Residential

Residential
Month in Review
September 2015
New South Wales
Our offices throughout the country have prepared
analysis on their attached housing markets and
made it available to you. This month’s edition is a
ready guide on markets, property types and trends in
attached housing right across the continent.
Sydney
The market for unit living in Sydney is evolving
and features a wide spread of participants. These
include the traditional entry level individuals and
couples, older downsizers buying a comfortable
executive style unit after selling the family home and
not forgetting the local and international investors
taking advantage of low interest rates and a stable
economy.
Many of these participants are buying units off the
plan waiting up to three years before occupation is
available. In the current strong market buyers have
seen prices rise from when they originally purchased
the unit to when they settle. One of the risks
associated with buying off the plan is if the market
declines they are stuck at the higher price and have
to wait it out until the market settles and catches up.
In some cases this can take years. This has been seen
in areas where supply has flooded the market and
values have stalled or dropped.
We have taken a look at three differing unit markets:
The Inner Sydney Area
The inner Sydney apartment market is currently
in a stage of significant growth with high demand
shown over the past few years, especially for new
products. There has been a noticeable shift towards
larger scale, high-rise and high density development
especially over the past decade. There are also
numerous significant developments currently under
construction or in the pipeline to come on board in
the coming years. Major developments of note across
the inner Sydney area that will incorporate high
density apartment living include Barangaroo, Central
Park, Ashmore Precinct, Green Square, Harold
Park, Wolli Creek Precinct and Mascot Precinct. All
the above developments are at different stages of
construction and so far they appear to paint a picture
of the future of inner Sydney living which is rapidly
transforming.
Apartment developments in inner Sydney began to
become established in the 1920s and 1930s with the
introduction of the Art Deco apartment. Often low to
medium-rise, these apartments are still commonly
found in areas such as Potts Point, Elizabeth Bay,
Bellevue Hill, Double Bay, Darling Point and some
inner west suburbs. This style of apartment remains
very popular with the Sydney buyer, with a premium
frequently being paid to secure these character
apartments.
The next notable wave of apartments through the
1960s and 1970s was the now conventional redbrick apartments which again were mainly low to
medium-rise. These are common in areas such as
Randwick and the inner west suburbs of Marrickville,
Leichhardt, Canterbury, Summer Hill, Ashfield,
Lewisham and Dulwich Hill, southern pockets in
Cronulla and Caringbah South and Neutral Bay and
Mosman on the north shore.
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Overview
Attached housing has been gaining popularity
throughout Australia. In particular, there’s been
increased acceptance that to live closer to big capital
city CBDs at an affordable price, it’s necessary to
compromise on space and head towards apartment
living. It has its pros and cons, but certainly attached
housing has never been more prevalent than it is
right now.
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Month in Review
September 2015
During 2014 and 2015, there were around 3,350
new apartments (BIS Shrapnel), the highest annual
supply total in fifteen years. The demand for these
new apartments still appears to outweigh supply
at present, however how long this will continue is
uncertain. The apartment to population ratio in
New South Wales now sits at 1.8 times the long-run
average. Apartment approvals are now also on par
with housing approvals with the long-run average
being closer to one apartment to every three housing
approvals. Recent estimates also suggest that 11%
of the total apartment stock in the inner Sydney
area is unoccupied (second homes or speculative
investments). Over the next five years the supply
of new apartments in the inner Sydney area will
remain high, with an estimated 3,000 apartment
completions per annum expected to 2017 and 2018.
As at June 2015, 74% of these apartment projects
were already under construction. Early signs may be
pointing towards future over-supply of apartments.
The buyer profile in this market remains investor
dominated. The majority of apartments in the inner
Sydney area are tenanted, accounting for around
55% of the total (BIS Shrapnel). Domestic and
overseas investors appear to be currently driving
the new apartment market with increasing levels of
off the plan purchases in the inner Sydney market.
Investors are hotly contesting areas close to major
transport links, retail, entertainment, universities and
hospitals which are popular with renters. One of the
key drivers of the rental market in the inner Sydney
area is students, making up around 14% of tenants
in the area of which 68% are overseas students.
Education-related travel remains one of the country’s
top exports and a key driver of rentals in sought after
areas.
Foreign investment remains a key driver especially
in the off the plan market where there are few
buyer restrictions. A recent estimate has suggested
that overseas buyers account for around 12% of
new apartment sales across Australia. This figure
however is estimated to be closer to 60% in the
CBD with many major Australian developers actively
marketing new developments overseas. A weakening
Australian dollar is expected to keep off the plan
purchases looking attractive for overseas buyers
helped by a political environment which is viewed
as relatively stable. On a domestic front, record low
interest rates along with strengthening economic
conditions and speculative purchasing will continue
to fuel investor demand in the short term.
Price points in inner Sydney apartments vary
significantly from suburb to suburb. Sticking to some
of the major developments in progress across inner
Sydney, typical entry points for off the plan units are
as follows:
Zetland
• 1-bed, 1-bath, 1-car: $670,000 - $770,000
• 2-bed, 2-bath, 1-car: $900,000 - $1.05 million
Wolli Creek
• 1-bed, 1-bath, 1-car: $575,000 - $650,000
• 2-bed, 2-bath, 1-car: $750,000-$850,000
Mascot
• 1-bed, 1-bath, 1-car: $650,000 - $700,000
• 2-bed, 2-bath, 2-car: $850,000k - $950,000
Western Sydney
The residential unit market is strong in the western
suburbs of Sydney. Parramatta is leading the
charge with numerous residential developments
under construction or recently completed. Up until
now demand has outstripped supply with many
developments sold out prior to completion. As a
result units within Parramatta have seen strong
growth in values in the past 12 to 18 months.
Australian property monitors suggest Parramatta’s
unit market has increased 12% in the past year. This
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Apartments through the late 1980s to 1990s showed
signs of increasing in development size however it is
most noticeable in developments constructed from
the beginning of this century. This modern era of
apartment living has presented a shift towards large
scale mixed use developments which are part of
major urban renewal projects keeping with the State
Government’s plans to increase housing density
within the city.
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Month in Review
September 2015
Entry level for 2-bedroom units in Parramatta is
around $450,000 for an older walk up. This jumps to
the mid section of the market where for $600,000
to $700,000 you can buy a modern 2-bedroom,
2-bathroom unit in a medium to highrise complex.
If penthouse living is more your scene then there
have been some recent sales from $850,000 to
$1,200,000 of larger 3-bedroom units.
The western Sydney unit market is predominantly
located around central business districts such as
Liverpool, Fairfield and Campbelltown. This market
is largely driven by first time property owners and
investors who have looked to make the most of low
interest rates, affordability and good returns.
The past ten years have seen
a vast change in design from
the early 1970s low rise walk-up
complex to the modern multi
storey complexes, comprising
of one, two and three bedroom
designed units.
The price point of units in the past 12 months has
shown strong growth off the back of buoyant market
activities, improved infrastructure and decreased
affordability of inner ring residential markets. Within
the Liverpool and Fairfield LGA’s, the unit market
starts with an older style 2-bedroom, 1-bathroom unit
for $330,000 to $380,000, the midpoint provides
modern 2-bedroom, 2-bathroom units ranging from
$450,000 to $500,000. The upper end of this
market ranges from $500,000 to $570,000 for a
modern 3-bedroom, 2-bathroom unit.
Finally we take a look at the prestige attached
housing market.
Prestige apartments and townhouses (generally
considered to be apartments over $3 million), are
primarily located within the Sydney CBD, CBD fringe,
eastern suburbs, inner east and lower north.
Prestige apartments and townhouses may be water
front or non-water front, have limited through to
expansive views and generally provide a minimum of
3-bedroom and 2-bathroom accommodation with one
or two on-site car parks, limited through to extensive
outdoor areas, with some inclusive of private pools
and gardens.
Market conditions for prestige apartments and
townhouses have up until recently remained
relatively weak and have been thinly traded since the
impact of the GFC was felt in late 2008.
Demand for premium apartments and townhouses
is largely driven by overseas buyers and high net
wealth empty nesters seeking to downsize from the
family home.
With recent weakness in the prestige dwelling
market, these empty nesters had been unable to
secure a premium price for their existing homes and
there was a subsequent reduced flow-on demand into
the prestige apartment market.
Over the past six to twelve months, the market
for prestige dwellings has shown early signs of a
sustained recovery, with increasing demand and
reduction in stock levels. Combined with the impact
of the weakened Australian dollar, there appears
to be early signs of sustained flow-through market
strengthening into the prestige apartment market.
Canberra
The current population of the ACT is circa 380,000
with a projected growth rate of less than 2%. Near
record low interest rates and low unemployment
levels continue to be the main drivers in the ACT
economy.
The median price as at July 2015 for medium density
housing has decreased slightly to $410,000. The
volume of sales has remained relatively steady with a
total of 1,810 sales for the most recent quarter on the
back of low interest rates and increased demand due
to the Mr Fluffy Buyback scheme.
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trend is set to continue as long as demand outstrips
supply.
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Month in Review
September 2015
The average number of multi unit sales in Canberra
equates to 3,000 to 3,500 on average per annum.
Of this amount approximately 50% are new units.
Accordingly, some 1,750 new multi unit dwellings are
required to meet annual demand in this sector of the
market.
The Flemington Road corridor in both Franklin and
Harrison could see the addition of a large number of
residential apartments in 2015. Depending on
pre-commitment sales some developments may be
delayed until demand strengthens.
Wollongong
The Illawarra, and more particularly Wollongong
CBD, is well supplied with medium and high density
dwellings including units, villas and townhouses.
These include older walk-up 1960s and 1970s red
brick blocks, through to modern towers with cutting
edge design.
The Wollongong CBD has a high concentration of
units which contributes to the vibrancy of the locale,
with the university, beach and harbour nearby.
In the year to December 2014, units made up around
one-third of all dwellings sold in the Wollongong
Statistical District which anecdotally is high for the
area, but reflects the amount of new units being
turned off by developers.
New units are being designed with larger floor
areas, in the range of 90 to 100 square metres for
2-bedroom units and up to around 160 square metres
for 3-bedroom dwellings. Larger balconies than the
old style 1980s and 1990s units had are also high on
the agenda for buyers together with security entry
and enclosed garages. Units without adequate
outdoor space and with open basement car spaces
play second fiddle in the value stakes to those with
more contemporary inclusions and features .
Well located 2-bedroom CBD units are presently
commanding prices in the high $500,000 to
$620,000 mark, and 3-bedroom units in good
locations fetch over $800,000 up to $1 million in
some cases.
In the northern beaches around Towradgi and Fairy
Meadow similar units are selling for slightly less, but
there is less modern high rise stock in these areas.
We believe there could be a looming over-supply of
new units, either recently completed, underway or
planned, within the Wollongong CBD. The demand
or take-up of available supply until present has been
driven by local purchasers. But more recently, the
spill over effect from Sydney purchasers seeking out
value, as well as from investors and self managed
superannuation funds (SMSF) has put some pressure
on prices. The combined effect of a recent retreat
by several of the main stream lenders to the SMSF
market together with an increase in interest rates
could put downward pressure on rental returns and
potential stock over-supply.
Recent rezonings around town
centres and train stations to
medium density will see future
high rise developments in the
suburbs as sites are amalgamated.
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The Canberra medium density market comprises
a mix of established and new developments
and includes townhouse style and unit style
accommodation. There are a significant number of
unit developments currently under construction
or nearing completion in the Canberra precincts of
Belconnen, Central Canberra, Gungahlin and Woden.
Trends in the new developments include using high
quality inclusions and in some cases smaller floor
plates. Price points follow general property trends
with more affordable medium density property
available in the outer suburbs, while prices increase
in the more central locations. Features like views,
standard of inclusions, accommodation and floor
level within high rise complexes impact on value. The
entry level price point for a modern 1-bedroom unit
in the Gungahlin area is around $260,000, while high
value, centrally located penthouse style units can
achieve $2 million plus price levels.
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Month in Review
September 2015
times have reduced dramatically. There have been
marked increases in both volume and value across
all of the townships and villages of the Southern
Highlands. The main market drivers are the low
interest rates and Sydney based buyers having a
tree-change and relocating to the Highlands region.
Recent developments have seen this method of sale
working to the advantage of the developers in this
region, something which had abated after the 2008
GFC effects. Some developers have taken stock off
the market in anticipation of achieving higher prices
once the project is nearing completion.
Traditionally there have not been many residential
unit developments in the Highlands. The preference
was for new housing on the fringes of towns and
renovating well located older style cottages. Most
strata title properties are villas and townhouses
with the occasional residential unit development.
Of note over the course of 2015 is the anticipated
release of planning revisions by Wingecarribee
Shire Council that will allow for further density
in town centres. This should see an increase in
medium density development in towns like Bowral,
Mittagong and Moss Vale over the medium term.
These planning revisions are well timed, with many
retirees moving to the Highlands and the demand for
low maintenance seniors living and medium density
properties is increasing.
We rate the best opportunities in the attached
housing market as being 3-bedroom, 2-bathroom,
2-garage townhouses in and around urban centres
such as Shellharbour in the south and suburbs such
as Balgownie, Corrimal and Fairy Meadow in the
north, where price points are still low enough for first
home buyers or trade-up buyers. It appears that
the northern suburbs and to some extent Kiama in
the south have passed price points which exclude a
great majority of these buyers and we are cautious
about future growth.
Southern Highlands
The Southern Highlands and Wollondilly residential
property market prices are increasing. Over the
past 18 months, this is most apparent in the lower
to middle price bracket (under $1.5 million). Selling
Most semi-modern to modern townhouses and villas
range between $450,000 and $750,000. There are
also some older 1970s and 1980s townhouses and
villas that range between $360,000 and $450,000.
In general, we find that attached housing living areas
tend to be getting larger over time.
There has been an increase in investor activity
generally. The prestige and upper end of the market
(over $2 million) is steady and some caution is still
evident in buyers.
Southern Tablelands
The regional city of Goulburn is steady to firming.
There is a current flurry of Sydney investor activity
that is driving a small increase in prices. Rental
levels have actually reduced slightly over the past
six months as more rental properties come onto
the market and some tenants have returned to the
Canberra area. Again, there has been a preference
for Torrens title properties rather than residential
units in the Tablelands. There are some semi-modern
and modern townhouse and villa complexes. Prices
range from $250,000 to $380,000. There are some
older style unit buildings, with units selling in the
$180,000 to $250,000 range.
The Crookwell village market is steady. The rural
residential property market has also been stable.
NSW Central Coast
As the location of the railway station and shops,
the Gosford CBD holds the largest portfolio of 2
and 3-bedroom units and apartments. Enjoying the
current demand levels being experienced in the
nearby Sydney market, there has been an increased
demand for units and this is evidenced by the number
of recently approved new developments. We have
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Strong sale prices for townhouses and villas are
evident throughout the Illawarra and Kiama regions
and new stock is taken up quickly. This product is
an alternative to the standard house on a larger lot
and we can see a trend to this type of property as
lifestyles change.
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Month in Review
September 2015
For an area the size of Gosford, this number of
approvals is quite significant and indicates a level
of confidence of investors in the area that has been
missing for many years. Should these approved
projects proceed, the landscape of Gosford will be
changed forever as new residents move into the city
centre and the local economy flourishes as a result.
Of course, it is hoped that the developers time their
commencements and completions appropriately
to avoid the sudden oversupply situation seen
previously which caused lasting damage to the local
unit market.
Prices vary according to the age
of the complex, the amenities
they provide and in many cases,
whether they have water views.
They generally start around mid
$300,000.
Away from the city centre, units and apartments
are also popular in the peninsula areas of Woy Woy,
Umina Beach and Ettalong Beach, although units
more so around Woy Woy due again to the presence
of the railway station and large shopping centre.
Villas and townhouses are more popular within the
other peninsula suburbs and have been for many
years.
Prices of units are fairly stable at present at around
mid $300,000 for an older unit close to the station
and shops. The surprise packet in pricing terms is
with new villas in Umina Beach and Ettalong which
are regularly achieving over the $600,000 mark.
The beachside suburbs of Terrigal and Avoca
Beach also have a number of unit and apartment
complexes. These units cater to the holiday market
and those wanting to live near the beach and café
scene. Price points vary considerably from mid
$400,000 to over $3 million.
We are aware of the practices in the Sydney market
of developers adjusting unit sizes to satisfy the
demand of potential purchasers. We would like to
think on the Central Coast that we are insulated form
this practice and our experience has shown that local
developers would rather produce a quality product
over quantity. The difference is quite obvious when
non local developers enter the market. The 1- and
2-bedroom sector has been growing however it is far
from being out of hand. What we are finding is that
new 1- and 2-bedroom apartments are also growing
in square metres over existing older apartments. The
Gosford CBD proposed developments have seen high
demand in the past months with whole allocations
selling off the plan. While larger tower style buildings
incorporating mixed uses have been approved, this is
new for the area and it remains to be seen whether
they will be accepted. It is our view that acceptance
of this product will most likely be from buyers new to
the area and international buyers.
Possibly due to the long absence of new unit
developments, we are seeing levels of off the plan
purchases. This is particularly from foreign and out
of area investors. It would appear to be sustainable in
the short term, however, once a supply point meets
market demand, it’s anticipated to flatten out to a
more stable market.
We hesitatingly say the best opportunities in
attached housing in the area at present would be the
Gosford CBD due to the new developments coming to
the market.
It is anticipated they will offer a good standard of
living with transport and shopping facilities at the
door. Prices for these new developments are yet to
be confirmed, but indications of pricing levels we
have heard for some new developments will need
reviewing as the commencement of marketing draws
closer. It is accepted that market values are rapidly
rising at present, but we doubt the Gosford market is
ready for some of the prices being bandied about and
if these price indications are realised, then we doubt
that their long term sustainability can be guaranteed
through any market correction periods.
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estimated that the council has given its approval to
around 787 apartments in the recent past.
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Month in Review
September 2015
Continuing with the sustainability of values theme,
the peninsula areas of Umina Beach, Ettalong Beach,
Woy Woy and Booker Bay have been in continual
growth mode for several years. While we could not
say that values have been behind in these areas and
thus needing a growth period, the level of growth
here has been a real surprise and streaking well
ahead of most other local markets. While largely
driven by non-local buyers and opportunism,
it is hard to imagine the medium to long term
sustainability of values as a sure thing.
Newcastle
Units in Newcastle are so hot right now. There have
been a number of recent projects that commenced
in 2013 and 2014 and have been recently completed.
It’s instructive that prices agreed at the time have
increased significantly. This is the holy grail for many
of the off the plan purchasers. (The speculators at
any rate. For those who purchase with the intention
of inhabiting, it’s just a bonus). It should be noted
that this is not always the case in Newcastle and
only comes around during the growth phase of
the market. Speculators who purchased units off
the plan in 2006 and 2007 had to wait for quite a
period before there was capital growth joy. A recent
conversation with a leading local real estate agent
revealed all but several units were pre-sold in a 90
plus unit complex with 10 purchasers on a waiting list
should any initial purchasers wish to cash out prior
to completion of the complex. This highlights the
strength of the unit market, especially towards the
more affordable end of the market.
If we were to look at the smaller unit development
market, the mums and dads level of undertaking,
it appears that activity in this sector is up from
previous levels significantly. Anecdotally the number
of valuations we have completed where development
approval has been granted for three to five units
is up significantly from 12 months ago. Generally
speaking the level of pre-sales being achieved is
considered strong which locks in a certain level of
surety into the process and subsequently lowers the
risk profile of the project. It is interesting to note
that various banks are reviewing their loan-to-value
ratios of these projects and moving forward it will
be interesting to see whether this has an impact on
developers’ appetites to continue to actively operate.
Especially coupled with banks changing their interest
rates for investors which may impact upon the
potential purchaser. It could be a double whammy.
Watch this space.
Another sector which has seen an explosion in recent
times is the humble duplex property. This is where
a single lot is improved with two similar quality
dwellings, whether attached or semi-detached. In
the past 24 months, this type of development has
increased significantly in popularity and a higher
density prevails as a result. This is seen as providing
the owner with an increased cash-flow and a
potentially minimised investment risk with a dual
cash flow as opposed to a single cash flow property.
It’s interesting when valuing properties of this type.
Often the owner adds up the individual component
prices and adds them together to arrive at an
estimate of value. What is often not factored in is the
in one line discount which can sometimes be in the
order of 10%.
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Away from the Gosford CBD, the beachside suburbs
nearly always deliver on value for money and rather
surprisingly because the rapid rise in values has been
a little slower in reaching these markets, we see good
value and sustainability.
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Month in Review
September 2015
The unit market in both the Port
Macquarie township and the
other larger coastal towns is well
established with the majority
of these developments in the
beachside suburbs.
These areas are within close proximity of shopping,
public transport and often patrolled beaches.
Within these areas unit buildings range from the
modern multi-storey high-rise complexes to older
style walk-up complexes of up to three storeys.
The older units are generally of 2-bedroom design
and lie within the $200,000 to $350,000 value
range. Units within this segment have been
predominantly purchased by investors and the tight
rental market is continuing to drive this segment,
with these properties showing good returns at
present and having the potential for good capital
growth over the next few years.
The more modern units, located in the highrise
complexes, are often 3-bedroom, 2-bathroom
design and are centrally located close to the town
or beach and local facilities. The have a wide value
range of between $400,000 and $1 million, with a
larger percentage of owner occupiers than the older
investment units. These more modern larger units
are also showing good rental returns, although at
inferior rates to the lower value segment and have
potential for good capital growth over the next few
years.
Strata villas are more often found in the established
residential areas within the towns along the mid
north coast. They comprise a mixture of owner
occupiers and investors and are usually of 2- and
3-bedroom design. Capital growth has been good for
this type of property in the larger towns and rental
returns has increased rapidly in certain specific
areas (such as the western areas of Port Macquarie
adjoining the new proposed university).
Townhouses comprise only a small segment of the
market compared to units, apartments and villas.
They are less appealing to older owner-occupiers and
show inferior capital gains to comparable value units
and villas.
There has been no construction of large unit
developments within the major towns of the
region over the past five years, however recently a
development application has been approved for a
new multi-storey unit development within the Port
Macquarie CBD.
The unit, apartment and villa sector on the mid north
coast is still in a state of growth, however rates of
sale and increases in values appear to be slowing and
steadying somewhat of late and we expect this to
continue over the next few months.
Coffs Harbour
Being a regional centre, Coffs Harbour has a limited
number of attached housing options. These include
standard duplex, villa and townhouse units in the
suburban localities and low to medium rise unit
buildings within the more sought after beach or
harbour side areas. Typically the suburban localities
comprise five to 30 year old low rise units providing
2- or 3-bedroom accommodation ranging in price
from $200,000 to $400,000.
The more popular beach and harbour side suburbs
see prices ranging from $350,000 to in excess of $1
million with average prices typically being around
$450,000 to $700,000. The diversity of product
within these areas ranges from 20 to 40 year old low
rise complexes to modern high quality medium rise
product with extensive water views.
The high end of the market of $700,000 plus
does see sales dramatically reduce due to limited
local demand for this price range. These units are
generally purchased by high net wealth individuals
with long selling periods required to attract potential
purchasers.
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NSW Mid North Coast
This month we are looking at the unit, apartment,
villa and townhouse market along the mid north
coast.
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Month in Review
September 2015
Park Beach has also seen the construction of a new
medium rise building (nine storeys) opposite the
landmark Hoey Moey Hotel with 2- and 3-bedroom
units ranging in price form $500,000 to $900,000.
The medium rise product is very limited within Coffs
Harbour with only a handful of buildings all located
along Ocean Parade at Park Beach, the highest being
15 storeys.
Another notable area of new development is the
popular harbour or jetty precinct located two
kilometres east of the CBD. Several low to medium
rise complexes are being constructed or due to
start construction shortly which provide varying
accommodation from larger complexes with 1-, 2- and
3-bedroom holiday style accommodation to larger 3and 4-bedroom units in smaller boutique buildings.
Typically it is the affordable end of the market which
sees the majority of activity in Coffs Harbour which
is reflected in the current median unit prices of
$180,000 (1-bedroom), $225,000 (2-bedrooms) and
$340,000 (3-bedrooms). There are encouraging
signs with the amount of new product currently being
constructed giving a wider variety of options for the
owner occupier or investor. The local market thins
dramatically as the price increases above $500,000
with the sustainability of the high end value units
($700,000 plus) dependant on the greater economic
climate at the time of sale. We caution this is a more
volatile market with the most likely buyer being
a high net wealth individual. The number of such
buyers is limited in the local market with prospective
purchasers most probably coming from Sydney or
interstate.
NSW North Coast
Clarence Valley
Residential units in the Clarence Valley are mostly
found in the regional centre of Grafton and the
coastal tourist town of Yamba. The unit market
situation within these two towns is like chalk and
cheese. Interestingly while Grafton has a larger
population, Yamba saw double the strata sales since
January 2014 compared to Grafton. In Grafton
units start from $50,000 for a basic 1-bedroom
apartment and range up to $350,000 for a brand
new 3-bedroom villa. This market is mostly driven
by investors and owner occupiers. In Yamba units
are sought after by holiday renters and capital city
owners who seek the beach lifestyle and ocean views.
Units in Yamba start at $200,000 for a 2-bedroom
townhouse up to $1.34 million for an ocean front
4-bedroom apartment. The NSW RMS has proposed
a new highway nearby Yamba and Grafton which is
expected to drive demand for units in the area. Once
the highway begins and more workers come to the
area there may be a lack of housing, placing upward
pressure on units and rentals.
Lismore/Casino/Kyogle
The existing residential unit market in Lismore
City, and to a smaller scale in Casino and Kyogle, is
typically characterised by brick and tile construction,
Residential
The recent upturn of the market has seen increased
construction of new unit developments which have
been noticeably absent during the GFC period. Park
Beach, located four kilometres north of the CBD, has
seen considerable new unit product predominantly
targeting the affordable end of the market.
Several modern townhouse complexes have been
constructed which generally provide 3-bedroom,
1- or 2-bathroom accommodation in complexes of
five to ten units ranging in price from $350,000 to
$400,000. The majority of purchasers have been
investors with rental returns of $360 to $400 per
week being achieved. There are a percentage of out
of town buyers for this product, however prices are
generally supported by sales of existing product.
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Month in Review
September 2015
Depending on location, quality of PC items, body
corporate financial position, whether renovated
or unrenovated, the market value range for this
humble accommodation type under current market
conditions can vary from $150,000 to $275,000 in
Lismore City and $100,000 to $200,000 (average) in
Casino and Kyogle.
Naturally, there are some outliers, but anecdotal
and available sales evidence suggest higher prices
are achieved for units close to the CBD and service
facilities such as shopping, hospital and major
shopping centres.
Off the plan unit developments are rarely entertained
in Lismore City, Casino or Kyogle compared to the
more coastal based communities of Ballina and
Lennox Head as there is still, traditionally, a stronger
local market sector seeking standard house and
land packages. However, we are aware of some
enterprising proposals in the pipeline for the local
region (Goonellabah) that could provide some
impetus in the investor or price conscious owner
occupier market with interest already shown in
some pre-sales for a contemporary style apartment
proposal situated within a holistic or community
living inspired design layout with community
gardens, parking and on-site manager.
This is still a relatively untested market for Lismore
City, but signs are encouraging as more modern price
conscious real estate products are made available to
the general public locally and abroad.
In the past ten years, there has been a preference for
new residential unit development to be dominated
by the higher quality, attached or detached
(free standing), duplex style residence, typically
comprising 3- or 4-bedrooms with 2-bathrooms
and a double garage ALL situated on a smaller site,
therefore eliminating (in theory) a high level of
maintenance with smaller yards, limited lawn space
and smaller, intimate garden areas. For the timepoor owner occupier and tenant, such a real estate
product provides a similar quality of living space but
just on a smaller site.
In some cases, a body corporate structure could be
minimised with each free standing duplex having
separate insurance policies and possibly no sinking
fund fees. This is usually achieved by utilising a
corner parcel of land that enables separate town
water and sewerage, mains power connections and
separate driveways, thereby eliminating any common
or shared areas.
As such, the sales prices achieved for this seemingly
popular investment real estate vehicle of late can
range form $350,000 to $450,000 within Lismore
City and $250,000 to $350,000 in Casino or Kyogle.
Recent policies adopted by local authorities have
given some encouragement to the budding small
developer, in particular, Clause 4.1C under the
Richmond Valley LEP 2012 for the Richmond Valley
area and Policy 5.2.32 from Lismore City Council for
the Lismore City area. These are worthy of a read for
any small time developer who may have a vision for a
vacant parcel of land or a parcel of land with a house
and large backyard (granny flat anyone?).
In summary, there are encouraging signs of interest
in attached housing, particularly now that we are
living in an era where price is very sensitive to
the dynamic challenges and shifts in society and
the market is having to adjust to the changing
demographics of the populace i.e. larger families are
becoming an increasingly rare species and single
living is deemed to be more acceptable nowadays.
Hence, the provision of market appropriate real
estate products is always a challenge to predict
ahead of time.
Residential
built within the 1980s or 1990s. This particular era
was generally represented by simplicity of design
and function, and units are usually single level,
comprising 2-bedrooms, 1-bathroom/laundry,
combined living and dining area and an attached
carport or a single lockup garage. There are a
number of three or four level apartment blocks and
attached townhouse developments (constructed
towards the middle and latter part of the 1990s),
however the bulk of the existing residential unit stock
is single level.
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Month in Review
September 2015
Lennox Head, Byron Bay, Mullumbimby, Ocean
Shores
Attached housing in the areas of Lennox Head,
Byron Bay, Mullumbimby, Ocean Shores and the like
is considered as strong and in demand. Interestingly
the market for 2-bedroom units on the flat and level
town area of Lennox Head has seen an increase in
demand and made developers re-think design options
before turning soil. The unit stock in all of these
areas seems to be limited and demand considered
as high. Pricing points vary across all areas however
with the limited stock available interstate buyers who
are used to smaller land areas (say from the suburbs
of Sydney and Melbourne) still find duplex units and
townhouses with yard space attractive and not overly
different to the overall land areas they were used to.
Off the plan purchases are still at a minimum and
agents are reporting they are hard to convert into
sales until the finished product is near fully complete.
Ocean Shores and surrounds is considered a good
opportunity. The buy-in prices are relatively cheap
when compared with the larger resort townships of
Byron Bay and Lennox Head. The rents achieved in
Ocean Shores also make it appealing if an investment
driven purchase.
Orange/Bathurst
Units and attached houses form a minority in the
local market, however the stocks of such housing
continue to increase in line with demand. Most
units can be found within four kilometres of a CBD
and the majority of unit construction is occurring
within these established urban areas. Knockdown
and redevelopment or rear development is most
common. Units in these developments have
previously been mostly strata titled however these
days there is a trend towards community title which
has the appeal of allowing owners more ability to
maintain the externalities of a unit without the need
for as much formal approval. The market ranges
from $150,000 to $350,000.
There are relatively few unit developments in new
estate areas, although that’s not to say there aren’t
any. In a planned gated community in Kelso called
Wentworth Gardens, 2-bedroom, 2-bathroom units
are being sold off the plan for between $350,000
and $375,000. Outside of such a gated community
the extent of attached housing in new estates is
limited to duplexes which have seen an increase in
popularity lately.
Interestingly there have been a number of
asymmetrical duplexes with typically a 4-bedroom
dwelling on one side, and a smaller 2-bedroom
granny flat sized dwelling on the other. This could be
in response to the phenomenon of three or even four
generations living under the same roof as housing
and other living costs become more expensive. In
terms of other attached units, there hasn’t been a
development of a multi-storey apartment complex
since the 1970s in the area. Unfortunately some
of the existing complexes seem to have become
synonymous with a lower socioeconomic status.
Of the attached housing in the area, a favourite
remains the original terrace houses scattered
throughout Bathurst. There are some in Orange
but not as many. They may be two or perhaps six
terraces in length, usually built before 1930 and often
have decorative wrought iron.
Residential
Ballina
Single level 2-bedroom units situated on Ballina
Island are the most popular in the area. This is due to
the older demographic who are buying to downsize
to a low maintenance home. As this immediate
locality is generally level it makes it an easy walk
to local amenities. In general the housing market
is considered superior in popularity for first home
buyers. In some instances units are used as a first
purchase but this is a last resort option because
within the years to come they are looking to upsize.
Units within the East Ballina area are popular with
investors who can see a good rental return. This
locality is one of the top three in the Ballina area.
Some investors use this as income potential but also
have the option to retire close to the beach in years
to come.
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Month in Review
September 2015
Victoria
The off the plan sales in the CBD are strongly
underpinned by foreign purchasers. 95% of
941 apartments within the proposed 92-storey
skyscraper known as Aurora located in the heart
of the city were sold in a fortnight. Approximately
75% of the buyers are from South-East Asia and
China. EQ Tower, another 63-storey skyscraper on
A’Beckett Street, was sold out within eight months.
The development will comprise 633 apartments on
completion in June 2017.
There is a growing concern of oversupply in the
market. It was recorded that 1,518 new apartments
settled in the CBD over the past 12 months to May
2015 (City Scope, 2015). Demand will need to remain
strong in order to match the large influx of new
apartments over the short to medium term. Inner
city apartments that are established or are not being
sold off the plan, can generally be purchased at a
lower price than a new apartment. The recent resale
of new apartments evidenced that many of the new
apartments, even being sold in brand new condition,
are struggling to achieve their original off the plan
purchase price.
Attached housing has been growing rapidly within
Melbourne. South Yarra is an inner city premium
suburb and has a median house price of $1,662,500
(detached housing) (REIV.COM.AU). According to
experts, the high demand suburb has been rated as
one of Melbourne’s most liveable suburbs with some
of the most popular shopping and dining precincts.
The area has experienced a large influx of new midto high density residential and mixed use attached
housing developments which have influenced the
area and market previously known for single dwelling
housing or low-set small density unit buildings.
The most attractive type of attached housing
available within the area is the boutique residential
apartment developments with high end finishes.
In relation to attached housing, the area is
strongly characterised by mid to high density unit
developments, therefore creating a strong demand
for townhouses which are considered unique within
the area and are extremely competitive at auction.
The suburb itself is experiencing large population
growth and the space within South Yarra is becoming
limited for further developments. As seen from the
results of the television show The Block, the threestorey townhouse market is strong and unique for
the suburb of South Yarra driving the townhouse
market up. The best opportunity for attached
housing is townhouse living, but with limited supply
and high competition, the smaller unique, low density
developments would be the next best option.
The outer eastern suburbs are generally popular
among first and second home buyers with families.
There has also been a noticeable rise in market
activity from foreign purchasers. Both builders
and developers are active in the marketplace,
with an increased focus on purchasing potential
redevelopment sites. This has led to a noticeable
increase in townhouse unit development in these
Residential
Melbourne
There will be a plentiful supply of apartments in the
CBD and inner suburbs in the next few years. It is
estimated that there will be 160,000 established
contemporary apartments in the market by 2018, a
43% increase compared to 112,000 apartments in
2015. Some of the upcoming standout developments
include Far East Consortium’s West Side Place,
featuring Ritz Carlton Hotel and approximately 2,600
residential apartments over four towers, which
neighbours its sister Upper West Side development.
In April 2015, the green light was also given to three
high-rise developments delivering 1,958 apartments
in Fishermans Bend.
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Month in Review
September 2015
would fetch around $150,000 to $170,000. Modern
2-bedroom townhouses are up around $250,000,
with modern 3-bedroom townhouses up around the
$300,000 mark.
The Yarra Ranges area and Melbourne’s south
eastern area have seen a significant rise in
townhouse development within the past decade.
Prior to this period the area was characterised by
single level detached brick veneer and weatherboard
dwellings on a quarter acre block (864 square
metres). Today it is a mixture of new attached
housing, detached townhouse and backyard
development and the conventional 1950s single
level dwelling which remain highly attractive to
the development market for potential subdivision
opportunities. Larger vacant land allotments
have also seen considerable interest from local
development and investment companies operating
within the area.
Wellington
Unit and townhouse sales in the Wellington area
have remained in steady demand. 2-bedroom units
and townhouses close to the CBD generally transact
at between $220,000 and $240,000, while those
distanced from the main shopping areas reach
$160,000 to $190,000, depending on location and
condition.
Gippsland
Latrobe Valley
Throughout the Latrobe Valley, there is a sufficient
amount of attached units for the market. Most of
these were constructed in the 1970s and 1980s and
are 2-bedroom, 1-bathroom brick veneer units with
1-car garage or carport. There has recently been a
shift in demand to larger units which are more like
townhouses, with 3-bedrooms and 2-bathrooms. A
neat, circa 1980 2-bedroom unit in original condition
Higher end townhouses or those in prime locations
can fetch up to $350,000, especially those with two
bathrooms or double garages. A landmark sale of a
high end, two level townhouse with lake views was
made earlier this month, at a sale price of $650,000.
With a view to the investment market, rental returns
generally fall in the 5% to 7% category and are an
attractive low-maintenance option for investors.
Mildura
When we think of units in Mildura we typically think
of what was constructed in the period between
about 1970 and 1990. During this period there were
quite a few small complexes constructed, typically
containing three or four attached units, usually
2-bedroom on standard residential allotments within
1.5 kilometres of the town centre. While some of
these complexes have been updated, many are still
in largely original condition. With a relatively tight
rental market, occupancy rates for these units have
been strong irrespective of their condition and
investors have seen them as a safe, positive cash flow
investment.
Some complexes are held under an Owner
Corporation structure, while others are not. Our
advice to owners has been that it is probably not
worth strata titling those complexes still on a single
title, as these complexes are quite affordable for
investors, typically selling for between $300,000 and
$500,000.
In recent times, developers have
focused more on building detached
townhouse style accommodation.
These properties have larger living areas and
private outdoor areas. Some of these have been
constructed in inner city locations, with these
typically containing two or three townhouses,
however a number of larger complexes have also
been constructed on larger allotments, specifically
included for this purpose in new subdivisions. Buyers
of these properties have included a mix of both
owner occupiers seeking either more affordable or
low maintenance accommodation and investors.
Residential
areas. In 2015, the outer eastern suburbs are still
considered to offer value for money which makes
these areas attractive and affordable for first home
buyers, families and investors alike.
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Month in Review
September 2015
The old adage that land appreciates while buildings
don’t applies to the unit and townhouse market
in Mildura. Value movements have tended to be
lower for attached units than for detached housing,
although increasing rents and decreasing interest
rates have made their yield more attractive in recent
times.
There are still opportunities to refurbish some of
the older unit complexes with the benefit of then
generating higher rents and reduced maintenance
costs.
Echuca
The opening mark for older 2-bedroom, 1-bathroom
accommodation in a six to eight unit complex can
be as low as $150,000 for units constructed in the
1970s although generally prices range between
$170,000 and $190,000. Centrally located units
and townhouses tend to achieve substantially
better prices with some demand for 3-bedroom
townhouses within walking distance of town or the
hospital. Typical prices are in the order of $250,000
for townhouses further out of town and $350,000
to $450,000 for well presented, centrally located
townhouses. Supply in this market segment is almost
exclusively the domain of builders who are able to
construct the buildings during their quieter periods.
Ballarat
Attached housing in the Ballarat region is limited.
The majority of attached apartments are centrally
located and constructed between the 1950s and
1980s. Most multi level complexes are two to three
storeys. In recent times developers have converted
churches into residential apartments which vary
from 1-bedroom to 4-bedrooms. Modern attached
unit complexes are limited within Ballarat with only a
handful constructed in the past 20 years.
We have noticed a shift in the design of modern
units toward larger living areas with more than one
bathroom. These properties attract a premium in the
rental and capital markets.
The older style 1970s 1-bedroom unit in a well
maintained original condition within the inner ring
trade for around $150,000 and rent at a yield of 5%.
This market is performing reasonably well due to its
affordability and rental demand.
The townhouse market in the region is the one
which has seen a significant increase in supply over
the past five years with several developers in the
area building many 3-bedroom townhouses. The
increase in demand has in the most part been taken
up by an increase in demand from investors. This
has seen the capital values for the properties hold
steady. Developers and agents are now reporting this
demand is showing some signs of slowing. As such
the next 12 months will reveal if an over supply issue
is a possibility.
Off the plan purchases for villas and units have been
steady in recent months with three developments of
10 to 20 townhouses each in progress within Brown
Hill, Ballarat East and Sebastopol. The villa market
has shown approximately a 5% to 10% increase
in value over the past five years in the sub prime
locations. This increase has largely been driven by
investors looking for positively geared properties
with tax depreciation benefits. Given the increase in
supply prices should begin to stabilise.
An opportunity would be to purchase an older,
original 1- or 2-bedroom unit in the Wendouree area,
undertake a simple renovation or update of the
property and then lease it. This would result in a
return to the investor of around 7%.
Residential
The largest of these complexes contains
approximately 50 townhouses, each of which has a
double garage and small rear yard.
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Month in Review
September 2015
Queensland
Unit living has become more and more fashionable
in our city. We’ve had the reputation of being a ‘big
country town’ for so long, and that’s had a lot to do
with available land being in good supply. Brisbane
was full of property that came under the banner of
the ‘Great Australian Dream’ – a quarter acre block
with a house – right up until the mid-1980s really.
Over the past 25 or so years, however, urbanisation
toward the CBD has progressed with a mix of hipsters
and empty-nesters keen to take up space within
walking distance of city hall.
As for how developments have changed in recent
years, there’s far more 1-bedroom units without car
spaces making their mark. This design means a lower
buy-in price point for inner-city abodes, particularly
for those single- and couple-residents, and investors
that are looking to tap into these tenants.
At the other end of the scale, owner-occupier stock is
growing in popularity too with a marked increase in
3-bedroom units being made available to locals.
Of course, there’s been a lot of talk about the offthe-plan market and much of it isn’t positive. While
some tall towers are reporting strong sales, the truth
is many are to non-local investors who want to grab
a piece of Brisbane. There are a lot of analysts and
observers speculating that our market will be the
next capital-city boom. As a consequence, supply of
investor style, off-the-plan stock is on the rise and
the full impact of the oversupply situation may not
become apparent until after many of these buildings
are completed in some 12 to 18 months. Add to this
the recent changes from the Australian Prudential
Regulation Authority which will curb lending to
investors through tougher qualifying criteria and
more onerous risk assessment. This is all within an
environment of softening rental demand as well, and
there are plenty of investors who may not see their
initial rent yields maintained.
Valuers are often viewed as a conservative bunch,
but really, we just like fundamentals. They’re good,
solid, reliable guidelines that have yielded steady
results time and time again. When it comes to
units, there are some basic rules you can apply
to try and keep the risks low. First and foremost,
consider well located second hand units. Best of
all, try those 1970s and 80s properties with at least
2-bedrooms and covered (preferably lockable) car
accommodation within established well serviced
suburbs. All the better if you can find something
that’s discounted in price because it needs a little
work. These things are always great to hold in your
portfolio and tend to get solid demand from tenants.
While we’ll always recommend being close to town,
even mid-ring suburbs with ready access to transport
offer great buying. For example Greenslopes and
Coorparoo provide good sized units that can be
renovated, and most are close to public transport,
facilities and schools.
At present in our market, there
are no price sectors you’d call
outstanding performers.
While the upper end is interesting to watch,
everything is pretty steady across the board with
no specific star performers… but that doesn’t mean
there hasn’t been a little eye-candy to mention.
Sydney readers may be unimpressed by this, but a
$5.275 million unit in Ciel on Moray St, New Farm
caught our valuer’s eye. Partly, and unfortunately
for the seller, because it was previously purchased
in 2007 for $5.6 million. Perhaps a sign that while
prestige is picking up, there’s still some way to go.
Toowoomba
Construction activity in the Toowoomba unit market
continues at a rapid pace as developers compete
with each other for development sites. Over the past
twelve months, unit development has intensified
Residential
Brisbane
The Manhattan-isation of Brisbane continues at a
staggering rate with an extraordinary number of
very tall residential towers set to come out of the
ground over the coming years. Not all of them will
‘proceed to final’ of course, but with seven to ten
years supply in the works, you’ve got to think we may
hit a saturation point very soon.
37
Month in Review
September 2015
The primary concern is the
looming oversupply as vacancy
rates for new units in the western
suburbs are on the rise.
Units that feature compact floor areas and tight car
parking facilities and those removed from suburban
shopping and transport zones are proving difficult to
rent at present.
The market for new units located in established,
in-fill areas across the eastern and southern areas of
Toowoomba are more sought after as this product is
also appealing to owner occupiers, which broadens
the buyer profile.
While at present new units are achieving a premium
on sale, second hand stock has seen a reduction in
both sale price and volume of transactions.
The median unit price as at June 2015 for units in
the 4350 postcode was $300,000, which shows a
decrease of approximately 1.5% since the previous
quarter.
Asking prices for newly constructed units appear to
be in the early stages of decline with some sales and
rentals being incentivised. Despite this, across all
property types the vacancy rate for Toowoomba has
stabilised at 3%.
Gold Coast
The market for attached townhouse/villa and
apartment product on the Gold Coast has steadily
improved over the past two to three years.
While initially, this improvement was focused on
established, resale stock as these market segments
improved, we have also seen improved demand
shown for new unit product, particularly for new
townhouses and apartments priced below $500,000.
Furthermore, while new home unit product on the
Gold Coast continues to be mostly purchased by
investors at price levels which are considered to
be high based on local comparable market resale
evidence, the firming in the established markets, has
to some degree, started to bridge the gap between
new and second hand dwellings. This has had a
resultant positive impact on the settlement risk for
‘off the plan’ sales, with most project marketing
agents reporting of reduced ‘fall over’ rate for pre-
sale contracts over the 2014 and first half of 2015
period.
Local real estate agents confirm that prevailing
conditions in most market segments on the Gold
Coast are buoyant, reflecting improved levels of
demand, increased sale volumes, shorter selling
periods, reduced stock availability and upward
pressure on sale price levels.
As a reflection of the favorable market conditions,
there are a number of new medium and highrise
apartment projects currently being marketed on
the coast, and most specialist marketing agents are
reporting of good sale volumes for product priced
below $500,000 and that there has been price
growth in recent releases over the past six to 12
months. The concern now lies as to the number of
projects which are proposed and as to whether the
demand will continue to sustain the potential future
supply of new product.
In the established market segments, potential
opportunities still appear for resale residential
apartments in central beachside locations between
Burleigh Heads and Main Beach, particularly for
highrise stock in large yield buildings. The reality
being that the sheer volume of resale stock that
can be on the market at any one time in these high
density suburbs, or in a particular building, can keep
a ceiling on price levels, despite the surging detached
housing market in the same areas.
Residential
across the western suburbs, particularly Glenvale
and Kearneys Spring, for which development and
demand have been predominantly absentee investor
driven. Extremely limited owner-occupier interest has
been observed throughout these estates as there
is a higher risk that amenity and overall appeal of
these areas may deteriorate at a faster than average
rate due to the influence of tenants, a trend which
will likely be exacerbated into the future as rental
pockets become more apparent.
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Month in Review
September 2015
Over the past two to three years, there has been
a large focus on medium rise apartment buildings
in the Southport CBD following the release of the
streamlined Southport PDA approval process. This
has led to a larger volume of approvals being issued
for Southport, some of which are for very large yield
highrise buildings. While development to date has
focused on smaller projects, where demand appears
to be adequately absorbing supply, there is a degree
of concern to the overall volume of approved stock
that potentially could be brought to the market if
a number of the approvals were acted on. Hence,
future supply levels and sale volumes for new
apartments in Southport could be an area to keep an
eye on.
We note, however, that there are a large number of
100 plus apartment highrise projects approved within
the Southport PDA area and that a proportion of
these have been obtained by ‘speculators’, with the
intent to on sell the approved site, likely to overseas
interests. To date, we have seen only limited local
developers or lending institutions show an appetite
for these larger scale developments in Southport,
and the reality is that while a larger potential supply
of apartments is approved for Southport, a number
of the proposals, may in fact, not be acted on in the
current development cycle.
In the improved market, there has been a noticeable
increase in the number of proposed fringe residential
apartment projects in areas which are traditionally
regarded as more suburban low density housing
locations. These projects are predominantly
being developed in multiple low and medium rise
apartment buildings where construction can be
staged in 12 month construction phases, and produce
new units at lower prices. These projects have
generally met with good sale results, particularly for
the central periphery areas of Varsity Lakes, Robina,
Bundall and Harbour Quays, which benefit from
significant existing amenities, shopping facilities and
transport infrastructure.
We comment that a large portion of new apartment
projects on the Gold Coast are progressively
providing smaller apartment product when compared
to historical standards, in an effort to suit changing
market preferences with a greater focus on lower
price points.
Interestingly, while we have seen a significant
recent increase in the emergence of new apartment
projects released on the Gold Coast over the past 12
months, there has been limited new medium density
projects appear in the market. However, the absence
of new released townhouse/villa development is not
considered to be an indication of a slowing market.
Rather, the market for new medium density dwellings
has been strong over the past few years, however the
now very limited supply of townhouse development
sites, coupled with the increased appetite for new
apartment product in established residential areas,
has resulted in a limited pipeline of new projects.
Of those projects which have been released in the
market, most are situated in Robina, Carrara and
Hope Island and provides new units priced greater
than $450,000 and mostly, in excess of $500,000. In
the very low interest rate environment, this product
appeals to both investors attracted to the good
rental returns and also, to owner-occupiers who have
been increasingly priced out of the detached housing
market. Furthermore, a number of new releases
within these projects have sold out ‘off the plan’,
prior to construction being completed.
Sunshine Coast
The unit market on the Sunshine Coast remains
patchy. To give some background it peaked in late
2007 and early 2008 with the median unit price
reaching circa $370,000 in 2008 and the volume of
sales reaching 4,465 for 2007 and 3,337 for 2008.
After this, sales halved to their lowest point in 2012 at
2,290 sales and a median unit price low of $345,000.
Residential
These areas all benefit from excellent location
attributes and amenity and typically provide resale
units with good size floor areas and at a lower price
point (both quantum and on a rate per square meter),
when compared to the price levels for smaller new
apartments in buildings currently being marketed for
sale ‘off the plan’.
39
Month in Review
September 2015
Slowly sellers became more accepting of the repriced
unit market and there was an increase in volumes
to 4,079 in 2014. Unlike houses, the unit values
have increased but far more slowly with a median
unit price in 2014 of $352,000. In 2015 we are on
track for sales volumes and median prices to better
2014. Most of the activity is below $500,000 which
accounts for 77% of the sales.
There has been a small improvement in yield to
residential unit investors with rents progressively
increasing over the past three years. Over this
period, the median house price has cumulatively
risen by 15% while the median house rent has
correspondingly risen by 14%. However for units, the
median rent has risen by 11.5% over the period from
June 2012 to June 2015, while the median price has
risen 6%.
Over the past 12 months we have seen a number of
new projects for both unit and townhouses being
marketed with construction commenced. This is good
sign as buyers who have previously been capital city
focused have been looking further afield especially
given the new University Hospital. There is no
doubt that there is a premium being paid for these
properties which should be expected given that they
are new. Some are marketed with various schemes
such as NRAS to help sales. The hope is that the
unit market will keep trending how it is with steady
value growth so that the values being paid can be
supported.
Emerald
The unit market in Emerald is performing very
poorly at present and given the current low level
of demand, the high level of supply and the current
vacancy rate, the signs are pointing toward further
heartache for owners of units and townhouses in
Emerald. The lowest unit sale for 2015 is a flood
affected 2-bedroom, 1-bathroom townhouse for
$115,000. Older 3-bedroom units are selling at
around $150,000 and modern 3-bedroom units at
around $220,000 to $250,000, down from a peak in
2012 of $400,000. Units have been the hardest hit
in the current slow down with an oversupply, lack of
investor interest and most purchasers, being owner
occupiers, preferring a house.
Hervey Bay
The unit market has undergone a gradual absorption
of excess stock over the past five to six years after a
long period of oversupply and retracting sale prices.
There is currently reasonable demand for onground
unit stock located close to the CBD and beach.
Depending on the location and overall improvements,
the difference in sale prices between new and older
existing units appears to be minimal. For example,
onground circa 1990 2-bedroom, 1-bathroom units
may sell for only $20,000 less than a circa 2007
modern 2-bedroom, 2-bathroom townhouse in a
similar location. It appears that the demand for
onground units appeals to a wider market and is
likely to appeal to an older buyer (with many retired
residents on the Fraser Coast).
Most of the older unit stock in original condition
predominantly sells from $190,000 up to $230,000.
Newer units may typically sell for between $250,000
Residential
Sales volumes in the unit market continue to be
very much location and property specific. The
main impediment in the unit market is high body
corporate fees, especially in the investment unit
market. Eroding modest occupancy increases with
discounting is usually required to effect a sale. Units
in smaller, near to beach complexes suited to owner
occupier or permanent rental have seen increased
demand and some value increases. We have also
seen a move to larger, permanent occupancy style
units as a people look to downsize from a house.
40
Month in Review
September 2015
Bundaberg
Unit sales in the Bundaberg town area have been
slow over the past six months with just under 30
sold. Prices range from $107,000 for a 1-bedroom,
1-bathroom renovated unit from the 1970s to a circa
2005 3-bedroom, 2-bathroom unit with 2-car built-in
garage for $300,000.
The main sellers are the 2- and
3-bedroom units that range from
low $200,000 to $300,000 for
the 3-bedroom units.
The construction of new unit stock is sporadic and is
mainly four pack complexes with some larger ones
depending on the size of the parent block.
Median rentals range from $225 per week for
2-bedroom units to $280 per week for the larger
3-bedroom units. Yields are around 5%.
Gladstone
The unit market in Gladstone is performing very
poorly at present and given the current low level
of demand, the high level of supply and the rising
vacancy rate, the signs are pointing toward further
heartache for owners of inner city units/apartments
and suburban townhouses in Gladstone.
Demand for near new, modern apartment stock
is extremely limited. Only two sales of modern
apartments in Gladstone have occurred in 2015 to
date. Both of these sales showed declines of between
45% and 50% from sale prices that occurred in the
peak of the market in 2011 and 2012.
The market for older townhouse and unit stock in
suburbs around the city has been fairly active over
the past several months. Values however are also
showing very significant decreases of between 40%
and 50% from the prices achieved in the peak of the
market. There have been 13 sales to date for units
or townhouses of older age (typically over ten years
old).
Over 900 new units or townhouses were built over
the five years between the beginning of 2010 to
the end of 2014. The initial surge in construction
activity was to combat the severe accommodation
shortage occurring because of the LNG boom.
Most of these were purchased by investors on off
the plan contracts and the completion of many of
these projects occurred well after the market had
peaked. Despite the oversupply of unit products in
Gladstone we are aware of a number of projects that
have recently started marketing units off the plan
and there is another fairly significant townhouse
development which has commenced construction.
Another worrying sign for the unit market in
Gladstone is the vacancy rate which has been
steadily climbing over the past several months. The
vacancy rate peaked in December 2013 at 10.2% and
has generally fallen until around January 2015 at
which time it started rising again. The vacancy rate
currently sits at 6.8%, the highest it has been since
May 2014.
Major companies associated with the LNG
construction have recently started selling off surplus
housing stock in Gladstone. We know a number of
these companies hold significant stocks of units and
it is only a matter of time before the stock on the
market increases.
With the number of workers on Curtis Island
decreasing by the week, the outlook for the
Gladstone market in general is dim, however close
attention should be paid to the unit market as it is
likely to take the hardest hit.
Rockhampton
Rockhampton has traditionally had a very small
sector of its markets represented by attached
Residential
and $330,000, with higher priced stock above this
range selling for $380,000. Buyers in the unit
market comprise a mix of investors and owner
occupiers, with most units selling within six months
of the original listing. Going forward, new unit
development is considered eminent with affordability
being a key factor for selling prices in order to
achieve a steady sale rate.
41
Month in Review
September 2015
• Waterfront - 2005 (13 unit complex over six levels).
Permanent occupancy only.
• The Rocks - 2007 (28 unit complex over nine
levels). Permanent occupancy only.
• The Edge – 2009 (77 unit complex over 12 levels).
Restaurant and short term accommodation.
• Quest – 2012 – Predominantly short term
accommodation with little sales evidence to date.
• Empire - 2014 – (138 unit complex over 12 levels).
Restaurants and short term accommodation.
• South Bank – 2014 (54 complex over eight levels).
Permanent occupancy only.
Further to this The Gallery is current calling for
expressions of interest and is expected to start
construction in early 2016. The complex will comprise
62 units over nine levels.
Over this time we have seen the average size of units
decrease with a focus on the bottom line. Smaller
units equals more units and these have proven to be
very attractive to the market. In 2005 we saw large
spacious 3-bedroom units (160 square metres plus)
selling from $330,0000 off the plan compared to
Empire where much smaller 1-bedroom units of 50
plus square metres have sold for $330,000 off the
plan.
Despite the significant boost in unit numbers over
the past ten years the attached residential space
still reflects only a very small percentage of the
entire Rockhampton and surrounding residential
markets. This has been a key factor in the successful
marketing and solid sales rates which have enabled
these developments to get out of the ground.
Looking forward the notable downturn in the
resource industries across Central Queensland and
general lack of confidence across the market may
result in an extended period where the Rockhampton
skyline remains unchanged for some time into the
future.
Mackay
Units in Mackay have had a roller coaster ride over
the past five years. On the back of historic low
vacancy rates for standard residential and high
occupancy rates for motels and serviced apartments
a large number of units, ranging from smaller
duplex, triplex and quadplex complexes to large
scale highrise unit complexes were thrown into the
mix. During the planning and construction phases,
the market in Mackay turned quite sharply and
quickly on the back of the downturn in the resource
industry. Standard residential vacancies some two
to three years ago were below 1%, and now hover
just over the 9% mark. Rental values have reduced
significantly on the back of this reduced demand and
fallen in some instances up to 40% from previous
highs.
One area of concern is the highrise unit market.
There were previously four highrise towers within
the Mackay CBD: The Rivage contains 59 1-, 2- and
3-bedroom units; Lanai comprises 80 1-, 2- and
3-bedroom units; The Crown contains 43 2- and
3-bedroom units; and Fusion comprises 31 2-, 3- and
4-bedroom units.
In the past 18 months, there are another five highrise
towers recently completed or nearing completion
within the CBD or fringe locations: Rivermarque;
Riviera Mackay; Carlyle Apartments; Pacific Sands;
and Gateway Apartments. Rivermarque is a new
eight level residential unit tower located within
the fringe of Mackay CBD. The complex consists
of 91 units being a mixture of studio, 1-bedroom,
standard 2-bedroom and 2-bedroom dual key units.
The complex is managed by Oaks Property Group.
The Riviera complex has just been completed and is
Residential
residential units. This was until mid 2005 when we
saw the first major high rise unit development in
over 30 years occur along the river front precinct
known as Victoria Parade. Since then there has been
a significant boost in unit construction with six major
complexes built, all concentrated on the same river
front precinct. A brief summary is as follows:
42
Month in Review
September 2015
This construction phase has introduced a further
326 units into the Mackay market on top of the 182
existing units. Throw in another eight completed
highrise residential towers at Mackay Harbour and
it has become apparent there is an oversupply of
highrise units. Most of the new completed units in the
CBD were purchased off the plan in 2012 prior to the
fall in the Mackay market. It will be interesting to see
when resales occur the level of demand and prices
that can be achieved in the current market.
Townsville
The unit market has fluctuated markedly over the
past five years particularly in the new unit sales
category driven by new unit releases, along with the
clear out of distressed developer stock. Another
factor to impact the unit market over the past years
has been the impact of escalating body corporate
fees. Our current assessment of the unit market is
that it remains relatively flat overall at a combined
total of around 50 to 60 new and established unit
sales per month.
The median established unit price has dipped since
early 2011 following escalating body corporate
insurance fees along with low demand particularly in
the established unit market. Affordability concerns
continue to dominate the market, however over
recent months anecdotal evidence indicates that
the established unit market has now reached a
price point that is again becoming attractive to
owner occupiers and investors alike. The median
established unit trend price came in at $257,000 in
June 2015, up on the $249,000 median price trend
recorded in June 2014. Meanwhile for a new unit,
the median trend price came in at $307,000 in June
2015, which is similar to that recorded in June 2014.
In the new unit market larger developments have
shown a distinct shift in size, configuration and
amenity offered over the past five years, which
has made them predominantly suited and targeted
to investors. Due to strong construction costs,
developers chose to reduce the size and scope of
their product to meet a price point. Over the past
five years we have seen an increasing number of
1-bedroom units and fewer 3-bedroom units being
Residential
located on the northern side of River Street directly
opposite Rivermarque. It consists of 64 1- and
2-bedroom units. Carlyle Apartments has recently
been completed and provides 59 1- and 2-bedroom
units plus 2- and 3-bedroom dual key units. It is
located on the south eastern fringe of the CBD. The
complex is managed by Oaks Property Group. Pacific
Sands has recently been completed and provides
56 1- and 2-bedroom units plus 2- and 3-bedroom
dual key units. These units are removed from the
CBD and located in close proximity to town beach.
Gateway Apartments has recently been completed
and provides 56 1- and 2-bedroom apartments. These
are located in the older residential suburb of West
Mackay, removed from the CBD.
43
Month in Review
September 2015
Our unit survey as at the June quarter indicates
a supply of 84 new developer units available for
purchase. Current supply consists of three new
units available in the CBD and 81 in suburban
developments (within developments of 20 or more
units).
Over the past 12 months there has been a distinct lull
in new unit developments commencing construction.
We have seen throughout the first half of 2015 a
slight shift in activity by developers with anecdotal
evidence suggesting perhaps we are seeing a refocus
on the local market.
Cairns
There has been a distinct dichotomy in the
performance of the residential and tourist unit
markets in Cairns. The tourist unit market peaked in
median price terms back in 2004. This was followed
by a distinct post-GFC correction from which it has
only partially recovered. The current median tourist
unit is still 28% down on the 2004 peak.
By comparison the median residential apartment
price peaked in 2010 before lowering as a result
of the slow market combined with buyer aversion
to both new and established strata housing over
insurance rates. The latest median residential unit
price is 19% down on the 2010 peak.
However the median unit price overall has increased
by a cumulative 18% from 2012 through to 2015.
The unit development story in Cairns is a very short
story, as it has been at a virtual standstill over the
past five years. There are projects in the pipeline but
very little happening right now on the ground as they
seemingly await the right trigger point to commence
construction. In short, the market is on the cusp of a
new phase of construction and development, but is
not quite there yet.
Residential
offered by developers along with units having
reduced main living areas with the focus being driven
by price points.
44
Month in Review
September 2015
South Australia
Price points are variable and are dependent on the
scale of the development. In some higher density
developments land components are very small
and prices will be in the order of $250,000 to
$350,000. Where as the more traditional two or
three dwelling development will result in an end value
of an attached dwelling being from $300,000 to
$600,000.
In particular there are large parts of Campbelltown
have been rezoned for medium density housing and
areas such as the inner western suburbs including
Seaton, Brompton and Bowden, and suburbs
surrounding the airport are all undergoing urban
renewal to some degree.
A word of caution from a funding perspective in
regard to multiple dwelling developments. There are
limitations resulting from the Australian Banking
and Finance Industry Standards in regard to co
dependence of dwellings and this has resulted in
complexity in obtaining finance prior to contruction.
We recommend some caution to investors looking to
buy lower priced product in the outer suburbs and
in particular the outer northern suburbs given the
short to medium term prospects of unemployment
in the north. There is potential for stagnation or
contraction of demand in those areas which might
mean declining prices in real terms. These areas
need close monitoring over the next two years.
Design change have tended towards smaller
developments and in the inner city accommodation
of less than 80 square metres is not uncommon.
Smaller units in the city may be being bought by
investors and there are some signs that there is an
oversupply of new product. This may have an effect
on the secondary markets.
Our market in general remains steady with limited
growth for both houses and units. Corelogic RP Data
Research is the most relaible source for general data
on sales and rentals and recent statistics indicate
that Adelaide dwelling values have risen at a rate
of 3.4% over the past 12 months with the five year
rate being low at 0.6% . The unit value change over
the past 12 months has been 3.4% with the five year
change being negative at -0.4%. There is a rental
growth rate of less than 1% in both houses and units.
However in some districts demand is patchy and
caution should be exercised in decision making. Our
market is showing limited capital growth stemming
from low confidence levels. This is off set to a degree
by the current and continued low interest rate
environment.
Mount Gambier
As seen on the above graph, unit sales have been
relatively stable for the past five years since a large
decrease in sales occurred in 2010 from 2009. Sales
of units throughout 2015 are remaining at similar
levels to preceding years.
Units have remained of a similar standard and
quality and no recent changes in design or moves
towards bigger or smaller units in the area. Most
units, depending on quality and the price point, will
comprise 2- or 3-bedrooms and 1- or 2-bathrooms.
In 2009 there was a movement to introduce smaller,
high density living but it didn’t appeal to locals and
Residential
Adelaide
With many homebuyers being priced out of the
established residential areas the options are
to move to more affordable areas or to buy a
smaller dwellings in an area that is undergoing
redevelopment. There is also the appeal of smaller
living units being simpler to manage and suiting the
modern lifestyle of younger people. Local councils
are starting to encourage more and more medium
density development and this will tend to mean that
attached housing will replace the typical older house
on a ‘quarter acre block’. It is also evident that in the
outer suburbs subdivision projects tend to maximise
potential by including allowances for attached
housing. Areas that are probably most suited to
attached housing are the middle ring suburbs that
have houses that were built duing the 1950s to
1970s but are now in need of either refurbishment
or redevelopment. The tendency is to now look to
fitting two or three dwellings on a site that formerlly
accommodated a single residence. Competition for
these sites is fierce and that benefits the end buyer
as developers are working to thin margins resulting
in end value price points being kept reasonable.
45
Month in Review
September 2015
The price range for units varies greatly from
$50,000 to $325,000. Within the past 12 months
most unit sales have occurred between either
$76,000 and $125,000 and $176,000 and $250,000.
In the past 12 months there have been very few
unit sales occurring above $250,000. These
higher valued units (above $250,000) are usually
recently constructed within modern divisions or well
located centrally and feature 3-bedrooms and 1- or
2-bathrooms. The reason for few units selling above
$250,000 is often due to the fact that for a similar
price a family style home on a larger allotment
can be purchased. Higher valued units exceeding
$350,000 have been constructed in the area.
However, they do not sell often and when placed on
the market often require extended marketing periods
and discounting to achieve a sale.
There are few developments where properties are
purchased off the plan.
Residential
was aimed more at investors from out of town who
had no intention of living in them. These higher
density units have started to appear on the market
for resale and after extended marketing periods and
price discounts, they have not been very successful
in achieving a sale which does show the lower
demand for this property type.
46
Month in Review
September 2015
Tasmania
It could be said that unit sizes do appear to have
become larger than those built in past decades but
what is more interesting is that unit design, both
internal and external has become smarter and more
flexible lending itself to the appearance of space.
Generally internal living areas are open plan in design
offering flexibility, use of large windows in living
areas to create a sense of space and efficient use of
floor area such as the laundry cupboard. Externally
more thought appears to be given to site placement
of the dwellings on the plot (heavily influenced by the
number of units in the development) to maximise the
plot’s views and features, privacy or environmental
benefits. The recently sold below units (at the upper
end of the unit market) in the north of the state are
good examples of thoughtful internal and external
architectural design.
•
•
•
•
Moonah (about six kilometres north of Hobart’s
city centre) for $340,000.
A character, 136 square metre unit in North
Hobart, located two kilometres from the city for
$385,000.
In Sandy Bay, just to the city’s south west, an 80
square metre modern unit for $415,000.
To the east of the city in Bellerive a modern, 109
square metre unit for $438,000.
In West Hobart, a turn of the century, 111 square
metre unit for $515,000.
The most notable unit sale occurring in the south
during this period was a 210 square metre penthouse
apartment in Battery Point for $2.1 million.
Unit sales that have occurred during the past twelve
months in the north reveal there is a broad range of
units available in the market place. For example:
Positive locality attributes for unit dwellers include
being close to the city centre, suburbs offering good
facilities and public transport networks or nearby
major employers such as hospitals and universities.
Unit sales that have occurred in the south during the
past year include:
• A modern approximately 98 square metre unit in
• An older style 70 square metre unit, located in
a suburb on the fringe of Launceston sold for
$150,000.
• A modern, 96 square metre unit in centrally
located South Launceston sold for $255,000.
• Modern 120 square metre units in Prospect Vale
sold from just over $300,000.
The most notable unit or apartment sale in
Launceston during the past year has been the
penthouse apartment in The Charles which sold for
$2.25 million.
Residential
Hobart/Launceston
Traditionally the dominant type of residential
dwelling in Tasmania has been houses. As occurs in
residential property markets over time, availability
of land close to the heart of city centres becomes
scarcer due to population pressures. One of the
many responses to this pressure is to increase
inner city housing density, often in the form of
residential units. Tasmania’s population growth
is much less dramatic than other states but in
one area, the ageing population, it is exceeding
the national average which is a likely contributing
factor to demand for unit living. Developers have
been capitalising on demand for units by achieving
premium prices.
47
Month in Review
September 2015
Northern Territory
Currently the market is operating
at two very different speeds.
Firstly is the demand for new
stock, which is largely being driven
by Government grants. The
$26,000 First Home Owner Grant
is a significant incentive for new
purchasers in the market to decide
on a new unit.
These existing first home owner and previous grants
to all purchasers of new stock have added depth to
the market over recent times. Different sections of
the market have been catered for with the recent
construction boom, ranging from 1-bedroom studio
apartments under $350,000 through to 3-bedroom
units over $1 million.
On the flip side of the demand for the new stock,
the second speed of the market has shown a
significant softening for existing units. Given that
the incentives for new stock are in many cases up
to 5% of the purchase price there is limited interest
in existing units that sit in similar price ranges. It is
also a sign that there are older buildings which are
less attractive to investors due to less depreciation
on the improvements, higher maintenance costs,
lower rental rates and an overall lower return on
investment.
It is not just the Darwin CBD that is experiencing a
high level of construction. In the northern suburbs
Nightcliff, Millner, Coconut Grove and Berrimah
have a number of new unit developments currently
under construction. Looking to Palmerston there is
a mix of unit development in all of the new suburbs.
These include medium density (four storeys)
through to large complexes with ground level and
two storey semi detached type dwellings. Again
these developments are being driven by incentives
to first home owners and a considerable amount of
investment by the Northern Territory Government
under the Real Housing for Growth program. This
sees private investors providing housing options
which are subsidised by 30% of the market rental by
the NTG to offer more affordable housing options for
means tested Territorians.
The most recent data as produced by the REINT
highlights that the overall Darwin median unit price
is $480,000 which remains quite stable only falling
1% year on year to June 2015. The big shift in the
unit market has been seen in the rental market. For
the year to June 2015 in the inner Darwin sector,
1-bedroom units have reduced 9.5%, 2-bedroom
units have reduced 12.5% and 3-bedroom units have
reduced 16.5%. This has certainly been a welcome
relief to all tenants in the market, swinging the
pendulum back to the tenant after a number of years
in the landlord’s corner.
Where to for the residential market? Activity on
development sites across the greater Darwin area
remains quite steady. This suggests that further
development is in the pipeline. As with most sectors
of the market the test will be how existing stock
is absorbed following the completion of the Inpex
construction phase. However we do note that a large
proportion of the workers are located in workers
camps, such as at Howard Springs which is occupied
by over 1,500 workers.
With the continuance of very healthy incentives
available for new stock we would expect that the
demand for off the plan units will continue, albeit at
Residential
Darwin
The Darwin residential unit market has been a
talking point for some years now. Demands from
investors and owner occupiers have brought about
the construction of over 1,000 new apartments in
the Darwin CBD and inner suburbs since the start of
2013, headlined by Stage 2 at the Darwin Waterfront,
Catalina, City Central, Catalyst and Kim on Smith at
the Daly Street end of the CBD, Kube opposite the
Darwin GPO, Zen Quarter on Carey Street and a
number of boutique buildings on inner streets of the
CBD, Larrakeyah, Stuart Park and Parap.
48
Month in Review
September 2015
lower levels to the peaks seen in 2012 and 2013. The
existing unit market is very largely dependent on
the next move from the NT Government. It is widely
considered that a reinstatement of FHOGs on existing
property, particularly entry level units, will help boost
this section of the market through late 2015 and into
2016.
$550,000. With slower market conditions, buyers are
well positioned to find opportunities at both ends of
the market.
Units under $300,000 are having a particularly
difficult time with significant price reductions
since the peak of the market in 2010 and 2011.
Developments such as 111 Bloomfield Street and parts
of Sadadeen around Aneura Place and Cycad Place
are of particular note due to price reductions well in
excess of 20% in some cases. On the positive side, a
neat and tidy 2-bedroom unit is now available in the
$200,000 to $240,000 range, well suited to first
home buyers.
New 2-bedroom units have been selling for between
$400,000 and $425,000 while new or modern
3-bedroom units have been selling for $450,000 to
Residential
Alice Springs
The unit and townhouse market in Alice Springs
provides plenty of variety with a mix of new and
old although it is experiencing subdued conditions
overall in line with the broader market. New units or
those in upper price brackets are faring a little better
and are holding value better than the lower end,
entry level market.
49
Month in Review
September 2015
Western Australia
At this point in the market, a
significant concern lies in the
settlement risk for many of the
development projects which were
pre-sold throughout 2014 as values
may have declined by up to 10%
relative to when pre-sold.
A further complicating factor for investors is that the
rental market has softened considerably with rental
listings increasing substantially and average weekly
rental values falling.
Locations which are of the greatest concern are
in areas where a small six to ten pack walk up
multiple dwelling development is a new concept,
where the locations are not well suited to this
style of development due to limited infrastructure
and amenity in the area. In the northern suburbs,
these are locations such as Balga, Westminster and
Nollamara with the most recent evidence showing
multiple dwelling (end unit) values in these locations
falling by circa 10% to 15% from 12 months ago.
Rivervale, Cloverdale and Belmont have also been
saturated with small walk up type developments
and local agents are reporting very low volumes
of enquiry. The apparent oversupply has been
exacerbated by the completion of numerous
apartment towers in the Springs Precinct which
appear to have absorbed most of the buyers in the
local market. Substantial stock remains available for
purchase (with this volume increasing) in a market
with fewer buyers. These combined aspects will more
than likely lead to price discounting.
Our involvement and discussions with agents for new
residential development within the inner ring of Perth
(three kilometres from the GPO comprising Perth,
Northbridge, East Perth, Highgate, North Perth and
Leederville) reveal pre-sale interest still exists, albeit
at much lower levels relative to 2013 and 2014. Once
again, there is a significant volume of approved
stock and should all of this product be developed, an
oversupply may well result. Noting the slowing presale market however, there is potential that many of
these projects will not proceed in the current market
due to an inability to meet pre-sale covenants, unless
alternative funding sources are secured.
South West WA
Unit development in the south west is limited in
comparison to the state’s capital. The population
density throughout the south west region is relatively
low as many of the residents have left the busy
capital to pursue a lifestyle that involves a back yard
and a slower pace.
The vast majority of dwellings are larger green titled
properties as the constraints that evolve a region
into higher density living do not particularly apply.
The only public transport network offered in the
region is a bus route and as such demand to increase
the density around train stations and other public
transport infrastructure is not applicable.
The CBD infrastructure in the south west towns
is also limited and as such demand to increase
density around CBD hubs is minimal. Any demand
(albeit limited) comes from the ageing south west
population and as such we have seen an increase
in single level unit development close to the CBD
hubs of Busselton, Dunsborough and Bunbury. This
demand has been met in recent years as these
small scale subdivisions have, once again, became
profitable for developers in the current market
climate. Such units can be purchased from between
$300,000 and $500,000. That being said, the
development of multi level apartments is in general
not feasible and is usually met with strong resistance
from the majority of the population.
Residential
Perth
The Perth residential property market remains in a
depressed state with supply outweighing demand
which in turn places pressure on values. Recently
released residential apartment projects struggle
to achieve pre-sales as overall market confidence
dwindles and the prospect of a diminution in value
over the construction phase of a project weighs
heavily on prospective buyers’ minds.
50
Month in Review
September 2015
All in all unit development in the south west is limited
and will continue to stay that way for the near future
until the region is supplemented with a significant
CBD hub and good transport infrastructure.
Esperance
The unit market in Esperance is more incidental
than dedicated, which is probably in line with
other smaller regional centres compared to larger
metropolitan areas. That said, there is a range of unit
accommodation available from basic single bedsit
through to luxury town house developments.
At the low end of the market is a small complex of
bedsit units with living areas of 40 square metres,
small private courtyards and open car parking. These
units are basic and comfortable as well as being well
located within close walking distance of the town
centre and amenities. At the other end of the scale
are near new luxury 3-bedroom townhouses with
living areas in the vicinity of 200 square metres
having ocean views, private balconies and double
garages under the main roof. Both extremes have
seen recent sales in the vicinity of $4,000 per square
metre over the living areas with the size differences
offset by the quality of the units.
Within these bookends are a range of single, 2- and
3-bedroom complexes. The single bedroom units are
typically within a one kilometre radius of the town
centre. Two developments of nine units each are
well established with a further five unit development
completed within the past twelve months and an
eight unit development currently nearing completion.
In our opinion, Esperance is now over serviced by
these single bedroom dwellings. Most are tenanted
with little owner occupation. There have been no
sales of these units for some time however this is
more a factor of little to no properties being available
for sale rather than a lack of demand.
A reasonable volume of 2-bedroom units for a
market of this size and a handful of 3-bedroom units
are interspersed throughout the town centre. There
is a greater proportion of owner occupation for these
dwellings compared to the smaller single bedroom
and bedsit properties.
Outside the town centre any unit developments
are more in the traditional duplex or triplex
configuration. Typically these attached dwellings will
have car accommodation under the main roof with
private front and rear yards. Land allocations can
vary from smaller areas of say 200 square metres
to more typical sizes in the vicinity of 500 square
metres. In the outer areas of the towns, the overall
land and building sizes are not vastly different from
smaller single residential properties. Accordingly, the
market for unit accommodation and single residential
properties is interchangeable with similar values
being paid for both property types. There is a similar
mix of owner occupation and rental properties that
would be found for single residential property.
If you are specifically in the market for a unit,
there would likely be one either in the town centre
or suburbs of Esperance that would suit your
requirements. In the unlikely chance nothing could be
found, there are plenty of larger lots throughout the
town that would facilitate either large or small unit
developments to meet your particular needs.
Residential
The tourism industry has provided a catalyst for
strata development in the south west. In particular
the coastal localities of Bunbury, Busselton,
Dunsborough, Yallingup, Margaret River and Augusta
all have a considerable number of tourist units.
These developments generally consist of single or
two level unit or townhouse designs, ranging from
10 to 50 dwellings in each complex, although there
are a number of resorts such as Abbey Beach Resort
and Sea Shells that offer multi level apartment living
on the beach. Values for these units range from
$100,000 to $300,000 with some executive short
stay properties reaching up to $1 million.
51
Sydney
Perth
Dubbo
Newcastle
Toowoomba
Melbourne
Tamworth
Peak of
Market
Starting to
decline
Approaching
Peak of Market
Cairns
Sunshine Coast
Brisbane
Gold Coast
Canberra
Albury
Bathurst
NSW Mid North Coast
Leeton
Mudgee
Wagga Wagga
Coffs Harbour
Bendigo
Echuca
Mildura
Ballarat
Liability limited by by a scheme approved under Professional
Standards Legislation. This scheme does not apply within Tasmania.
Emerald
Darwin
Alice Springs
South West WA
Approaching
Bottom of Market
Bottom of
Market
Hobart
Launceston
Orange
Entries coloured orange indicate positional change from last month.
Declining
Market
Rising
Market
Start of
Recovery
Townsville
Whitsunday
Bundaberg
Hervey Bay
National Property Clock
September 2015
Houses
Horsham
Gippsland
South East NSW
Mackay
Rockhampton
Gladstone
Adelaide
NSW Far North Coast
Adelaide
Mount Gambier
Riverland
52
Rockhampton
Sydney
Perth
Dubbo
Toowoomba
Melbourne
Tamworth
Newcastle
South East NSW
Horsham
Gippsland
Peak of
Market
Starting to
decline
Approaching
Peak of Market
Brisbane
Sunshine Coast
Gold Coast
Albury
Bathurst
NSW Mid North Coast
Leeton
Mudgee
Wagga Wagga
Coffs Harbour
Bendigo
Echuca
Mildura
Ballarat
Liability limited by by a scheme approved under Professional
Standards Legislation. This scheme does not apply within Tasmania.
Approaching
Bottom of Market
Bottom of
Market
Launceston
Orange
Entries coloured blue indicate positional change from last month.
Declining
Market
Rising
Market
Start of
Recovery
Cairns
Townsville
Hervey Bay
Hobart
National Property Clock
September 2015
Units
Mackay
Rockhampton
Bundaberg
Adelaide
Canberra
NSW Far North Coast
Mount Gambier
Riverland
Emerald
Gladstone
Darwin
Alice Springs
South West WA