Property Market Insights
Quarter 2, 2018
Welcome to the Q2 Market Insights for 2018 from National Property Buyers, where our local agents provide expert analysis of property markets across the country.
Sections: National Market Overview | Victoria | Queensland | South Australia | New South Wales | Case Studies
National Property Market Overview
It’s the end of another financial year and how did it fare?
According to every news outlet the property market has softened across the board. And there is no denying at a national level it has. But is it necessarily a bad thing and is it truly across the board, because when we delve deeper there are many regions and suburbs still enjoying strong capital growth.
Slowing in the most expensive capital cities in the country can only be a good thing for buyers, it is unsustainable to have continuous exponential growth. According to Corelogic “Australian dwelling values continue to trend lower in June amidst tight credit conditions and less investment activity”. Australian dwelling values fell for the ninth consecutive month in June, taking national dwelling values 1.3% below their September 2017 peak.
Source: Corelogic
Credit Conditions
Tighter credit conditions have been a key contributor to the slowdown in the market. Investors and Owner-occupiers to a lesser extent, have had their borrowing power reduced significantly off the back of changes to serviceability calculations, in particular to the way Living Expenses are calculated. It is also important to note that the Living Expenses calculations are being implemented at a Lender Level and the power to access data from a borrowers daily spending habits is having a big effect. Less access to credit has reduced competition in the property market which is one of the key drivers of growth. At the start of July APRA lifted its 10 percent investment cap on interest-only loans, however serviceability and loan to value ratio still remain an important focus with banks, so it will be interesting to see if more investors return to the market.
On the ground we are also witnessing borrowers not being able to extend their interest only loans expiring after 3 and 5 years, so they must now make higher principle and interest repayments. For many who own an investment property portfolio, this is a difficult point in time as their lifestyle had been maintained on interest-only repayments. As a result, we are seeing many investors now choosing to sell their investment properties to generate cash flow.
The chart below shows the heavy reliance on access to investor housing credit which helps drive the month on month change in dwelling values which is heavily subdued at present.
Source: Corelogic
Market within Markets
In our Q4 report in 2017, we coined the phrase “Two Speed Market” and it truly is.
There are suburbs and regions that are enjoying 20% and even 50% growth in the last 12 months. For example, Killcare Heights a beachside suburb on the Central Coast of NSW has enjoyed 50% growth in the last 12 months! Norwood, one of the premier suburbs in Adelaide has achieved 14.11% growth. We feature both these suburbs in our suburbs to watch section.
In Melbourne, we have a range of suburbs still achieving good growth as well. In particular, we have noticed that sub $750k suburbs within commuting distance to the CBD is enjoying substantial competition from FHBs who are enjoying low-interest rates, stamp duty concession and even the help of the bank of “mum and dad”. Investors are also vying for properties in this market and as competition remains fierce in these desirable properties and locations prices are heading north.
Queensland also has suburbs with strong steady growth, for example, houses in Yeerongpilly have achieved growth of 17.4% in the last 12 months, an outstanding result for Queensland.
Politics
Tax is looming as a key issue in the next election, Labor’s plan to slash negative gearing on all but new dwellings is polarising voters. In addition, reforms to Capital Gains Tax will see investors paying more tax to the government as the capital gains discount will be halved. The proposal would not affect investments made before 1 July 2017. All investments made before this date would be fully grandfathered.
Each State across Australia presents it’s own property traps and opportunities and it is never a better time to seek out the advice from an expert buyer’s agent to assist with your property negotiations.
Read on for each State Manager’s analysis of current trends and activity in their markets.
Market Overview
State Overview
The Melbourne market is softening and the numbers released by Corelogic for the last quarter concur with the feeling on the ground. However, we need to keep in perspective that property values are still higher than 2 to 3 years ago. And as always there are markets within markets and there is definitely opportunity for buying in high growth areas. A softening in the market is part of the property cycle and prevents unsustainable exponential growth.
Whilst typically in Winter the overall activity drops off (fewer listings and transactions) we are still seeing some good opportunities present themselves. It’s a buyers market at the moment and good purchases can be made.
We are continuing to see that well-located properties in the sub $750k price range are performing well. There are multiple interested buyers in these properties and competition is driving prices north. Properties that are well located with good bones are attracting FHBs and investors alike. FHBs continue to take advantage of low-interest rates, stamp duty concessions and in some cases the bank of “mum and dad” who are helping their children get into the property market. Townhouses, villa units and small houses are all performing well in the right locations.
But what is pulling the market down?
The high end of the market is struggling. Property in the $1.5-2m+ range is “correcting” with less demand and vendor expectations need to adjust. The clearance rate for auctions has reduced due to a lack of competition in these higher priced properties. Private Sales appear to be increasing but that includes auction campaigns that didn’t sell under the hammer and now properties are listed privately.
The charts below show the drop in auctions clearance rates compared to 2017 and the number of properties sold at auction.
Data Source: Sold Price
Projects
The Victorian Opposition has announced plans to resurrect the East West Link road project, putting forward two design options to link the Eastern Freeway with major roads west of the city.
Mr Guy has also committed the Coalition to completing another project started by the Andrews Government — the $16.5 billion North East Link, which will connect the M80 Ring Road with the Eastern Freeway.
This is a bit of a backflip as in March, Mr Guy described the West Gate Tunnel project scheme a “dud” and not in the interests of the state. It will be interesting to see how the Liberal party responds to this change of heart.
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From July 1st 2018 APRA lifted the 10% cap on investor loan growth for lenders. This will enable more investors to re-enter the property buyer arena. Serviceability and loan to value ratio will remain important but it will be interesting to see if the cap removal will allow for more competition between the banks and keep interest rates low.
With the Melbourne Property Market sitting in favour of the buyer at the moment, good purchases can be made if they are in the right location. This quarter our suburbs to watch focuses on two suburbs that offer good growth opportunities in the years to come.
Seaford - “The Serenity”
Overview
Seaford is a Bayside suburb located on Melbourne’s outer south-east, 36 kilometres from the CBD. Seaford has quiet and beautiful beaches and who can resist proximity to water and the lifestyle it offers.
Seaford ticks all the key investment criteria: transports, shops, parks, schools and medical facilities. It is 45 minutes into the CBD and Frankston is just next door for larger shopping precincts and nightlife.
Seaford is traversed by the Frankston Freeway and the Frankston railway line while the Nepean Highway runs adjacent to the foreshore in the west. The suburb is primarily residential with significant industrial areas in its northern parts. The suburb, along with many other coastal suburbs around Frankston is gentrifying and offers an amazing lifestyle at more affordable prices. But as with all suburbs there are areas that are better than others for residential living. And for the best locations, we recommend buying west of the freeway (beachside).
The suburb features the beautiful Seaford Wetlands Seaford North Reserve and the Seaford Life Saving Club. The Seaford Wetlands is a magnificent 305 hectare nature reserve which is listed on the Register of the Natural Estate. The wetlands are home to a wide variety of bird life, including a number of rare and endangered migratory species protected by international agreements.
Interestingly, properties are bought very quickly in Seaford. Listings can be up for two weeks then they sold.
Pricing
According to Corelogic the current median house price Seaford is $745,000. The current median unit price Seaford is $481,000.
Trend in Growth for Houses
Trend in Growth for Units
Purchase Example
Perfectly situated in a quiet cul-de-sac in one of Seaford’s most desirable and peaceful pockets, this three bedroom family home has been fully renovated to the most exacting standards. With a prized location to match within walking distance to the pristine waters of the Seaford beach, shops, railway station, wetlands and recreational reserves, this home offers low maintenance living combined with modern touches. Featuring a spacious living room with split system heating/cooling, plus stunning polished floorboards and adjoining dining area. State of the art light filled kitchen with stone benchtops and dishwasher.
St Albans– “Bang for your buck”
Overview
Land, Land, Land. Big blocks of affordable land with a house thrown in.
St Albans is located 16 kilometres North-West of the CBD and is primarily a residential suburb. St Albans is close to everything – schools, plazas, hospitals, freeways and the airport.
Convenience in public transport is what sets this suburb apart from many, you have 3 stations covering the range of the suburb; Albion, St Albans and Keilor Plains. St Albans Train Station has recently benefited from a complete renovation and is looking great.
St Albans is a 35-minute drive into the city (45 minutes in peak) or about 30 minutes on the train. A 15 minute drive will get you to the airport which for people travelling for work is very convenient. In addition, you can jump onto the Western Ring Road to get easy access to the North and West.
There is the obligatory leafy and well-maintained streets with period homes and newer townhouses and small apartment blocks.
There are plenty of schools to choose from, from the very best St Paul’s school to Sacred Heart and St Albans Meadows for primary and St Albans public school for secondary. And once you finish secondary school you can head straight over to the Victoria University of Technology St Albans Campus if you like!
Whilst St Albans isn’t famous for its Michelin star restaurants there are some good cheap eats that the locals all enjoy. And if you want to cook up a storm at home, St Albans has its own local Coles, Woolworths, grocer and butchers.
And if you do feel like a big shop head to Highpoint for all your shopping centre needs just a suburb or two away.
You truly get bang for your buck in St Albans. People on Homely are quoting that their properties have almost doubled in value in two years! And if you travelled 16 kilometres East of the CBD instead of North West you couldn’t buy a unit for the same price you could buy a big block of land and a house.
Data Source Corelogic RP Data
Pricing
According to property data from Corelogic the median price of a house in St Albans is $669,440 and for a unit $460,000.
Trend in Growth for House Pricing
Trend in Growth for Unit Pricing
Purchase Example
This gorgeous 3 bedroom home has been stylishly renovated and maintained. There is a multitude of options on this large allotment of 766sqm, the property could be extended and value added or suitable for multi-unit development (STCA).
This property was purchased by a FHB who wants to live in now and enjoy the benefits of capital growth when it comes to sale time.
View the agent listing here. Purchase Price $705,000
Overview
Q2 Average Vacancy Rate 1.4% – NPB Q2 Average Vacancy Rate 1.1%
Internally our own Property Management team has experienced growth, we now have 3 Property Managers and one assistant servicing our Melbourne rent roll.
Victoria has consistently enjoyed some of the lowest vacancy rates in Australia according to SQM Research the current vacancy rate for Melbourne is 1.4%. Well located, well-presented and well-priced properties are being leased after one open. Potential tenants are seeing 20 – 30 people attend opens and are firing off applications straight after the first open. Properties located in the inner ring of Melbourne are always in demand or properties in lifestyle suburbs, like Williamstown, continue to be popular. We are also finding the Northern Suburbs continue to be a desirable location for tenants; Thornbury, Coburg, Preston, Pascoe Vale, Northcote, Brunswick are all hotspots. The weekly median rent for houses in Melbourne is $523.2 and for units $411.7.
Properties that are missing the modern conveniences that tenants expect are taking longer to lease and need to be competitively priced. We recently discussed in a blog “5 fixes that increase rent and get you money back at tax time” how to better present your investment property to attract high-quality tenants. For example, in Winter in Melbourne the number one requirement is heating, ducted heating can be preferred but split systems with reverse cycle can prove a cheaper option for the Landlord and the Tenant. We discussed the necessity of keeping your rental property fresh and appealing as this will keep your rental property popular in times of high supply.
The comprehensive review being conducted on the Residential Tenancies Act (RTA) is still be conducted and due for completion this year. The aim of the review is to amend the RTA to meet the expectations of current and future landlords and tenants in Victoria. The changes are to increase rights of the tenants but there are concerns by some that is taking the rights of property owners away. More can be read here on the proposed changes here.
by Antony Bucello
Director and Victorian State Manager
Antony is married with 2 children and lives in Lower Templestowe, Victoria. Educated at Swinburne University, his sales and marketing career has spanned over 30 years in both the Financial Services and Property sectors. Having been involved in countless property purchases for his clients over the years, he is now a leading Melbourne Buyer Advocate.
0418 131 950 or email me
Market Overview
Sometimes the pace of life runs a little bit slower in Queensland from the breakneck speed of Melbourne and Sydney. And we love it! It also means our property market operates at a much steadier pace.
The eternal quest for warm weather and coastal lifestyles makes Queensland the destination of choice for many interstate and overseas migrants. And with all that Queensland has to offer – pristine beaches, world heritage listed rainforest, the Great Barrier Reef, the vast Outback, world-class calendar of events, unbeatable experiences and our world-famous way of life – why wouldn’t it be?
Queensland’s property market and the wider economy benefits from strong population growth and quality properties in good locations continue to enjoy strong capital growth. There hasn’t been a marked change in the Queensland market from Quarter 1 to Quarter 2, according to Corelogic, Brisbane dwelling values have increased by 0.3% over the 2nd Quarter and are 1.1% over the past year.
Most of the areas that we are buying in are still very much a sellers’ market and this is largely due to a shortage of good quality stock. Typically, in these areas, the buyers are finding it difficult to negotiate their ideal price as sellers are receiving multiple offers, often on the 1st day on market. Outer lying regional areas are more stable (although median dwelling value did experience a moderate fall of 0.2%). Less competition in regional areas mean that buyers have more influence on the market price, however typically with a lower growth and lower overall yield.
Recovery the top-end of the market has been quite astounding. The top end has been flat-lining since about mid-2016 to mid-2017 but is now making some great strides in the right direction. The demand for these properties is a mix of interstate buyers and cashed up local buyers upsizing in their own suburbs.
The unit market is still in free fall with diminished demand for units in high rises as they are not proving to be smart investments, currently. That said they are still selling but at a greatly reduced price from what was originally forecasted.
Monthly Auction Clearance Rates
Year on year comparison for monthly auction clearance rates demonstrate the market is behaving consistently but marginally lower compared to 2017 when it comes to clearances.
Gold Coast
The drawcard of the wonderful weather, an average of 300 days sunshine every year and a huge increase in tourism over the last 6-7 years has created significant work opportunities albeit largely for the younger Australian. The Gold Coast median house price grew by 7.7% to $615,000 year end 2017.
A strong local economy and massive improvements to local infrastructure has accounted for some explosive growth in some suburbs with Mermaid Beach returning an impressive unit growth of 14% to record a median value for units of $720,000.
Population growth here is largely attributed to retirees from Brisbane and interstate, predominantly NSW, settling along the coastal urban corridor however recent improvements to employment infrastructure within hospitality and tourism has also seen a younger adult seeking the lifestyle and the sun.
Projected continued growth in both of these demographics will see the Urban Coastal areas growing steadily and younger adults with families driving the growth in new homes in the Greenfield Development areas. The Sunshine Coasts median house price grew 6.4% year-end 2017 to a $569,000 but in isolation Noosa grew to a median of $650,000. Again the lack of available housing in coastal areas is driving up the prices.
Wellington Point - "Get to the point"
Overview
Just one glance at a map and you know Wellington Point is going to be a good place to live. This leafy suburb is surrounded by water. You can launch a boat from the boat ramp, fish off the jetty, or visit huge parklands and reserves with picnic areas. It has 25 parks covering nearly 17.3% of the total area!
It has a population of approximately 12,500 and the predominant age group in Wellington Point is 50-59 years. Households in Wellington Point are tightly held primarily by couples with children and owner-occupiers makeup 76.3% (2016) of residents.
It’s a quiet, friendly and beautiful suburb.
There is a local village with specialty shops, cafes, restaurants takeaways and the local pub all within walking distance. The main road dissects the suburb and bus routes run down it offering good transport options. Large shopping facilities are 5 minutes away in Cleveland and Capalaba.
There is good access to a number of private and public schools, some within easy walking distance.
Wellington Point is also home to the Geoff Skinner Wetlands Reserve an area of mangrove fringed saltmarsh located on the eastern foreshore. These wetlands are internationally recognized as part of the Moreton Bay Ramsar site. More than 100 different bird species have been sighted in Reserve and you can explore the wetlands, but don’t expect established walking trials or facilities, the wetlands are a little more rustic.
The point does can get busy on the weekends – with visitors and cyclists but how could it not with all that it has to offer.
Pricing
Corelogic has the median price of a house at $616,000 and a unit at $390,000
Trend in House Pricing Growth
Alexandra Headlands - "Best of the Sunshine Coast"
Overview
Alexandra Headland is a suburb of the Sunshine Coast Region approximately an hour north of Brisbane. Nestled in between two busy hubs, Maroochydore and Mooloolaba.
The local 4000 residents love living in Alexandra Headlands. Not only is the beach on your doorstep there is plenty nearby such as good shops, great restaurants, schools, parks, reserves, hotels and even a nearby golf course!
The predominant age group in Alexandra Headland is 20-29 years and primarily childless couples working in a professional occupation.
The beaches in Alexandra Headlands are great and offer good surfing conditions yet safe swimming between the flags. There is a wonderful surf club with meals, entertainment and beer on tap. There are also two very well maintained caravan parks.
For those that like an active lifestyle there is plenty to do on land or in water, or if you prefer something quieter you could just laze on the beach or in a cafe.
There are plenty of high-rises along Alexandra Parade but we recommend buying an older style unit in a smaller complex. These have the greater propensity to attract growth and keep value. If a house was preferred we recommend somewhere close to the waterfront.
Alexandra Headlands has enjoyed significant growth in the last few years, with the median house price increasing by 65% over the last 6 years.
Pricing
According to Corelogic the current median price for houses is $1,270,000 and units $593,750
Trend in House Pricing Growth
Source: Corelogic
Vacancy Rates and Median Rents
Rental Market
Brisbane Q2 Vacancy Rate Q2 2.9%, NPB Q2 Vacancy Rate 1.94%
Rental enquiry was slow for most of the quarter as anticipated, but improved towards the end of the period. We are now entering the “mid-year” peak period with tenants moving around if they signed 6-month leases. We also found that suburbs with lots of students rented quite quickly at the end of the quarter.
Units have been reasonably slow due to the number available for rent, while houses, especially on the wider rim of the city continue to be in higher demand and a shorter vacancy rate. Overall with the slower market, quite a few agents had been reducing advertised rental rates on properties to secure a tenant.
The vacancy rate for Brisbane at the end of the quarter was 2.9%, and the NPB rate was 1.94%. Median rental rates were:
End of Q1 – Houses $452 Units $369
End of Q2 – Houses $447 Units $336
Changes in the Smoke Alarm requirements which come into effect in January 2022 require interconnected hand wired alarms to be installed in bedrooms and hallways. This is a compulsory legislative requirement and may be a major cost for most of the landlords. NPB will be able to arrange this on your behalf to ensure that your investment property is compliant with the new ruling. You can read more here.
by Stephen McGee
Queensland State Manager
Stephen is married and lives in a bayside suburb of Brisbane. Stephen brings over 15 years of experience in residential property to National Property Buyers QLD, including residential property investment and small-scale developments. Stephen is a Committee Member of the REIQ Buyers Agent Chapter and was voted “Best Buyers Agent in Queensland” by his clients in the Investors Choice Awards of 2015.
0488 501 170 or email me
Market Overview
Adelaide remains nestled in the middle of national property market, neither recording remarkable growth nor significant decline.
Adelaide will keep ticking on with low to mid-single-digit growth. Probably the worst has passed in terms of population outflow and with new infrastructure and employment opportunities over the next 5 years, we should see this grow in contrast to the ongoing loss of population of the past.
Houses are the property of choice here, as this market is stable – it’s all about location.
Take the suburb of Gelnunga, 5km south of the Adelaide CBD, it maintained a strong growth trend over the five years to June 2018.
House prices have shot up by 15.9% in the last 12 months, with the median value passing the $1m mark. Meanwhile, unit values increased by almost 13% and the median price came close to $450,000.
The annual rate of dwelling value growth has slowed to 0.2% nationally, the nation’s slowest annual rate of value growth since October 2012.
Despite the slowing conditions across all capital cities, most have still recorded value increases over the year which is a good indication of a potential flat line, rather than a decline in the in the market overall.
With some strong performing Adelaide suburbs showing growth of over 10% over the past 12 months, we are poised to maintain this steady trend ticking over for years to come which makes it a great time to buy in this still very affordable market.
Strong road developments and upgrades, new tram lines extending from the city to some city-fringe suburbs and thousands of new job opportunities being created over the next 5 years are all great indicators of what we can expect to see across the market in the very near future.
Adelaide has had some of the most consistent year on year performance with properties sold and clearance rates at auction. In fact, Adelaide is one of the few states that has achieved two months of higher clearance rates compared to last year, as demonstrated in the below charts.
Prospects - "Good Prospects in Prospect"
Overview
Prospect is the great all-rounder Suburb.
It is an inner-northern suburb located in the city of Adelaide and is only 5km from the CBD. It takes 5 minutes to get to the city by car or there are excellent public transport options. Or maybe on a nice day walk into town in 30 minutes.
The suburb is great whether you’re single, a family or retiring.
Local amenities include shops, hospitals, schools and medical centres. Prospect Road which runs through the area boasts many eateries, restaurants and shops which you can choose from. Or catch a flick at the newly opened boutique cinema, Palace Nova Prospect Cinema.
The streets throughout Prospect are beautiful. The tree-lined streets with a mixture of the old bungalows to the modern homes blend in very nicely. Footpaths are well-kept. The predominant age group in Prospect is 20-29 years old and households are primarily couples with children. There are several excellent schools, both public and private (Wilderness School, St Dominic’s, Blackfriars, North Adelaide Primary, Adelaide High School and the nearly completed specialist public school on Frome Street that is taking enrolments from 2019) that offer plenty of choice for these households.
Peak hour like any thriving suburb is a little busy in the morning or after work in the evenings but is not detrimental to status of this lively suburb.
Prospect is also known for holding the annual Tour Down Under, which is a cycling race that attracts riders from all over the world. A festival atmosphere is enjoyed by local and tourist alike with most of the main road closed off to hold the event in January. And maybe if cycling is not your thing, Prospect is only 4 km from Adelaide Oval. Go Crows!
For a blue chipped suburb, Prospect is still affordable for professionals and investors alike. And much better value than other blue-chip suburbs.
Pricing
Currently, the median sale price of houses in the Prospect is $700,000. The current median sale price of units is $359,750.
Trend in House Price Growth
Source: Corelogic
Norwood - "The Jewel in the Crown"
Overview
Norwood is one of the premier suburbs of Adelaide and with good reason.
Located on the eastern fringe of the Adelaide CBD, it is only 4km into town. An easy 10-minute drive or 20 minutes during peak or even a leisurely walk will get you in, in 30 minutes. Norwood has a growing population of approximately 6000 people. The predominant age group is 20-29 years.
So, what is attracting this young professional crowd to Norwood?
Norwood is a leafy suburb – many of its streets lined with plane trees and older houses. It provides easy access to the city and the main parade has an abundance of trendy cafes, fine dining, gastro pubs, boutique shopping and supermarkets. And though the majority of its inhabitants are childless young professionals, there is also on offer a large amount of high class public and private schools in close surrounds.
The suburb consists of four segments, divided into north and south by the major thoroughfare of The Parade and east and west by Osmond Terrace.
Its popularity can cause it to get a little busy during peak hour and on the weekends. But it is a small price to pay for a thriving and delightful suburb. And it is only the main streets affected the back-streets remain quiet.
Offering not only an easy commute into town, a 20-minute drive will get you to the picturesque Adelaide Hills or alternatively a day out at the beach.
The popularity of this suburb has driven the prices north. But there is a mix of lovely old detached homes, apartments, townhouses and modern houses each with a different price point.
Owner-occupiers and Investors are fairly evenly split at 50% in 2016. It seems they are all attracted by the vibrant lifestyle on the eastern fringe of the CBD.
It is also home to the Norwood Redlegs Football Club, a well-known club if football is your interest.
Price
According to Corelogic the current median sales price of houses in the area is $950,000. and a unit $459,000.
Trend in House Pricing Growth
Source: Corelogic
Vacancy Rates and Median Prices
Adelaide Q2 Average Vacancy Rate 1.3% – NPB Q1 Average Vacancy Rate 0.01%
Adelaide’s rental market is continuing to show signs of impending growth for the Spring and Summer months as we are still seeing many potential renters out there willing to pay premium rents for quality stock which historically we don’t see in the Winter where rents are often discounted.
Investors are becoming much more savvy about the types of properties they are purchasing for rent, and how these are presented. We are seeing more and more landlords prepared to take our advice and spend some money on potential refurbishment or freshen up to attract not only higher rents, but better quality long-term tenants.
Rents are generally increasing across the metropolitan area by small amounts come review time with the exception of coastal properties in the Winter months. This market continues to be extremely seasonal with no signs of change.
Adelaide vacancy rates remains extremely tight at 1.3% with properties priced and presented correctly expected to be off the market within 4 weeks.
by Katherine Skinner
Buyers Agent and Senior Property Manager
Katherine Skinner began her career in property over a decade ago in Melbourne working in Buyer’s Advocacy and Property Management. Returning to her home town of Adelaide in 2009, Katherine quickly established a reputation as an exceptionally thorough and diligent practitioner, providing outstanding customer service coupled with a calm and positive attitude while working with some of Adelaide’s most highly regarded agencies.
0438 729 631 or email me
Market Overview
If you pay attention to the property market, you have no doubt heard about the negative growth of Sydney. According to Corelogic, Sydney dwelling values have fallen by -0.9% over the three months to May 2018 and they are -4.2% lower over the past year. And it’s true, at a macro level the Sydney market has slowed but it is now time for Owner Occupiers and Investors to take advantage of this and buy smart.
The market is shifting towards a buyer’s market and owner occupiers are now able to purchase good properties in good locations for more reasonable prices. Investors who pick and choose carefully will do well buying in this less competitive market. There are more opportunities in Sydney than national statistics or some news articles would have you believe.
So why does Sydney seem to get dragged through the media the most?
Sydney is the largest property market in Australia and after 4/5 years of 75% growth, yes it’s one of the most expensive. People respond to media articles advising the property bubble will crash. But this is not a crash and nor is it a major shift in economics like the GFC. This is a controlled reduction led by the changes that APRA have enforced and the fact that different markets move in different cycles. The reduction of interest-only loans that banks can issue has reduced the number of investors and even owner occupiers getting new loans. A big bank here in NSW said that almost half of their interest only bank books were actually owner-occupiers. Owner Occupiers were using interest only loans to buy bigger or better-located properties and the reduced repayments enabled them to serve their loans.
The reduction of loans issued has naturally resulted in fewer buyers in the market. Properties are taking longer to sell and if they are not located in prime or popular locations there is less competition to drive the price up. Real estate agents are working hard to shift their listings and price reductions are becoming more common for listed properties.
Interestingly, according to Corelogic Sydney has 20.4% more listings than this time last year. More listings, means more choice and less urgency.
Infrastructure Projects
There is always a great deal going on in NSW for infrastructure projects and planning. In this Quarterly Insights, our focus is the fast train service from Newcastle to Sydney.
For years, there’s been talk about a fast train from Newcastle to Sydney.
Trains between Sydney and Newcastle could be an hour faster if a business case the federal government has pledged to help fund pans out. Documents detailing the NSW government’s proposal for a business case indicate changes including better segregation between passenger and freight services, removal of level crossings and realigning the track to make trips faster between Newcastle and Sydney. This could save an hour on a trip that regularly reaches three hours.
If that is still sounding too slow for you, there are talks now about a hyperloop system shortening journey time from Newcastle to Sydney to 13 minutes! The system involves tubular pods hurtling down a magnetic track, using levitation, low pressure and solar power to hit speeds anticipated to reach 1100km/h, however, the current Hyperloop speed reached is about 387 km/h. A Hyperloop transport project is currently underway in Maryland in the US and if successful will increase the current Hyperloop speeds to the unimaginable 1100km/h.
If a fast train or Hyperloop between Newcastle and Sydney was built it could result in an increase in both job opportunities and housing for Newcastle and the Central Coast. We don’t think this is a matter of ‘if’ this will happen, it’s more like ‘when’ it will happen and now is the time to keep an eye on Newcastle and the Central Coast for your next investment, watch this space, these areas will likely boom in the next 10 to 15 years.
Killcare Heights, Central Coast - "Highest growth in Australia"
Overview
Killcare Heights is a beachside suburb of the Central Coast and is approximately 95km North of Sydney. It is a small suburb with a population of approximately 705 and is a short drive to the established towns of Umina and Ettalong Beach.
Killcare Heights is connected to the greater area of the Central Coast suburbs by road and is an 18-minute drive to Woy Woy station, from here, residents can catch an express train to the Sydney CBD as well as outer suburbs such as Hornsby and Chatswood. Residents here enjoy a slower paced life than those in Sydney with the benefit of being only 1 hour away by car. Bordering the Bouddi National Park, Killcare Heights enjoys views across the Pittwater past Lion Island to the headland of Palm Beach. The suburb is within close proximity to Gosford and Erina and enjoys the benefits of shops, cafes, restaurants, beaches, elite schools and all amenities.
The suburb borders Macmasters Beach, Copacabana and Bensville, once sleepy towns for retirees, these suburbs are now changing as young families move in and take over the 1960s fishing shacks. In recent years Killcare and Killcare Heights have been popular destinations for those wanting to escape the hustle and bustle for a holiday, these days, the houses are being snapped up by savvy Sydney buyers seeking a sea change within commuting distance of Sydney.
Killcare Heights has been named the highest growth suburb in Australia this year, recording approximately 51% growth. It’s not surprising that the Sydney siders are pushing up the prices. Many have had holiday houses in the area for years and now see it as a viable place to live.
The suburb consists predominantly of houses (97%) with very few units / townhouses (3%). Most residents are purchasing or own their homes, there are very few rental properties in this suburb.
The population is mixed between couples with no children (45%) followed by couples with children (43%) and to a lesser extent, single parent families (12%). A higher proportion of residents are aged 40+ years.
Pricing
The current median house price in Killcare Heights is $1,475,000 making this an affordable suburb for families looking for a modern home with sea views.
Current Median Pricing 2018
Trends in Growth for Houses
Purchase Example
An architecturally designed home nestled in the privacy of bushland bordering the Bouddi National Park, this generous sized house offers separate living in at either end and large open plan living surrounded by expansive glass windows that overlooks the bushland. A 20-minute drive to Umina, Ettalong, Avoca, Erina and Gosford, this property is a great example of what money will buy in this area. Last purchased in 1997 for $175,000, 2015 for $920,000 and recently sold for $1,475,000.
Earlwood - "Sleepy no more"
Overview
Earlwood is located 10km south-west of the Sydney CBD in the Inner West. It is a larger suburb with a population of approximately 17,741.
Earlwood is well serviced by a bus line which offers express buses to the CBD and the eastern side of the suburb has access to 4 train stations. This suburb is home to many Australian born Greek, Italian and Lebanese residents with a recent increase in population of Chinese and Portuguese. Once considered on the outer of the Inner West, Earlwood has recently seen an increase in families moving into as they are outpriced in surrounding suburbs. In recent years Earlwood has become a thriving community with access to good public schools, parks along the Cooks River and easy access to the Sydney CBD.
Earlwood is also within close proximity the St Peters Westconnex Interchange which is due to open in 2023. The Westconnex will provide faster access to the M5 and M4 motorways and will eventually link into the Northern Beaches Tunnel for easy access to the north side of Sydney.
Historically a sleepy suburb, buyers are now turning their attention to Earlwood where they can secure a character style bungalow and renovate to add value for around $1.4m or a renovated home for approximately $1.6m+.
The majority of properties in Earlwood are houses (82%), with a very small proportion of semi-detached properties (9%) and units (9%).
The population is predominantly families (52%) and couples with no children (31%) and a smaller proportion of one parent families (17%).
Pricing
The median house price in Earlwood is $1,380,000 and for a unit $790,000 making this a more affordable Inner West suburb.
Current Median Pricing 2018
Trend in Growth for Units
Trend in Growth for Houses
Purchase Example
This character filled home is in one of the more sought after areas of Earlwood within walking distance to Tempe train station and Gough Whitlam Park. The property is a 4 minute drive to the Earlwood shops and a 10 minute drive to the eclectic suburb of Newtown and all it has to offer. The property is also conveniently located near the Princes Highway providing quick access to the Southern suburbs of Sydney. A solid 3 bedroom home on 442sqm in a quiet family oriented street the property offers plenty of scope to renovate and add value. Last purchased in 2002 for $510,000 and sold in May 2018 for $1,370,000.
View the agent listing here.
by Simone Luxford
State Manager New South Wales
An outstanding analytical approach, dedication and attention to detail, as well as her sound work ethic and desire to achieve a positive outcome for her clients are Simone’s distinctive personal qualities within her field of expertise. With a Bachelor of Business degree, Simone has a background of over 17 years experience as a Senior Research Consultant in corporate marketing and 10 years experience researching the property market.
0429 039 558 or email me
We have prepared four case studies on properties we purchased in Q2 for our client’s.
First Time Investor (VIC)
Suburb: Mentone Address: 5/6 Brindisi Street
Client type and budget: 1st time investor clients. Budget $1M
Property: Standalone 3 bedroom villa Purchase Price: $950,000
Our clients were first-time investors who engaged us for our full service – search, assess and negotiate to secure them a high capital growth property. With an original budget of $600k we began the search and presented the clients with properties in Phub, our online portal. Once the clients have reviewed the properties, they decided as long-term residents of Mordialloc they would prefer Bayside properties and increased their budget to $1 million ($1.050m at a push).
With a modified brief we reinitiated the search. The clients were keen to participate and attended several inspections, our search narrowed to two properties and after a thorough assessment, we recommended both to our client.
One in Parkdale went to auction first, it sold for $1.1 million (just beyond our client’s budget). It was a near identical property to the second property located in Mentone that was going to auction the following week.
This property was a standalone three-bedroom villa situated in a group of just five and was perfectly positioned to just step out and enjoy the ever-increasing attractions Mentone has to offer. Just a gentle stroll from the shopping strip and station, the property was moments to the beach and boasts sought-after dual zoning for both Beaumaris and Mentone Girls’ Secondary Colleges. The home presented well but required some minor cosmetic updates, including new carpet and tiles. These necessary improvements were factored into our client’s budget.
At auction day there was a crowd of 30 people and 3 bidders participated, we threw out the opening bid and the property eventually passed into us at $940,000. Ensuring the property passed into us gave us first right of refusal at the vendor’s reserve price of $970,000 (the vendor must disclose their reserve at this point). We successfully negotiated and only budged $10,000 to agree on $950,000. This was well below our clients “push” budget so they were very happy.
Post the auction we continued to facilitate the purchase. At the pre-settlement inspection, there was a party of 8! We had organised a tradesman to be present to quote for the necessary works, ensuring as soon as settlement was complete work could commence. This would minimise vacancy time between settlement and tenancy for our clients. Our Property Manager, Caroline also attended so she could meet our clients and she brought along a potential tenant. A little unusual to have a tenant at a pre-settlement inspection, but we knew someone through our network that would be a perfect tenant for this property and our client.
This is a great property that should enjoy substantial capital growth due to its location and proximity to the water and premier schools.
It pays to wait (NSW)
Suburb: Belrose
Address: 29 Forest Glen Crescent
Client type and budget: Our client, a young family recently moved to Sydney from Hong Kong, were looking for a new home close to the Sydney CBD and were hoping to secure a property in the suburbs of Leichhardt, Annandale, Drummoyne or Gladesville. An updated 3 bedroom home within walking distance to a CBD bus stop and good school were essential criteria to their property brief. With a budget of $1.5m we commenced their search in these suburbs and it quickly became apparent that unless you are wedded to the Inner West there are suburbs further away from the city that provide excellent value for money and are still within close proximity to the CBD and all amenities.
As our search progressed, our clients changed tact a little and decided to move their search area to Belrose and Frenchs Forest where their budget would secure them a nicely renovated home on a large block of land with a pool and plenty of room for the kids to play.
Property: An updated generous sized 3 bedroom character home with a pool and spa as well as a north facing aspect with district views. This home offers plenty of room for the family and guests, has a study which will make working from home easy and although recently updated, still offers room to renovate and modernise which will add value in the long run.
Solution: This property ticked all our client’s buying criteria and was well within their budget, it is the perfect long-term family home in a community-driven suburb within walking distance to all amenities. Most importantly, it is within 6 minutes walking distance to the CBD bus and a 10-minute drive to the beach and Warringah Mall.…the perfect location for our clients!
The Off-Market Door Knock (SA)
Suburb: Torrens Park
Address: 16 Brook St
Client type and budget: Relocation from Interstate
Property: 3 Bedroom, 2 Bathroom
Scenario:
Clients contacted us with a specific property in mind which was previously on the market a few months earlier but didn’t sell.
During the property’s listing time our clients had inspected it, but it was overpriced and they were unsure how to negotiate an extended settlement time they required as they moving to Adelaide from Sydney in 18 months’ time.
The vendor eventually pulled the listing and several months later our client asked us if we could approach the vendor and negotiate on their behalf.
We approached the owners (knocked on their door) to express our client’s desire to purchase the home as this property ticked all the right boxes.
Over a protracted period of 6 weeks, we successfully negotiated a purchase directly with the vendor with an extended settlement time of 7 months. This not only suited our clients but also the vendor who was renovating a unit and it was taking longer than expected. It is always best in a negotiation if you can find out and understand the motivations of the vendor. This could be the preference for a short or lengthy settlement or the need for fast money or more money.
Once settlement took place, NPB secured tenants for $690 per week for the 10 month period until our clients were ready to make the move.
It was a win-win-win, for our clients, the vendor and the tenants!
Renovate and Capitalise (QLD)
Suburb: Wellington Point
Address: 6 Redgrove Avenue
Client Type and Budget: Investor, $550,000
Property: house to rent out and renovate later to add value
Scenario:
Expats currently residing in UK came to NPB QLD for their 2nd purchase within 6 months. This time we talked about alternative strategies to their first property that was bought as a set and forget. The clients elected to go with a buy and renovate option so that they can manufacture equity through a renovation in 12 -14 months time.
We approached our network of sales agents and after 4 weeks were introduced to a property in Wellington Point that was just about to be listed, but the agent who we have a good working relationship with provided us with advance notice
After a quick walk through I knew immediately that this was a blank canvas for renovation. The bones of the property were good but it was in a poor condition as it had been neglected by tenants for a few years.
After some swift negotiating we secured the property for $545,000 which was at the very least $10-$15k under its current market value in my opinion.
The home was ripe for a full cosmetic renovation ($70-80k) that would increase its capital value to $780k – $790k on current market values. However, with a tidy up internally and externally, the replacement of a few small bathrooms fixture and a carpet clean the property could be rented whilst plans were underway.
NPB will also project manage the renovation when the client is ready to commence.
So a 2nd great purchase for this client who is now doubly happy.