctuations in the past 12
months. Housing is seen as affordable. Building
should increase in Traralgon with greater residential
subdivisions available. The Sale rental market is
relatively strong.
Overall prices are steady, so it might be a good time
to invest!
Residential
of the property and is happy to renovate and extend
themselves. Therefore this price is very close to land
value, reflecting a rate of $2,500 per square metre,
proving that the gap between original and updated
house prices in Northcote is closing as purchasers
pay a premium for un-renovated dwellings.
30
Month in Review
June 2015
East Gippsland
The East Gippsland residential market continues
to be subdued with demand and prices showing no
signs of recovery. Having said that the most active
markets for dwellings are $200,000 to $250,000
for new buyers and investors in Bairnsdale, Lakes
Entrance and Paynesville.
The stock levels are reduced, however prices have
yet to show signs of growth. Sales upwards of
$300,000 in Bairnsdale are low in volume with the
demand here probably being satisfied by new builds
in the Shannon Waters and Eastwood developments.
It looks like the market has yet to respond to the
recent reductions in interest rates and with the lack
of growth in values in the area it is uncertain when
the dampened investor and second home buyer
market sentiment will improve.
Phillip Island
Phillip Island comprises a number of small coastal
townships comprising residential property for owner
occupiers and holiday rentals. Agents have reported
that the first half of 2015 has seen the most number
of sales and an increase in enquiries for several
years. This is yet to have a noticeable upward effect
on prices in this locality.
The most notable sale was a waterfront property
in Sunderland Bay comprising a 640 square metre
vacant lot with ocean views which is currently under
offer for $535,000. Vacant land with ocean frontage
or views is rare in this locality.
South Gippsland
The market has been steady in South Gippsland
localities with an increase in both enquiries and sales.
This is yet to result in an increase in market values.
The best performing area in this locality is Inverloch
which comprises an owner occupier market and a
large, established holiday rental market.
Mldura
The residential market in Mildura continues to move
along at a brisk pace. Agents are reporting good
levels of enquiry and marketing periods are relatively
short. Values appear to have improved by around
5% to 10% in the past twelve months. The most
active segment is owner occupiers looking for good
standard homes in the $250,000 to $450,000
bracket. We have also seen strong demand for the
limited number of subdivisions recently completed,
with vacant lots typically selling for around 15% to
20% more than in 2013.
Rental vacancy rates remain at close to zero and
combined with low interest rates, is resulting in an
active investor market. Both owner occupiers and
investors continue to show a preference for better
standard homes and buyer activity remains slow in
the sub $200,000 market.
The first half of the year is generally pretty busy
in terms of real estate activity, with the number of
homes being placed on the market generally slowing
down as the weather cools.
Residential
Baw Baw Shire (Warragul/Drouin)
The Warragul/Drouin area saw an increase in sales
in the first half of 2015. Waterford Rise and other
developments in the area are selling at a steady rate
however there has been no noticeable increase in
market values to date. The predominant buyer in this
area is older or establishing families.
31
Month in Review
June 2015
Queensland
2015 started with plenty of promise and certainly
there are any number of buyers’ agents and other
observers out there claiming the Sunshine State
capital is the best prospect for the Australian
property investor. Unfortunately, out on-the-ground
experts say there’s been a bit of a lull in urgency
amongst buyers in those usually firing inner-city
northern markets. New Farm and Paddington, for
example were two suburbs that were achieving
good premiums up until a couple of months ago, but
demand has waned a little. Whether it’s a matter of
vendors overpricing their property or other factors
at work, bidders don’t appear to be hyped-up at
auctions and paying the big dollars they once were.
Many are adopting a wait-and-see stance with a
number of homes hanging around on the market.
Despite this general outlook, renovated and brand
new abodes with all the bells and whistles in desirable
locations sell well and with a bit extra on the contract
price.
Conversely, some southern inner-city suburbs are
doing fine. Demand for dwellings in in West End and
Highgate Hill continues to be strong for both entry
level and properties nearing the $2 million mark.
Of course the Brisbane State High catchment
continues to help sellers attract a premium.
purchases are in high demand pushing prices up and,
subsequently, sales rates remain quite high.
The gigantic red-flag for Brisbane is inner city units,
and their soft pricing is likely to continue for at least
the next couple of years. Towards the end of the year
and throughout next year, we’ll see a number of large
off-the-plan developments settle simultaneously and
the ability to absorb the supply looks shaky. Look out
for increasing vacancy rates, particularly in second
hand stock, as renters start moving into newer
developments once they’re constructed. If you must
buy a new unit, look for something that has appeal
for owner-occupiers to help mitigate the risk.
In the south, outer suburbs are relatively static. Sales
are occurring but there’s no evidence of an increase
in values.
In our middle-ring northern suburbs, we were seeing
a ripple of capital growth, but this too has a slowed
a little according to our team. The price point to
look for here is entry level, particularly in desirable
suburbs. This is the property likely to continue
enjoying good results. Mid-ring in the south is
experiencing increasing levels of interest, although
secondary products sit on the market for extended
periods. There’s good rental demand for established
units in areas such as Coorparoo and Greenslopes,
and proximity to infrastructure and public transport
are important factors.
Outer lying suburbs in the northern corridor are
doing quite well with a lot of interest evident in the
house-and-land packages in new infill estates. Land
There are still a number of
townhouse developments being
built with the predominant
purchaser being interstate
investors and that means a risk of
oversupply and a decline in rental
returns.
Interest rate cuts haven’t done much to stimulate our
market. The biggest impact has been to push existing
borrowers towards refinancing in order to improve
their cash flows. First home buyers continue to be
underrepresented in the market however investors
still remain active in our inner ring.
Toowoomba
As we approach the second half of 2015, the
Toowoomba residential property market continues to
experience an upswing.
Residential
Brisbane
Here we sit with June upon us and it seems
Brisbane is in the midst of another fair-to-middling
performance.
32
Month in Review
June 2015
Due to reduced mining activity in surrounding locales
as mining projects shift to operational phases, we
may see the incline experienced in these areas in the
first half of 2015 begin to ease at some point in the
second half of 2015.
world financial situation, banks tightening their
lending and LVR parameters, the Australian dollar
soaring in value, the commodity boom and tourism
being particularly hard hit, the perfect storm was
unleashed.
At present, the greater 4350 postcode demonstrates
a vacancy rate of 3% which has increased from the
sub 2% recorded in the early stages of 2014 and
there has been a reduction in unit and small lot
development activity from the investor market.
However, that all seems to be well behind us now
as the property market has recovered and turned
upwards. Prices are well off the bottom across all
residential property categories.
As for sales, while there is a firming consumer
sentiment as asking prices across all property types
continue to rise, it is the sub $450,000 price bracket
that is likely to remain the most popular due to its
affordability and proven broad market appeal.
Across the board, the Toowoomba residential market
has performed in line with expectations and thanks
to low interest rates, this period of upswing looks
likely to continue into the second half of 2015.
Gold Coast
The Gold Coast was one of the hardest hit regions
of Australia following the GFC, with mortgagee in
possession sale rates running above 6%. With the
Land values on the God Coast are reported to have
increased by 10.7% over the past year according to
the Queensland Valuer General’s 2015 annual report
dated 5 March 2015.
The increase in volume of transactions is particularly
evident since the September 2013 federal election.
Very positive economic changes have been driving
the property market on the Gold Coast including:
•
Increasing population. Current Gold Coast
population is now at 535,000 (source: Gold
Coast City Council web site) with projections of
a population of circa 680,000 by 2021 (source:
Queensland Office of Economy and Statistical
Research Population Prediction Report dated
2011).
• Tourism is back stimulated by the lower Australian
dollar and strengthened by new international
flights direct to China and other parts of Asia.
• Increase in building development and
infrastructure projects.
Residential
Despite this, low interest rates and the robust nature
of the Toowoomba market have enabled momentum
to remain stable in other sectors and land values
continue to rise as demand outweighs supply.
• Increase in number of new homes being built
and apparent increase in number of substantial
renovations of dwellings.
• Increased international investors including the
very influential and growing Chinese investment
market and cashed up Auckland based Kiwis.
• Increased interstate buyers with many cashed up
investors from the very buoyant Melbourne and
Sydney markets.
• Predictions of improving employment in the
tourism sector and also boosted by the impending
2018 Commonwealth Games.
33
Month in Review
June 2015
While the prestige residential market proportionately
accounts for a small part of the market in terms of
number of transactions, the prices are on the rise on
the back of overseas investors, locals and interstate
buyers taking a shine to mostly waterfront houses
and a limited number of luxury high rise units.
Examples of sales in 2015 include:
Beachfront Houses:
Address
Waterfront Houses:
Sold for
Address
Sold for
123 Albatross Ave, Mermaid Beach
$4,100,000
201 Monaco Street, Broadbeach Waters
$5,800,000
93 Hedges Ave, Mermaid Beach
$5,600,000
247 Monaco Street, Broadbeach Waters
$3,000,000
25 Hedges Ave, Mermaid Beach
$5,000,000
102 Amalfi Dr, Isle of Capri
$3,300,000
13 Oceanview Easement, Mermaid
Beach
$3,560,000
36 Southern Cross Dr, Cronin Island
$3,350,000
98 Admiralty Dr, Paradise Waters
$3,200,000
1 Surf St, Mermaid Beach
$8,420,000
25 Buccaneer Ct, Paradise Waters
$3,600,000
129 Jefferson Lane, Palm Beach
$3,750,000
117 Commodore Dr, Paradise Waters
$6,600,000
37 Norsemann Court, Paradise Waters
$3,000,000
31 Hampton Court, Sovereign Islands
$4,000,000
64 The Sovereign Mile, Sovereign
Islands
$3,400,000
46 Shearwater Esp, Runaway Bay
$3,490,000
100 Regatta Pde, Southport
$3,100,000
Residential
According to our data, purchasers still favour the sub
$500,000 price bracket which accounts for 71.5% of
transactions, compared to 23.5% for $500,000 to $1
million and 5% over $1 million.
34
Month in Review
June 2015
Address
Sold for
Nirvana by the Sea Penthouse,
Coolangatta
$3,755,000
Liberty Pacific Penthouse, Main Beach
$3,300,000
Soul Penthouse, Surfers Paradise
$7,000,000
CENTRAL GOLD COAST
Growth has been solid throughout 2015 in the central
areas of the Gold Coast as a result of increased
demand across all property types within the area.
The main reasons for this increased demand include
the reduction of interest rates, improvements in
rental returns and increased overseas investments in
new developments.
Broadbeach Waters, Mermaid Beach and Mermaid
Waters have seen strong growth (25% to 35%
increase in land values). An example of this is 145
Allambi Avenue, Broadbeach Waters which sold for
$760,000 in August 2013 and was recently resold for
$1,015,000 with no improvements to the property.
The unit market in Broadbeach and Surfers Paradise
has seen improvement in the lower price points in
smaller developments. Most of these sales were to
local and interstate investors as the rental returns
were covering mortgage and body corporate costs.
The larger high rise developments are still seeing
limited growth due to the high body corporate rates
restricting the overall investment appeal. We should
see increased growth in holiday units as building
managers are reporting a decrease in vacancy rates
as more tourists come to the Gold Coast.
Robina, typically a popular location for young
families, has also seen strong growth as it is within
close proximity of amenities such as schools,
shopping centres and transport. In recent months
demand for rental properties has increased and
vacancy rates have dropped as more construction
jobs are available on the Gold Coast due to new
developments. For example the average townhouse
rental rate has increased $20 to $30 per week across
all developments.
The majority of new developments across the central
areas are showing high sale rates with developments
like Sunland’s Concourse Villas/Marina Residences
and Robina Land Corp’s City Village and Riverlilly
selling out within a few months. The majority of
buyers have been overseas investors, although we
are seeing an increase in owner occupiers looking
to downsize from the family home and first home
buyers.
NORTHERN COASTAL
(SOUTHPORT TO HOPE ISLAND)
This year the Northern Coastal area has performed
very well to date. Sales agents continue to report
a general lack of sales stock with improved buyer
activity putting upward pressure on values. Notable
changes have been a significant reduction of time to
sell with many listed properties selling within just a
few days. Some properties are selling sight unseen
by interstate investors, something not seen since the
2007 boom period and we are also seeing multiple
offers and properties selling prior to auction. The
strongest performing property categories have been:
1. Vacant residential allotments;
2. $800,000 to $1,500,000 market range; and
3. Lightly improved sites with development potential.
In one Hope Island residential estate, 500 square
metre allotments that were selling for circa
$250,000 are now selling for circa $290,000. Vacant
allotments have jumped circa $100,000 in some of
the more in demand canal estates. The traditionally
more popular suburbs, generally those close to the
Broadwater and Canal Estates, have been the best
performers with increases estimated to be as much
as 15% to 20%. The $400,000 to $600,000 range
for the more typical family suburban style home has
performed well. Two and three bedroom duplex units
have also been in good demand. The unit market
between circa $180,000 to $450,000 range appears
to have improved, however, not as well as other sub
market categories as stock levels remain high in
some buildings. The unit market above $500,000
in the Broadwater precincts has lifted strongly with
Residential
Highrise Units:
35
Month in Review
June 2015
We further note that the mainly established Northern
Coastal property market will continue to strengthen
due to the scarcity of land and influences of higher
density town planning. The short term outlook is very
positive.
M1 NORTH-WEST TO MOUNT TAMBORINE
Throughout the first half of 2015 the property
market in the north-western Gold Coast, also known
as the growth corridor continued to strengthen with
agents generally reporting a shortage of stock and
strong buyer activity.
Modern dwellings close to infrastructure such as
schools and shopping centres appear to be the
best performing. Notable estates include Highland
Reserve, Riverstone Crossing and Coomera
Springs. These estates all comprise predominantly
modern dwellings of above average quality with
good surrounding infrastructure. Prices in these
estates range from $450,000 to $600,000 with an
average increase in value over the past 24 months of
approximately 10% to 15%.
Vacant land also appears to have strengthened
throughout Upper Coomera and Maudsland with land
becoming scarce. The more popular estates include
Riverstone Crossing, Stone Creek, Coomera Retreat
and Highland Reserve.
A notable sale is 16 Murray Circuit, Upper Coomera.
This is a vacant 604 square metre allotment which
sold mortgagee in possession on 27 August 2012
(arguably the bottom of the market) and is currently
under contract for $202,000. This is a reflection of
the increasing demand for vacant allotments.
Mount Tamborine appears to have stabilized with an
increase in the volume of sales, however there has
been no notable increase in values. These types of
regional areas generally appear to have a bit of lag
in market segment conditions compared to the local
markets.
House and land packages remain the most
concerning segment. Inferior quality estates in
Upper Coomera and Pimpama continue to see large
volumes of interstate investors paying a premium for
new product. We are also seeing very small lot sizes
in these areas (as small as 250 square metres). This
product is relatively untested with little to no re-sales
to gauge how this style of product will be viewed by
the local market.
UPPER NORTHERN CORRIDOR
The first six months of 2015 was generally considered
a positive period for the upper northern corridor.
Investors have continued to increase their appetites
for house and land packages within recently
established residential estates. To fulfil this appetite,
developers have decreased lot sizes as evidenced
in the new stages of The Meadows at Pimpama
and Yarrabilba at Yarrabilba, with some lot sizes
below 250 square metres. On the other side of the
spectrum residential estates such as Gainsborough
Greens at Pimpama and Ormeau Ridge at Ormeau
Hills have retained lot sizes or only marginally
reduced sizes due to these estate attracting a higher
percentage of owner occupiers.
Recent sales include:
• 6 Leland Street, Yarrabilba: 250 square metre
allotment that sold for $110,500 in January 2015.
• 38 Leland Street, Yarrabilba: 250 square metre
allotment that sold for $110,500 in January 2015.
• 13 Matas Drive, Pimpama: 300 square metre
allotment that sold for $188,500 in January 2015.
Although there have been no settled sales within
Pimpama of allotments below 250 square metres it is
present within the new stages.
Values of rural residential properties in the upper
northern corridor have remained stable within the
first six months of 2015. A number of real estate
agents in the area have complained about lack of
stock on the market or set to go to the market.
Residential
some complexes showing recovery of as much as
$100,000 per unit. We note that property managers
are reporting that they are now increasing rentals
on properties as vacancy rates fall and demand
increases. In some cases we have had reports of as
many as 50 rental applications for a single property.
Some of this demand has been within the more
popular school zones.
36
Month in Review
June 2015
Rental amounts in the area remain steady as
infrastructure is being approved, on the drawing
board or is currently under construction. An example
of this is in the Yarrabilba Estate, with the planned
kindergarten currently under construction and the
recent sale of the school site and shopping centre
site. The development of amenities such as these
should increase rental amounts in the direct vicinity.
If the first six months are anything to go by, the
upper northern corridor will continue to grow in
terms of number of dwellings, however there is
potential that a trend to decrease allotment sizes will
continue and in turn increase the developer’s gain.
Established residential suburbs in the upper northern
corridor including Eagleby, Edens Lands and Mount
Warren Park have continued to attract owner
occupiers. Real estate agents in these areas are
noticing reduced time on the market if the property
is reasonably priced. Beenleigh is considered the
central business district of the upper northern
corridor and has historically remained a sleeping
giant for the area. The Beenleigh Town Centre
has continued to attract foreign and interstate
investment with high purchase prices being noted
and purchases of multiple neighbouring properties.
There has also been strong sales activity in the over
$750,000 price bracket in waterfront localities such
as Currumbin Waters, Palm Beach and Burleigh
Waters.
SOUTHERN GOLD COAST AND TWEED COAST
In 2015 there has been a continued improvement in
the residential property market across most but not
all sectors.
Duplex units have been selling well across the
board along with townhouse or villa units in small
complexes. There is currently a new duplex unit
under contract at Palm Beach for $800,000, with
very limited sales evidence to support this sale price.
Vacant land has perhaps been strongest with the
majority of estates having been sold out or close to
selling out. There is reportedly no developer stock
available at Casuarina and very strong resales.
There has been a recent resale of a 500 square
metre allotment in The Pocket for $520,000
which was originally purchased off the plan for
approximately $395,000. There has been an
improvement in prices for vacant land at Terranora
as demand is now stronger than supply. The Hidden
Valley estate at Tallebudgera is almost sold out. Sales
have been strong at The Observatory and Varsity
Heights Estates at Reedy Creek and also strong at
Palm Beach Heights at Elanora.
From Miami to Pottsville the housing sector has
continued to improve throughout 2015, being
strongest in the under $750,000 price bracket. In
most localities, demand is outstripping supply. In
many cases sales evidence is not directly supporting
new sales, particularly on the Tweed Coast.
Sales activity and market demand for low rise units in
the under $400,000 price bracket is average. There
has recently been some strong sales activity for low
rise units along The Esplanade at Burleigh Heads.
There have also been some gains in well located highrise units. There is a 2-bedroom, 2-bathroom unit in
the rear Ambience building at Burleigh Heads under
contract for $730,000, which previously sold in June
2011 for $625,000.
Caution remains for low rise and high rise units in
larger, older buildings in secondary locations where
high body corporate fees may apply. Local agents
are reporting limited levels of demand for these
properties.
There are a number of positive factors currently
influencing the property market on the Southern
Gold Coast and Tweed Coast including historically low
interest rates, population growth and improvement in
the local economy.
Residential
Owners of rural residential properties in the area
are optimistic about changes to upcoming or
recently implemented planning schemes; there is
optimism that some areas within the historically rural
residential only areas could see a reduction in the
required lot size per dwelling, therefore increasing
the potential to subdivide or construct an additional
dwelling on the lot.
37
Month in Review
June 2015
There is more activity in the northern suburb of
Jimboomba with enquiry levels and sales rates
decreasing through Beaudesert and Canungra as you
move geographically further away from Brisbane.
Enquiries and rate of sale have increased and while
most of the area has shown little value increase,
recent sales in Cedar Vale have improved by up to
10% from this time last year. This may be attributed
to the new release at Jimboomba Woods which
comprises similar 4,000 square metre lots to Cedar
Vale however further away from the Mount Lindesay
Highway. Purchasers are comparing established
three year old homes against a new product and are
willing to compromise on dwelling age to be closer to
the Highway to commute to Brisbane.
Canungra Rise was released to the market this year.
A multi stage and multi product estate within walking
distance of the Canungra main street, it is anticipated
that purchasers will be the end user local market.
Standard residential lots in the estate are priced
from $195,000 to $210,000 and the sales agent is
reporting eight sales to date. Construction is due to
commence later this year. This is the first new larger
subdivision released in Canungra since before 2000.
Sales rates in Beaudesert have been low over recent
months. There have been a couple of properties
resold that were initially purchased by interstate
investors. These 4-bedroom, 2-bathroom, double
lock-up garage homes were purchased off the plan
in October 2011 for $396,000 and were resold
three years later for $345,000. Older houses on
more centrally located lots continue to remain
static although stock levels below $300,000 are
decreasing.
While this area continues on a level path, sentiment
from purchasers, vendors and agents varies in each
area and is dependent largely on the perceived
value. There are still a number of vendors selling
under duress and this will continue to hold off any
substantial value increases.
Sunshine Coast
Throughout the first half of 2015, the Sunshine Coast
property market has continued to improve. Demand
has improved and sale volumes remain strong due to
the continued momentum from the Sunshine Coast
University Hospital helping confidence.
The housing market has been strong in the lower
value bands. The sub $600,000 on the coastal areas
and sub $350,000 in the hinterland towns remain
the strongest sectors of the market. Stock levels
or the lack of stock is becoming a concern. The
higher priced properties have started to benefit as
well. The prestige market has become less patchy
with significantly improved activity and some price
increases.
$4 million plus Sunshine Coast house and home unit
sales 2007 to 2014:
Year
Number of Sales
Highest Sale
Price
2007
23
$8,000,000
2008
8
$6,650,000
2009
11
$8,250,000
2010
6
$5,500,000
2011
7
$5,000,000
2012
5
$6,750,000
2013
5
$7,000,000
2014
8
$7,150,000
The land market remains strong with developers
pre-selling stages well in advance while also
Residential
SCENIC RIM
The Scenic Rim and Lower Logan localities have
started 2015 at a slow and steady pace. While the
adjoining areas appear to be gaining momentum, this
market hasn’t shown significant price changes so far.
Agents are reporting a decrease in stock levels and
good enquiry, however the underlying current is that
purchasers have the upper hand and vendors firmly
believe it is a buyer’s market.
38
Month in Review
June 2015
The unit market remains patchy. We have seen
an increase in sales volumes, however this is very
much area and property specific with units in well
located complexes suited to owner occupier or
permanent rentals remaining the best performers..
Units in larger complexes with high body corporate
or operating costs remain hard to sell. There are
a number of new complexes proposed and being
marketed which are all good signs.
Activity in the rural residential market has improved
also. Personal preferences, presentation and
motivation of purchasers can impact heavily on
the ultimate sale price and can result in wider
parameters than more traditional residential
properties.
It is still typical to purchase
properties below replacement cost
in some cases but the pendulum is
swinging.
Hervey Bay
Demand for residential property in Hervey Bay
appears to be steady, with renewed interest in
construction activity of late. House and land
packages continue to be popular with a range
of buyers including some superannuation fund
investors for property mainly priced below
$350,000. There have been increased sales
for higher priced stock between $500,000 and
$750,000 which is encouraging. Most of these
properties are on sites over 2,000 square metres
providing executive modern homes with extensive
ancillary improvements. Units located in premier
locations situated close to the beach and CBD are
reasonably sought after, particularly for onground,
2- bedroom, 1- or 2-bathroom units. Overall, market
sentiment seems to be generally optimistic, with
confidence gradually gaining momentum.
The market for inner city apartments and suburban
townhouses is still pretty tough in Gladstone and
conditions are unlikely to improve in the short to
medium term. Sales volumes are very low and the
sales that are occurring are showing very significant
decreases of between 40% and 50% from sale
prices achieved during the peak of the market.
Gladstone
Market values for established residential dwellings in
the city of Gladstone have generally stabilised over
the course of 2015. Market activity has also stabilised
over the last few months after a flurry of activity at
the end of 2014 as property values stabilised to more
realistic values.
We still consider it a possibility that there will be
further market correction in the next 12 months over
which time all LNG construction work will cease on
Curtis Island. The exact effect this will have on the
residential market is unknown.
Vacancy rates have also remained relatively stable
since the beginning of 2015 with rates hovering
between 4.5% and 5.5% which is still above average
for Gladstone and reflective of the oversupply in
some market sectors.
Values for vacant land are continuing to come under
pressure. It is much more cost effective in the current
market to purchase an established modern home
than it is to purchase a block of land and then build.
Sales volumes for land are very low.
The Tannum Sands and Boyne Island markets appear
to have regained the premium over Gladstone which
they lost during the growth stage of the last market
peak. Sales volumes have increased slightly in these
localities and values have stabilised.
Rockhampton
To date 2015 has been a sluggish start for residential
property across the Rockhampton region. After
a notable decline in the strength of the resource
industries across Central Queensland we have seen
large reductions in sales activity, sale prices and
rental prices particularly in newly developed areas
Residential
increasing prices. The reduction in lot sizes continues
to help with market appeal and affordability. The
construction of multi tenanted houses (3-bedroom
house with a 1- or 2-bedroom flat) and duplexes
continue to be popular with investors however the
market depth remains unknown with limited re-sales,
especially for the multi tenanted houses.
39
Month in Review
June 2015
More established localities within Rockhampton
City such as Wandal, Frenchville and The Range
have weathered the storm with a higher degree of
resilience, particularly in the $250,000 to $450,000
range. Properties listed above this price point often
require an extended selling period.
In addition to the above factors, 2015 saw an
Australian first for the lowest cash rate on record
which now sits at a staggering 2%, creating one of
the most competitive lending environments seen
in a very long time. This is combined with a newly
released Federal budget which has been summarised
as the Have a Go budget and includes a significant
number of tax incentives for new and small
businesses.
Moving forward these factors may and will hopefully
take the spotlight of the weakening resources
industry by creating a positive outlook and increased
confidence which should in theory create a stronger
residential outlook for the Rockhampton region for
the later half of this year.
2015 also saw the first major Cyclone to hit the
area in over 40 years. On 20 February, Cyclone
Marcia reached Category 5 only hours before hitting
Rockhampton and Yeppoon. In many respects
a natural disaster such as this has devastating
consequences however it has to be said that the
aftermath appears to have been in many ways a
silver lining to the region. A huge volume of work
was created in various fields, community spirit and
engagement was enhanced and some insurance
claims in many instances will be of overall benefit to
the individual landowners upgrading old to new.
In summary 2015 to date and moving forward can
be most certainly summarised as a buyer’s market,
so for those thinking about entering the property
market for the first time or looking for that additional
long term investment, now is the time to act.
Townsville
At the halfway mark of 2015, the residential property
market has to date remained relatively unchanged
from the beginning of the year.
Unemployment in the region remains higher than
the state average, while business confidence in
Townsville during the second quarter of 2015 has
continued to improve with a slight uplift in the index
according to the PwC Townsville Business Confidence
Survey.
Anecdotal evidence suggests that the renovation
market has seen more activity of late, potentially
attributed to the low cost of finance and the
availability of tradesmen in the current environment.
Older established units have also seen reasonable
interest due to the low price entry, particularly
units priced below $200,000 along with duplex or
maisonette style properties that offer increased
utility by way of dual income or live in one side and
derive an income from the other.
The residential rental market has remained in
oversupply into 2015, with a slight increase in the
overall trending vacancy rate between January and
April 2014 from 5.2% to 5.4%. There continues to be
break-leases evident and incentives being offered by
way of free weekly rent to entice tenants.
Overall the market remains cautious, with the level of
activity being very much dictated by local economic
factors.
Residential
such as Gracemere and Parkhurst. For example we
are now seeing modern 4-bedroom, 2-bathroom
homes selling and renting under $300,000 and $300
per week respectively, down from $400,000 and
$400 in 2013.
40
Month in Review
June 2015
South Australia
The market is however segmented which means we
need to be careful about generalizing.
Many segments of our market are
pretty flat with prices only seeing
modest increases in some areas.
Inner suburban housing closer to the city, facilities
and the coast are showing steady growth in prices
and turnover. Outer suburban areas and housing
in the sub $500,000 range are reporting flat to
negative conditions.
Inner markets are simply supported by stock
shortages and the safety of those markets. Values
don’t decline in Norwood, Walkerville, Unley and
North Adelaide Council Areas. Houses are often
character styles and with a mixed offering from small
cottages worth between $500,000 and $800,000
up to more prestigious homes of $1 million upwards
where the market continues to rise steadily.
Outer suburbs paint a different picture with
rising stock levels, extended selling periods, and
uncertainty surrounding employment in the North
leading to low confidence levels, limited new
investment and potentially zero to negative real
growth. It is well recognised that with the closure of
traditional manufacturing in this state there needs to
be other stimulus and the opportunities are hard to
envisage. Many of us are waiting on decisions relating
to public spending and stimulus strategies that will
hopefully come from the public sector.
The private sector business community is currently
increasingly cautious with below average confidence
levels and in view of that, growth in many economic
areas including property will be subdued.
Unfortunately this paints a somewhat bleak picture
for property in the short term. The upside is that, for
those of us that can remember, similar conditions
existed in the early 1990’s and in time, as it did then,
recovery and confidence will be restored. So maybe
its just a good time to be considering investment with
a view to the longer term. But if doing so be careful
and take advice.
A big risk in the Adelaide market is that of
generalisation. While some market segments are
down, others remain strong with the appeal of inner
city and beachside living being strong, values in the
inner suburban areas are holding and growing in
some places.
The former AAMI stadium (Football Park) is a massive
western suburbs project that will bring on stream a
variety of housing in a near city location. This project
will be a significant factor in the property market in
the coming years and we will be reporting on its scale
and influence in the years to come. The property
is some 23.5 hectares of prime residential and
commercial land that has been earmarked for staged
development.
Mount Gambier
The property market within Mount Gambier is
currently relatively stable. There was a slight
decrease in house sales for the first quarter in 2015
(January to March) compared to the first quarter of
2014, however sales are still noticeably higher than
they were in 2011 when sales levels had softened.
The chart below shows that in the first quarters of
2014 and 2015 sales numbers were up on previous
years dating back to 2009/10. This is a positive
sign for the Mount Gambier housing market. Sales
numbers indicate that the Mount Gambier market
has stabilised and we are returning to the levels of
previous years when there was more positivity in the
local property market.
Residential
Adelaide
As we approach the midway point of 2015 we
are hearing lots of positive signals flowing from
the eastern states about property prices, strong
markets and heated market conditions. This is largely
driven by interest rates being at all time lows but
despite this the South Australian market remains
in a becalmed state. Adelaide in particular has not
historically experienced boom and bust conditions.
But equally it has not experienced extended flat
periods. Its probably best described as at times
stronger and sometimes weaker but generally “safe”.
Currently there is no doubt that we are in a weaker
phase in general.
41
Month in Review
June 2015
Sales evidence indicates that most of the dwellings
sold in the past 12 months in Mount Gambier were
in the $200,000 to $250,000 price range. The
$200,000 to $250,000 price range is affordable
for owner occupiers entering the market and for
investors looking at a property that provides a
stable rental return. There has been an increase in
the past 12 months of properties that have achieved
a value greater than $400,000. This could be due
to the interest rates being at record low levels or
recent positive news regarding employment in
the region. There are few dwellings purchased for
under $150,000 or over $500,000. Dwellings under
$150,000 are generally in less sought after locations
and have limited market activity. Dwellings over
$500,000 are at the top end of the market and have
a reduced market segment.
For growth to become noticeable within the region,
sales activity needs to increase. With the new
James Morrison Academy and the Dairy Processing
Plant in Penola it is expected that this will happen.
Construction on the Dairy Processing Plant is due
to commence before July this year and will be
completed in about a year. It is expected to cost $60
million to develop and to create 50 full time jobs and
80 constructions jobs. It is expected that this will
have a positive impact on the economy within the
region. It will be an interesting year which we will be
monitoring closely to see if sales continue to increase
throughout the year.
Residential
Properties located within the Lakes location and
centrally around the town centre have shorter listing
times than most other areas, as they are tightly held
locations. We have not seen much growth, if any, with
often decreased values on dwellings within the region
since the market peaked. Most properties that have
seen growth have been renovated or updated and
are in sought after locations. Properties not located
in sought after locations generally are not reaching
their values when the market peaked and have
dropped back.
42
Month in Review
June 2015
Tasmania
Tasmania’s cycle trails are creating quite a buzz
enabling Tasmania to build on its tourism market
traction which with other tourist draw cards such as
Mona, our famous Salamanca markets, Port Arthur,
Cradle Mountain and Cataract Gorge will reinforce
Tasmania’s image as a sought after worldwide
tourist destination. Strengthening tourism and
food production industries that create and support
employment and business opportunities will create
stability and positive flows to other markets such as
the housing market.
The Tasmanian residential property market has
recently experienced higher volumes of sales across
the state. Launceston in the north has enjoyed the
greatest percentage rise in sales volumes relative to
previous periods. Newstead, Newnham, Riverside
and Mowbray are areas where the greatest volumes
of sales have occurred in this region.
Suburbs in the south that have
experienced the greatest sales
volumes include Kingston, Sandy
Bay, Blackmans Bay, Howrah and
Lindisfarne.
In the North West region Devonport has had the
greatest number of sales.
The scheduled reduction of the first home builders
boost grant from July 2015 to $10,000 makes this
market segment one to watch. With state budgetary
challenges there is interest to see if the Government
will extend the FHBB grant program to maintain
economic and employment momentum within the
construction and real estate sectors.
Residential
Tasmania’s economic data remains relatively
stable with unemployment at 6.9%, up slightly
on last month. Economic developments, in line
with Tasmania’s future economic focus, are
mainly tourism and food production. Reported
developments include expansion of Hellyers Road
Distillery and two new farms in the North West, the
opening of Stage 2 of the Blue Derby Bike Trail in the
North and in the South, Houston Farm will increase
lettuce production for export and Mount Wellington
tours are being offered with guides specialising
in and focusing on Tasmanian Aboriginal culture.
Conversely further contractions will be felt within the
forestry industry as Forestry Tasmania undergoes
restructure.
43
Month in Review
June 2015
Northern Territory
The Australian Bureau of Statistics housing finance
data reports that the number of home loans taken
out by owner occupiers in the Northern Territory fell
by 0.7% in March. We note that in contrast, other
states have experienced a jump. The median house
price for dwellings had decreased by 1.7% year on
year to $553,000 while units have also move in the
same direction and dropped by 0.91% according to
CoreLogic RPData Daily Home Value Index year on
year to 30 April 2015.
Conversely, the absorption rate of vacant land in the
suburbs of Muirhead, Johnston, Zuccoli and Durack
have seen continued growth with new housing
developments performing strongly and being well
received in the market. All in all, it is likely that newly
built housing may continue to be on an upward trend
whereas the established stock market will remain
dampened.
The market for units in Darwin’s inner suburbs has
remained relatively flat in the first half of 2015.
This is largely due to the considerable amount
of new stock coming onto the market in a short
space of time with the completion of SOHO, Kube,
The Avenue, Wharf 2, Kim on Smith and Catalina
Apartments, which have added more than 800 new
apartments to the market. At the same time, weak
buyer activity and softening population growth has
also put downward pressure on house prices in the
Northern Territory. Falling house prices coupled with
the recently announced rate cuts by the Reserve
Bank Australia to a record low seem to be the right
opportunity for first home buyers to dip their feet
into the dull property market.
The combined influence of the changes in
development phase of Ichthys INPEX project, the
substantial supply of new units pouring into Darwin’s
CBD market and the movement of Defence personnel
has had an immediate impact on Darwin’s housing
market with rental rates easing and the demand for
existing older stock clawing back to show a clear
easing in rental demand. Latest SQM Research data
showed Darwin house rents dropped by 4.7% year
on year to 31 March 2015 but still topped the highest
rent yielding cities list at 5.7% for houses and 5.9%
for units. Being one of the least affordable housing
markets in the country, this drop in rent as a portion
of median income spent is good news for tenants to
get some much needed rental relief.
Looking at the year ahead, the downward trend is
expected to continue through 2015 with a downturn
in commodity prices and the winding down of the
Northern Territory’s key economic driver, the Ichthys
INPEX project. Shortage of affordable housing
will remain a key issue for 2015 while increasing
supply of smaller lot sizes in Darwin’s northern
suburbs and Palmerston and record low interest
rates will definitely provide a much needed boost
to the housing market and potentially affect home
ownership. In addition, the federal government 2015
/ 2016 budget putting an emphasis on developing the
Top End is certainly a broadly welcomed decision.
Residential
Darwin
In spite of being able to offer stellar returns to
investors and residential property owner occupiers
over recent years, the first half of 2015 has witnessed
a slow down in Darwin’s property market. The
greater Darwin region has seen a steep drop in sales
activity for houses, units and townhouses. One of
the main factors contributing to the slump is the
new First Home Buyers Grant (FHOG) policy that
kicked in whereby first home buyers are restricted
to contracts to construct or purchase a new home
or unit. As a result, the new policy has begun to
create two segment markets whereby a significant
increase in new housing stock has taken place and
established homes, mainly in Palmerston, Sanderson
and Nightcliff LGA (northern suburbs), have remained
static and decreased in value. According to recent
data released by REINT, the first quarter figures
indicate a dramatic fall in sales volume for houses
in Sanderson LGA of 34.7% while Nightcliff LGA
has also declined but by a smaller percentage at
3.4%. Inner Darwin CBD and Nightcliff LGA units and
townhouses have followed in a similar fashion, having
declined by 42% and 55.3% respectively.
44
Month in Review
June 2015
Western Australia
In Western Australia, property prices have been
falling, jobs are being cut and projects are on hold.
On the other side of the pond, things are still holding
up and we can sense the smirks on the faces of the
Sydney-siders who must be saying “Cowboys!”.
Well giddy-up Sydney. Here’s our take on the Perth
property market.
In most recent months, Perth has seen a fall in
confidence in the property market (despite strong
demand for new homes, thanks to population growth
and low interest rates) with the news over the past
few weeks of job cuts in the mining sector weighing
down perceptions and market sentiment.
Western Australia has an obvious strong correlation
between high commodity prices (iron ore, oil and
gas) and the demand and price for property in Perth.
So with confidence sagging, prices falling and rents
coming down, is it all doom and gloom for Western
Australia? Well, let’s take an optimistic look at the
future for Western Australian property.
Iron ore is back to nearly $60 per tonne after falling
to a ten-year low of US$46.70 earlier this year. This is
welcome news for the Western Australian economy.
Commodity prices have been climbing on the back
of tentative signs of supply cutbacks, rising oil prices
and economic stimulus in China, with the moves
exacerbated as the gloomy rhetoric around the
commodity for much of the year ensured heavy short
demand.
Meanwhile, oil and gas prices are also surging from
lows seen in the past six months. In recent times,
major players such as Woodside and Chevron have
been cautious, but with higher prices, we are likely
to see more natural gas export infrastructure
investment in Western Australia. In fact BP
Exploration as recently as this week announced its
biggest investment project in the Great Australia
Bight (off South Australia) with the world’s largest oil
rig under construction for that project.
During the mining boom of the mid 2000s to
early 2010s, Perth’s property market boomed as
speculators entered the market and the population
of Perth grew at breakneck pace. We might not see
that kind of growth again, but there is every chance
a new, lower, yet more sustained period of growth is
ahead.
While Perth continues to grow strongly and above
historical trend, the boom times are certainly over,
with prices cooling from double digit year on year
growth to about 5% to 7% capital growth today.
Gone are the days of explosive
wage growth and ridiculous beer
price inflation.
The boom phase of the mining era is over for now. In
2015, it is more about exports and less about capital
expenditure, however this is not necessarily bad
news in the medium to long term for Perth.
BHP Billiton and Rio Tinto are still pumping out ship
loads of ore. Their strategy is to decimate the local
Chinese miners, small local firms (FMG, Atlas Iron
, BC Iron) and other international players and take
market share. According to the Wall Street Journal,
it appears to be working. While BHP and Rio may
become slimmer operations (BHP has trimmed off
and created South 32) and some jobs will go, overall
there will likely be sustainable growth in the mining
sector.
China now has to import more than 80% of its iron
ore meaning that the country must continue to rely
on Australia’s cost efficient supplies.
Residential
Perth
The Perth Property Market – Long Term Outlook
The Perth property market has been most subdued
since iron ore prices started to fall below the magic
$80 per tonne. Premier Colin Barnett has been trying
to bash Tony Abbott and Joe Hockey up for more of
a lion’s share of GST since our royalties from iron ore
have fallen through the floor causing a big hole in the
state’s budget. He had a small win last week when he
was handed $500 million for infrastructure projects
in the Federal Budget.
The big three world iron ore miners are bluffing when
it comes to more supply according to US iron ore
expert, Cliffs Resources Chief Executive Lourenco
45
Month in Review
June 2015
With these reports in mind, the iron ore price is
unlikely to tank beyond its current correction of
about 50%. In fact iron ore may well be a sustainable
business for years to come. Some jobs may be lost,
but overall exports in iron ore and other minerals
are likely to sit at sustainable levels for some time
to come, (perhaps around $50 to $60 per tonne)
underpinning realistic and sustainable growth for
Perth’s mining sector and government coffers.
While growth in Perth property prices has been
subdued in recent months, Perth is likely to see
significant long-term capital growth in the coming
years. Some of these reasons are outlined below. One
of the greatest reasons is the demand for housing
and the shortage of options for the people of Perth.
Perth Population Growth
From a domestic perspective, Perth is seeing a
number of migrants from the rest of Australia,
particularly areas like Sydney and Melbourne which
are more crowded and much more costly than
Perth and Tasmania and South Australia, where
professional and blue collar jobs are more scarce and
pay lower. Secondary schools in Western Australia
are some of the very best in Australia, especially
the private and independent schools in established
suburbs.
Perth is also a destination of choice for many
international immigrants, particularly well educated
and wealthy immigrants from countries such as the
United Kingdom, China, Singapore, South Africa,
New Zealand, Malaysia and India. Perth’s incredible
lifestyle, health and education systems (top
universities in particular) are extremely attractive
to overseas immigrants, especially those who have
discovered the extremely high cost of living and
property prices in Sydney and to a lesser extent
Melbourne.
Both the Federal and State Governments have
billions dedicated to infrastructure projects in and
around Perth. Some of these are already underway,
such as the new Perth Stadium, Elizabeth Quay.
Other projects kicking off are the extension of
freeways and highways, new light rail, Perth airport
and other local projects.
Agriculture, energy, minerals, education, high end
manufacturing, legal and financial sectors all offer
lucrative potential for Perth’s economy in the long
term.
Infrastructure Investment
The fact that Perth is so close to Asia where there
is a rising super middle class of hungry consumers
means that Western Australia is going to develop
huge wealth and growth over the coming decades in
all sectors.
Residential
Goncalves: “None of the three majors (BHP, Rio, Vale)
can continue to support their massive CAPEX needs
without allowing the iron ore price to increase.”
There’s going to be a lot of demand for inner city
and near CBD development in the medium term,
especially as young people and older Australians
46
Month in Review
June 2015
We are already seeing that development take place,
particularly in the CBD and other areas such as the
City of Belmont and City of Subiaco, with an increase
in inner urban living, rather than what occurred in
the 1970s, 1980s and 1990s where people just went
to a greenfield site up in the north-west corridor.
We are doubling the size of most of our largest
shopping centres and local authorities are getting on
board with urban infill programs. Our new football
stadium at Burswood, new hotels and large scale
infrastructure projects in the Perth CBD (such as The
Link project, Elizabeth Quay and Waterbank) are all
underway and will set Perth up to be a greater tourist
destination, especially from the South-East Asian
market in the years ahead.
Demand for homes in established
areas is going to increase
dramatically in coming years as
attitudes change and urban sprawl
creates congestion and social
issues in the outer suburbs.
High-rise and low rise high density property
developments will continue to generate significant
interest and wealth for investors and developers.
So, while we like to hear how much Sydney-siders
hate us and think we are a bunch of cowboys who
live in a boom and bust state, there is much more
confidence in the WA economy than that of either
NSW or Victoria and our weather, beaches, people
and roads are nicer.
South West WA
As we near the middle of the year, agents in the
main towns throughout the South West of Western
Australia are reporting a stable level of sales
throughout the locality with a levelling out of values
throughout the lower and middle segments and a
slight increase in land values.
The top end of the market continues to be more
problematic with continuing weak demand and is
characterised by an over supply of properties for sale
coupled with a lack of prospective purchasers in that
value range. The rural residential market has also
slowed. The majority of the sales are below $1 million
and properties are also experiencing extended selling
periods.
Developers are responding to the lack of land supply
with further releases in new subdivisions such as
Treendale, Millbridge, Dalyellup, Provence, Vasse New
Town, Kealy and Dunsborough Lakes which is likely to
see the demand supply balance improve.
The rental market has eased over the past six
months, however continues to be relatively tight with
low vacancies. Historically high rents put upward
pressure on the first home buyer market and this is
bringing investors back into the game.
Smaller lot developments in the new subdivisions
have become popular due to their affordability
and it is anticipated that this will be a trend going
forward. A move away from larger homes to smaller,
better appointed homes on small blocks, with limited
gardens and the ability to lock and leave is on the
rise.
Overall the word on the street is that the property
market in the South West is likely to slow for
second half of 2015. This is on the back of the Perth
metropolitan market slowing significantly throughout
the last two quarters of 2014 and the first quarter of
2015. The Perth market historically has had a flow on
effect to the South West market. Nevertheless, the
South West market to date has remained relatively
steady, however is expected to weaken throughout
the year.
Esperance
As we head towards the middle of the year, it is time
for a mid year review of the market performance in
the Esperance district. In short, erratic is the best
way to describe it. Short bursts of activity then
nothing have been the norm for the past six months
and a smoother spread would be welcomed.
Residential
look to find property closer to essential services and
entertainment.
47
Month in Review
June 2015
The residential market in Esperance has seen
sound sales volumes and values in the lower socio
economic areas as purchasers realise these areas
provide some of the most affordable housing in the
region, are well located close to schools, shopping
and recreational facilities and can provide the best
return on investment for residential property with
correspondingly high rentals relative to capital
outlay. Values typically range between $180,000 and
$220,000 in this area with increased sales compared
to the same period last year.
The mid tier market of say $300,000 to $450,000
has seen consistent activity and this range is well
represented in volumes and values with a relatively
stable correlation between supply and demand.
Absent from the market for a short period of time
were sales over $500,000 however recent months
have seen strong sales above this value and into
the mid $600,000s. Prestige residential property is
limited in this area with no $1 million plus sales for
over 12 months.
Rural residential lifestyle properties have maintained
their consistency in sales volumes with realised sales
over all price ranges noted. Lower end property with
modest houses and negligible outbuildings have
achieved prices within the $400,000 to $500,000
range with other sales pushing upwards to the
$900,000 range for more substantially developed
properties.
of uncertainty in the local market, Norseman still
provides some of the most affordable housing in the
state, if not the country, for an isolated town having a
moderate level of local services.
So, market activity over the first half of the year
has been erratic and quietened off lately but overall
sentiment is still positive for this region. Later in the
year we will provide another summary and see how
things have changed between now and then.
The satellite localities of the Esperance shire have
had little to no activity over the first half of the year
with limited supply being a factor.
Encouragingly, the small coastal town of Hopetoun
has seen sales volumes increase slightly over varying
value ranges which is giving some hope that values
there may have stabilised. There is still an issue of
extensive oversupply of property, especially rural
residential land, but in time it is hoped that supply will
gradually reduce and allow values to recover.
To the north, Norseman is still struggling with
uncertainty over the local mining operations however
sales volumes have been strong in comparison to
recent years, although at the low end of the market
with most transactions typically ranging between
$20,000 and $40,000 for established homes. A
general consensus is that although there is a lot
Residential
After a promising end to the 2014 year and start to
this year, activity in particular over the most recent
month has nearly stopped. Part of the reason is
seasonal with cropping programs well underway
after a reasonably traditional break to the season.
With relatively low interest rates continuing and
a broad spread of affordable housing, the lack of
recent activity is hopefully only temporary and
regular volumes will return in the near future.
48