Property Market Insights
Quarter 4, 2018
Welcome to the Q4 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 | Case Studies
National Property Market Overview
The current property market can be a little hard to get your head around.
In the September 2018 quarter “Australian properties resold for $14.06 billion in profits” according to the Corelogic Pain and Gain report “but 11.1% of homes were resold at a loss.” And interestingly the capital cities that are in the media for suffering the greatest loss in the property market actually made the lion share of the profit “The majority of the $14.06 billion in profit was generated by Sydney and Melbourne which accounted for 31.0% and 24.7% of total profits nationally respectively.” This is due to the strong growth in their dwelling values in the last 4 to 5 years leading up to this point.
There is no denying that the national dwelling values are slipping and that is largely attributed to Sydney and Melbourne which make up 55% of the value of Australia’s housing asset class. These capital cities have been affected by the tightening conditions of credit lending, and the reduction of investors in the market. Diversely, Hobart, Canberra, Adelaide and Brisbane have all experienced growth. And our regional markets in Victoria and Tasmania have as well.
Source: Corelogic
According to the CoreLogic December home value index results, the downturn in Australian housing conditions accelerated through 2018, driven by consistently larger quarter-on-quarter declines in Sydney and Melbourne. The year finished with national dwelling values down 4.8%, ranging from an 8.9% and 7.0% fall in Sydney and Melbourne through to a 9.9% rise in values across regional Tasmania. Brisbane and Adelaide have both enjoyed moderate price growth at 0.2% and 1.3%.
Although the weaker housing market conditions in Sydney and Melbourne remain under the spotlight a report by KPMG has presented a more “optimistic” outlook than recent forecasts. “We anticipate the Sydney and Melbourne dwelling markets to perform quite differently over the next few years,” the report said. “Melbourne prices are forecast to begin rising again in the 2019/20 financial year, with a 2.4 percent price rise followed by 4.7 percent in 2020/21.”
So is now a good time to buy?
If you are looking in the right market, then yes!
We always emphasise to our clients there are markets within markets, whether that be at state, city, suburb or even street level. Whilst one market might be in decline or stabilising another will be growing. For example Caulfield East (Melbourne) and Hastings (Regional Victoria) have experienced bullish growth in the last 12 months, 47.54% and 39.72% respectively.
The market is tipping in the favour of the buyer and there are some excellent opportunities for people to get onto the property market or into areas that were previously beyond them.
- First Home Buyers have surged into the property market snapping up properties in Sydney and Melbourne that previously investors would have been competing for
- Upsizers or Upgraders are taking advantage of the dwelling value price slip in the premium Sydney and Melbourne market and buying properties that were once beyond them.
- Downsizers, who tend to be more cash-rich, are competing against fewer investors in the market and snapping up easy to maintain townhouses or units in lifestyle locations
- The Mum and Dad Investor who have been able to secure loans are also benefitting from less competition. But it is more important than ever to get expert advice on what and where to buy to ensure long term sustained growth
In addition, in a tight market, the transaction cost of buying and selling a property is reduced as vendors can negotiate deductions with property professionals.
Tim Lawless, Head of Research at Corelogic points out the difference in the current downturn (in the market) to previous down cycles. “Typically, the catalyst for a turn in the housing market is a result of changes in interest rates or economic conditions. This time around, however, the market has been most affected by credit policies and availability of finance, despite very low mortgage rates and relatively strong economic conditions.” Lawless continued emphasising that the cost of debt remains at the lowest level since the 1960’s, GDP growth is tracking above expectations, unemployment is tracking well below average (at the lowest level since 2012), population growth remains strong (albeit showing signs of slowing) and wages growth is slowly lifting from a low base.
All these factors should reduce the decline of the property market.
Politics
For anyone that is interested in the property market, there has been much speculation about the impacts of a Labour Government taking power and the proposed changes to negative gearing and capital gains tax reforms. Investor reactions have been quite diverse, some are playing a wait and see game and others are racing to secure the tax advantages of negative gearing as the policy will be grandfathered and not affect existing ownership.
Labor’s proposed reforms
- Capital Gains Tax – reduce the current discount for investors from 50 percent to 25 percent across all asset classes. No change to owner-occupied dwellings.
- Negative gearing – limit to newly built homes the current concession that allows property investors to offset losses against their taxable income. The reform would be ‘grandfathered’ in, and therefore have no impact on investors with existing negatively geared properties.
Royal Commission
The banking royal commission’s final report is due to be handed to the Governor-General by February 1 — and it will cover a wide range of topics, including responsible lending, commission structure/ fee for service for financial advisors and mortgage brokers and a regulator shake-up. Banks and borrowers have already made adjustments pending this report. A cap on interest-only loans was initiated by APRA which has now been lifted and stricter credit and expense reporting implemented. Lenders and Banks traditionally used the Household Expenditure Measure (HEM), a benchmark of basic living expenses, as a substitute for customer’s actual expenses but are now asking for the nitty and gritty from potential borrowers.
Overall the 2019 Calendar year is expected to present both challenges and opportunities to all involved in the finance and Australian Property Markets, but if you follow the Golden Rule of purchasing the right asset/property in the best locations and hold for the long term you will win the race of building wealth and prosper in the long run.
Read on for our capital city and state review by our State Managers in Melbourne, Brisbane and Adelaide.
State Overview
It might be a strong statement but Melbourne is providing a unique opportunity and there is no better time to buy.
The real estate market always goes in cycles and now is the time to enter the market before the next growth phase. And to prove we put our money where our mouth is, we have just purchased an investment property in Oak Park for the brother of one our staff members and Senior Buyers Agent, Robert Di Vita is getting his finances in order to purchase an investment property through a SMSF before the market enters the next growth phase.
A report by KPMG has tipped Melbourne to rebound more quickly than Sydney and Melbourne will see just “half the real price decline of that in Sydney” during the current financial year. The report forecasts Melbourne’s prices to begin rising again in the 2019/20 financial year (that’s July this year!), with a 2.4 percent price rise followed by 4.7 percent in 2020/21.
It is a buyer’s market in Melbourne and there are plenty of opportunities out there for the savvy buyer.
Our client base has seen a real swing towards owner occupiers whilst there are fewer investors in the market. It is great to see homeowners recognising the benefits of using a Buyer’s Agent. First Home Buyers have surged back into the market, especially at that $750k range for small houses, townhouses and villa units. Downsizers are also seeing the opportunity as the transaction costs of selling and buying in the current market environment are considerably lower. Upsizers are taking advantage of discounted premium stock and buying property that was once beyond their means.
Whilst Corelogic has Melbourne’s dwelling values declining by 7% at 31st of December 2018 there are many suburbs still experiencing steady growth. And we firmly believe that properties in the right location should maintain their value in just about any market and experience growth over the long term.
We reviewed REIV’s metropolitan house price by suburb data for the September Quarter (latest available) and identified over 35 suburbs that have experienced positive annual growth. This is after we eliminated suburbs that had less than 30 sales for the quarter (these suburbs can be heavily skewed by one or two results) and suburbs that we would not deem investment sound. On average the annual change in growth was an increase of 10%!
Good opportunities continue to be located in the North/North East and West approximately 20 kilometres out of the CBD. Glenroy, 13kms from the CBD, house values have enjoyed 7.6% growth and Coburg and Preston units both 9kms from the CBD have enjoyed steady growth of 7.5% and 15.7% respectively. Areas like Mernda, Doreen and South Morang located North East and a little further out at 25/27 kilometres have experienced growth ranging from 9.2% to 12.6%. These relatively new estates offer first home buyers the opportunity to get onto the property ladder with a newer property on a smaller block.
In the South East, coastal suburbs likes Seaford and part of Frankston are performing well. The access to water, transport, shops and the freeway is appealing to buyers and continues to drive demand. Frankston house values increased by 9.5% and units by 17.4%. A little closer to town in Keysborough house dwelling values increased by 20.9%!
Source: REIV September 2018
Auction Barometer
The auction barometer (clearances/sold) provides a clear indication of confidence in the market and unfortunately, there has been a steady decline in the monthly auction clearance rates. We expect private sales to temporarily increase in 2019 as sellers and agents have lost confidence in auctions. Vendors that are going to auction need to ensure their selling agents are running strong campaigns and they need to be realistic with their selling price expectations if they want their property to sell on the day. The good news is that if vendors quickly adjust their expectations post auction good properties are selling relatively quickly.
Data Source: Sold Price
Date Source: Sold Price
Politics and Regulatory Bodies
The 30% lending cap on interest-only loans has been lifted and with people adjusting to the more stringent credit reporting we have seen a slow increase of the return of investors to the market and we expect that to continue modestly. The Banking Royal Commission and the next Federal election are playing heavily in people’s mind and some people are sitting tight and waiting to see what comes out in the wash. It can be a dangerous game though, once the dust settles we may find ourselves back in an upturn market.
If the Labour Party is successful at the federal election and changes the rules to negative gearing and capital gains tax, we expect that the cost of renting will increase as landlords attempt to recoup their cost through other means.
We expect the first quarter of 2019 will behave much the same as the last quarter of 2018. February and March will be the true test as new listings hit the market and auction weekends return to “normal”.
Oak Park - "Hidden Gem"
Overview
Oak Park is quite often the unknown suburb tucked in between Pascoe Vale and Glenroy. But it should definitely not be overlooked, it has a lot to offer the astute buyer.
Oak Park is 11 km north-west of Melbourne’s central business district and at the 2016 Census had a population of 6,205. It is a small suburb of only 1.9 square kilometres. But it packs a punch for its size.
Oak Park is well located and has very good transport options. A 20-minute drive will get you to the CBD or the airport (off-peak). And for those that prefer public transport, this zone 1 suburb has a few options. Oak Park has its own train station located centrally in the suburb. The train station is on the Craigieburn line, which has services about every six minutes in peak hour. The train takes about 30 minutes to the CBD. There are also various bus routes available.
Oak Park offers great schooling options for families. There are three primary schools all within 5 minutes walking distance, including St Francis de Sals, Strathmore North PS and Oak Park Primary School. And if it is high-schools you are after, part of Oak Park is zoned for the popular and high performing state school, Strathmore Secondary College. Properties in this zone do attract a premium though.
Oak Park has great parks and facilities for the more active person or family. There is a long belt of parkland along the western edge which traverses Moonee Ponds Creek. There are walking trails and bike paths that get you all the way into the city. The creek will benefit from a rejuvenation project that will commence shortly and return it to its more original state. There is a large footy oval and the recently redeveloped aquatic centre and 24-hour gym is definitely being enjoyed by locals.
Whilst Oak Park has limited shopping and café/restaurant options within its tight borders it does provide the essentials and there are plenty of options nearby. Moonee Ponds has supermarkets and boutique shopping and Pascoe Vale offers a selection of good cafes and restaurants. Or a trip into town gets you everything you could desire.
There has been redevelopment in Oak Park as developers snapped up larger blocks and sub-divided and redeveloped them. The council has tightened up the subdivision rules recently to prevent overdevelopment and ensure open space is retained.
As you can see Oak Park has lots on offer for a family or active people. Friendly neighbours, quiet streets, parklands, easy/close access to freeway, walking distance to local train station and bus stops.
Purchase Example
This little gem we purchased through our Buyer Advocacy service for first home buyers and we feature it in this quarterly’s case study.
At 11 kilometres from the city and close to all the amenities you need this two bedroom townhouse was a great buy at $627,000.
Heathmont– “Clean and Green”
Overview
Clean, green and fresh air – Heathmont has it all for the person/family looking for a real suburban feel. And if you buy in the right street, magnificent views over the Dandenong Ranges can be enjoyed from your home or property.
Heathmont is located 25 km east of the CBD. Bounded by the Dandenong Creek in the south and Canterbury Rd in the north Heathmont is a small residential suburb located in Melbourne’s outer east. Like a number of suburbs in this part of Melbourne, the population has decreased and aged significantly over the 1981-1996 period. The suburb also features the H.E Parker Reserve Heathmont Park the Heathmont Golf Park and the Belgrave railway line. Heathmont has everything nearby, trains, buses, local shops, and great schools.
You can shop to your heart’s desire either in the local village which caters for an eclectic mix of shoppers with its own post office, banks, dentists, coffee shops, restaurants, supermarkets, hairdressers, butchers and bakers. And if that is not enough, the Eastland Westfield mega mall is nearby, the sprawling Bayswater shopping strip and slightly further south, Knox Westfield. And of course Costo, next door in Ringwood.
It is handsomely served by sporting facilities of all kinds… and boasts tennis courts, lawn bowls, ovals for AFL, soccer, rugby, baseball, softball and the like…. together with a full Aquatic Centre housing indoor/outdoor pools – therapy spas – diving boards, and so on.
School options include Aquinas College, a Catholic co-ed secondary college located in Ringwood and Whitefriars, a Catholic boys school located nearby in Donvale.
If you feel the need to get out and about the Eastlink and the Eastern Freeway are right there to get you into town, the beach, Healesville, or the Dandenongs.
Heathmont is a quiet, residential suburb – it is perfect for family living and offers a variety of schools, parks, open spaces, bike paths, local churches and a creek in and around the community from which to choose. It also benefits from its thriving next door neighbouring Ringwood and Ringwood East and all they have to offer.
Purchase Example
A good modern family home. Positioned in a popular address enjoying convenient access to prestigious educational institutions, boutique shops, lively café culture and Heathmont Railway Station, this sophisticated eight-year-old home captures immediate interest with its stylish structure and sleek rendering, complemented by a thriving garden.
Sold for $1,350,000 in October 2018. View the agent listing here.
Overview
Q4 Average Vacancy Rate 2.2% – NPB Q4 Average Vacancy Rate 0.65%
The flow-on effects of a “busier than normal” winter period were felt during Q4. The usual ramp up before Christmas didn’t really happen as it traditionally does.
We suspect this is because tenants begun rethinking moving automatically due to the shorter “air time” properties up for lease are generally getting.
In the main, tenanted properties which come up for lease were successfully leased during the last 2 weeks of the tenancy, as the law allows the agent to hold Open for Inspections during this time. The changes to the Residential Tenancies Act which are due to come into effect mid next year will see this time increase from the last 2 weeks of the tenancy to the last 3 weeks of the tenancy. When the rental market is strong 2 weeks is plenty but having 3 weeks to advertise and conduct opens will be a big win during the less busy times of the year when demand slows down.
There is always demand for good properties, even when times are slow. Properties that are near public transport, good schools and lifestyle options like shops and cafes are always snapped up in one to two opens.
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
Brisbane is reaping the benefits of long term urban planning and consumer confidence is high.
According to REIQ’s Queensland Market Monitor, ”Inner-city Brisbane is defying the country’s downturn with prices up 2.2 percent while some suburbs in Gold Coast are doing particularly well — Main Beach rose almost 30 percent year-on-year and Currumbin is up more than 13 percent.” And a report by BIS Oxford Economics (BIS), Australia’s leading provider of industry research, analysis and forecasting services, forecasts Brisbane house prices continuing to appreciate through to 2021, with an overall expected growth of approximately 13%!
So as we hear the media cry loudly about dwelling value price decline in Sydney and Melbourne, Brisbane has been enjoying slow but steady growth. We have seen an increase in interstate investor activity as people lose confidence in our more expensive neighbours. The majority of our clients for Q4 2018 were interstate investors (95%) and from Melbourne or Sydney. And this was correlated by a realestate.com.au report that large volumes of search activity into Queensland was from Sydney, which may suggest that our price growth is in part driven by Sydney money.
The leading driver in the Queensland market is the affordability coupled with appealing lifestyle option. Consumer confidence is high as investors see steady price growth whilst Melbourne and Sydney are experiencing a correction. Price growth is being driven by long term plans that are coming to fruition in Queensland. Local councils provided tax incentives for companies to move their Head Offices to Queensland leading to growth in employment prospects. Funding for the development and overhaul of local infrastructure has been the best it has even been, consistent population growth as foreign and interstate migration continue to seek out the lifestyle the sunshine state has to offer are all underpinning property growth.
However, Brisbane’s unit market is still suffering from an oversupply, according to the BIS report unit construction rates rose from 36% to 57% of new housing stock. Interestingly, according to 2016 Census data about 77 percent of Queensland’s dwellings are separate houses compared to 73 in Australia and 66 percent in New South Wales. Unfortunately, the units are heavily condensed in Queensland’s major city centres in Brisbane and the Gold Coast. And despite the increase in migrants, BIS experts expect unit prices to depreciate by approximately 10% by 2020. Consisting of a 5% decrease in 2018, a further 2% decrease in 2019, followed by 3% in 2020.
While we were seeing some emerging signs of positive conditions in regional Queensland, it does look like any recovery in house prices is stop, start. Areas in South-East Queensland are doing relatively well and seeing some moderate increases, but beyond that, conditions are flat.
Queensland offers investor a chance to secure a good property for $350k that will enjoy substantial growth and offer a good rental return. And whilst sentiment is high in Queensland and confidence bolstered it is still important to purchase the right property at the right price. Queensland is a large state, and Brisbane and regional markets operate very differently. And as we know not all properties are created equally so it is important that you stick to a sound investment plan and someone that has local knowledge.
Auction Clearance Rates
Apart from a sluggish December Brisbane’s clearance rates have remained the most consistent across the 4 capital cities.
Source: Sold Price
Sold
As poorer quality listings take longer to sell, buyers are able to be more fussy about their purchases.
Source: Sold Price
Rochedale South - "The grass is always greener"
Overview
Source: YIP/Coreglogic 2018
Rochedale South is perfectly positioned to raise a family. There are plenty of parks and open spaces to walk the dog, ride the bike (on purpose-built tracks), enjoy picturesque walks in the bushland or play in a playground. There are local shops and cafes. And Rochedale South has its own primary school in its borders.
Rochedale South is a northern residential suburb of Logan City Council, 19 km south of Brisbane CBD. It borders Rochedale, Eight Mile Plains, Priestdale, Springwood and Underwood. At the 2016 Australian Census the suburb recorded a population of 15,317.
So what do the locals, who are 73.6% owner occupiers know about Rochedale South. It is an established suburb that is made up of large blocks (eg 700 sqm) with older style properties, typically from the 70’s/80’s sitting on them.
Rochedale South is perfectly located with easy access to everywhere in South East, Queensland with all major motorways converging nearby. The M1 provides a quick 20 minute trip to Brisbane’s CBD (off-peak) and only 45 minutes to the beaches of the Gold Coast. The Gateway Motorway makes a trip to the airport only 20 minutes and a drive to the Sunshine Coast is 1 hour and 20 minutes.
The new Eight Mile Plains to Roma St, Brisbane Metro is fuelling the rise in property values in as Rochedale was selected as the site Metro vehicles. With construction now fully funded it is only a matter of time for groundworks to begin.
Neighbouring suburb Springwood is the “CBD” of Logan City and has a thriving business centre and a large shopping complex. And if you do like shopping, Garden City, Loganholme, Sunnybank and Carindale are all just up the road and offer plenty of variety.
Rochedale South is the enjoying the ripple effect of its more expensive neighbours, Sunnybank and Eight Mile Plains, pricing out buyers and people discovering and looking to Rochedale South for its more affordable price point. Rochedale South has all the infrastructure you need including medical, education and employment opportunities.
It is a great time to check it out before prices are driven further north.
Purchase Example
Presented to the market for the first time since being built, and sitting proudly on the high side of Algona Street on a large 784sqm block with uninterrupted views. The elevated position above others in the street provides uninterrupted views with impressive proportions over two spectacular levels making this residence one of the finest properties in Rochedale South. The entire property has been meticulously maintained and boasts spacious bedrooms. Sold in the mid $500,000s. View the full listing here.
Bracken Ridge - "Sheds its coat"
Overview
Bracken Ridge is an established suburb with older style homes on larger land holdings.
The streets are wide and treelined, providing a great sense of space. It is a northern suburb of Brisbane and is located about 18 kilometres from the CBD. It has 23 parks covering nearly 6.5% of total area.
Bracken Ridge is definitely a fast-moving suburb that has left its somewhat unruly past behind it and the locals are mainly couples aged 30-39 with children.
Bracken Ridge is benefitting from the gateway arterial infrastructure upgrade. Easy access to the gateway motorway provides a 30-minute drive to the CBD and 15/20 minutes to the airport. If you love walking the beach a 10-minute drive will get you to Shorncliffe or if the shops are more your thing head to Chermside Shopping Centre, Australia’s 2nd largest by the number of stores.
There are a number of train line options just on the outskirts of Bracken Ridge that provide access to Caboolture in Brisbane’s North and Redcliffe in Brisbane’s North West and direct to the CBD. The express bus service to Chermside and the city is excellent.
There is a very good selection of private and state schools in the area or close by, St Joseph, for example, is rated one of Brisbane’s best schools. There are a number of local shops, medical centres, good cafes and restaurants in Bracken Ridge. The Tinchi Tamba Wetlands on the northern border are a great attraction. Offering walking trails, bike paths and bird watching. And if you have a boat you can take advantage of nearby boat ramps and launch and explore Pine River in the Wetlands or Morton Bay!
Brighton and Sandgate, Bracken’s Ridge more expensive coastal neighbours offer a variety of water sports and kite surfing options. Or you can travel north to Clontarf and Margate for swimming beaches.
However, the locals closely guarded secret is that there is a huge hillside area with fantastic sea breezes and incredible views, and what a rarity is to get such beauty with an affordable price tag.
The prices in Bracken Ridge have been on a reasonably steady upward trajectory but it still offers affordable buying options for large blocks of land. But you should get in before prices skyrocket.
Purchase Example
Spacious inside and outside, nestled close to shops, schools and public transport this house has it all.
From its prominent street appeal, 3 good sized bedrooms, separate living zones, glamour kitchen, air-conditioning, stunning rear deck, 4 car accommodation and much much more… This home is perfect for Queensland family living!! Sold for $550,000 in January 2019.
View the full listing here.
Vacancy Rates and Median Rents
Rental Market
Brisbane Q4 Vacancy Rate 2.7%, NPB Q4 Vacancy Rate 0.00%
The rental market for the quarter was reasonably slow on enquiries, but with only a few properties available through our office during this period, we finished the year with 0 vacancies. Houses were still quite popular with potential tenants. The market overall for the quarter saw quite a lot of reduced rental rates due to the slower market, but this improved slightly towards the end of the quarter.
January/February are always our busiest periods! Due to the huge demand properties generally rent quicker with less vacancy periods. Areas close to popular schools and universities are in greater demand during this period as many tenants are looking at getting settled prior to the school year commencing. We also find that houses close to these areas and the city attract share house tenants, while further out areas are popular with families.
The vacancy rate for Brisbane at the end of the quarter was still a high 2.7%, while NPB vacancy rate remains was 0.00%. Median rental rates for the quarter were:
End of Q3 – Houses $451 Units $371
End of Q4 – Houses $454 Units $372
The Queensland community enthusiastically embraced the Open Doors to Renting Reform consultation, with more than 130,000 responses received.
The experiences, views and information collected through the consultation will be analysed to help identify reform priorities to shape the future direction of renting laws in Queensland.
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
The last quarter of the year is normally one with many properties hitting the market and an urgency from buyers to secure and potentially even settle prior to Christmas. We found that the market changed during this quarter, greatly, depending on which section of the market you were in.
The million dollar market cooled slightly with tightening lending conditions continuing. Some purchasers and even owner occupiers decided to play the wait and see game, believing the New Year would have more options hitting the market. Quality investors or first home owner type homes sitting in the market at $450,000 to $600,000 were still in high demand and sold quickly, especially in highly desirable suburbs. Character homes, both with renovations or ready for one in popular suburbs close to good schooling and shopping also stayed desirable with good competition amongst them.
Overall Adelaide continued to perform well in comparison to other capital cities, especially those in the Eastern States. As reported by realestate.com.au the City of Churches’ median property price is now at $437,511, with houses up 1.3% on last year to $465,000.
We found that there was a good mix of buyers in the market including first home buyers, investors and owner-occupiers. Investors based in Adelaide, Melbourne, and Sydney can all see the value in investing here. On offer is smart investment purchases at affordable prices in high demand (or neighbouring) suburbs assuring steady rental returns and future growth.
We also saw a good mix of first home owners, wanting to take advantage of the grants on offer, and investors seeking low maintenance properties at opens for new builds. The quality between the new builds is often evident and those with more generous or more accommodating layouts (eg extra space for study, second living space or courtyard), definitely saw an increase in potential purchasers.
We have also seen a rise in clients looking for properties for their Self Managed Super Funds. While there are stipulations around these purchases, we have secured a number of well-performing properties in growth areas that will serve them well.
Lifestyle suburbs in Adelaide continue to prove popular. The Adelaide Hills alone boasted 3 of the top ten in-demand suburbs recorded nationally by realestate.com. The figures are based on the number of views per listing in the December quarter, with the three Hills suburbs each attracting between 5200 and 5800 views per listing! These lifestyle suburbs, Aldgate, Crafers West and Belair, all offer a community, family-friendly feel in a beautiful setting. And I know I have been known to dream about a move to the “hills” and spend some quality time online searching what is available.
With the brand new, much talked about, Adelaide Botanic High School officially open, we also predict to see properties for both lease and sales in the already popular zone, (shared with Adelaide High School), to increase. Suburbs include St Peters, Walkerville, Prospect, Bowden, Brompton, Hindmarsh, Mile End, Glandore and Black Forest, all of which are already high demand suburbs, so close to the CBD, with trendy shopping and café culture. This is great news for anyone with property already in this zone, but not too late to invest in the area as the school becomes more established as enrolments increase.
The overall feel of the market is still positive and from all reports, that’s exactly how it should be. Huge news that Adelaide has been chosen to host Australia’s international space agency was also announced. It will be located at the former Royal Adelaide Hospital grounds which are being transformed into Australia’s first creation and innovation neighbourhood, where thousands of people will work and stay.
“Our Government’s $41 million investment into the agency will act as a launching pad to triple Australia’s space economy to $12 billion and create up to 20,000 jobs by 2030.”
With jobs, there not only becomes the need for housing, but an increased positivity for the state creating further spending and therefore a roll on effect of jobs in a number of sectors especially hospitality and retail.
The first quarter of the year generally commences slowly as people come out of the Christmas/New Years/Summer holidays haze. Quality property will continue to hit the market and the savvy investor and purchaser will continue to have competition. As is always the case in Summer, beachside suburbs will continue to receive good interest and achieve good results. It has been reported that almost 150 homes sold for more than $1 million across Adelaide’s West last year. A number of local agents foresee that this will continue and record even bigger sales this year. Lockleys, Tennyson, Henley Beach and Semaphore had the highest number of seven-figure sales, with a varied selection of homes from character to modern, executive living. Who doesn’t love a beachside suburb, especially when it is still only a 20 -30 minute commute to the CBD!
All in all, we expect to see more of the same; always popular, lifestyle suburbs performing, growth areas continuing to gain interest and suburbs that have in the past been overlooked, become the next hot suburb as their neighbouring suburbs become increasingly harder to enter into due to pricing and owner occupiers staying put. Adelaide – the safe and steady investment!
Auction Clearance Rates
Whilst Adelaide’s auction market is reasonably small compared to the larger auction driven markets of Sydney and Melbourne. Our clearance rate is stable and behaving more consistently with previous years, apart from a dip in December.
Data Source: Sold Price
Sold Houses
Brighton - "It's the vibe of the place"
Overview
Brighton is a coastal suburb of Adelaide, situated between Seacliff and Glenelg and aside Holdfast Bay.
With a large sandy beach actively patrolled by the Brighton Surf Lifesaving Club on Weekends and Public Holidays between November and March, Brighton proves to be a favourite with all age groups from young couples, to families and through to retirees.
As popular coastal suburbs do, it is the lifestyle that makes Brighton so appealing. With the Brighton-Seacliff Yacht Club, the Brighton Surf Lifesaving Club and the Brighton Jetty there are many sea-related activities. Those who enjoy a coffee or a spot of shopping also don’t miss out with Brighton’s Jetty Road providing many options of restaurants, cafes, boutique shops and the local hotel, known as “The Esplanade”, or “Espy”.
The Esplanade is an area of prime real estate which has been transformed over the years from a street of old cottages to new modern townhouses which can fetch up to $AU4 million!
Not only does Brighton offer great coastal living, but it also benefits from public transport (including several train stations) and proximity to Flinders University and Hospital, a variety of schools (private and public), and Westfield Marion, a major shopping centre and a swimming pool complex.
As with the mix of occupants in Brighton, there is a real mix of properties. From units, character homes and executive modern living, there is something for everyone. Investors also find Brighton full of opportunity and receive steady rental returns.
If you enjoy leisurely walks, running, swimming or surfing then Brighton is the place to be. Or if you prefer just relax in a café on Jetty Road and people watch your day away. A real vibe exists here, Brighton is a real community and a very easy place to live. The city is only about 20 minutes away, so an easy distance for commuters. And with a median price tag under $650K for houses and $480k for units, your dollar goes a long way.
Purchase Example
Sold for $1,525,000 in October. A flawlessly designed home, built in 2014 providing a great feeling of space and light with high calibre finishes. Providing three living areas, designer kitchen, four large bedrooms, three bathrooms, plus alfresco dining, pool and spa; the purchaser of this home would not be going without.
View the agent listing here.
Erindale - "Undiscovered opportunity"
Overview
You know when one of our local Buyer Agents say they would love to buy their dream home in this suburb you are on a winner.
Erindale is the small package that delivers the ultimate suburban family lifestyle. And don’t let the word suburban put you off, some people use it as a dirty word but this tranquil, beautifully green suburb is the perfect location for a young or growing family. The predominant age group in Erindale is 10-19 years and parks cover nearly 5.8% of the total area, once again proving how popular the suburb is for families.
This small suburb of only 0.6 square kilometres and 1,181 people is often swamped by its bigger and more well-known neighbours such as Burnside, Kensington Gardens and Leabrook. With the benefits of what all these popular Eastern suburbs and other have to provide, including Burnside Village, The Parade, Norwood, popular private and public schooling, easy access to the CBD and an enjoyable lifestyle, Erindale packs a punch.
Its local residents, which are 82.3% owner occupiers love its beautiful tree-lined, large blocks, character homes and peaceful location. You know when the percentage of owner-occupiers is this high, that it is a tightly held suburb and if a property does become available for lease, it will get snapped up in no time.
The current median price of homes, $1,295,000 reflects the quality of lifestyle this suburb offers and only 6 kilometres from the CBD, The University of South Australia, Magill Campus is also a short distance nearby.
Whilst there isn’t a school in its small border there are plenty of options nearby including Burnside Primary School, Marryatville Primary School and Pembroke all less than a 1 kilometre away. Private school options include St Peter’s Collegiate Girls School, St Joseph’s Primary School and Pembroke School are all within close proximity.
The suburb is also closely located to the Adelaide Hills, meaning a long lunch at a winery or one of the many popular hotels is only a short, yet scenic, 20 – 30-minute drive away.
Erindale really is a suburb for those who want to forget the daily hustle and bustle when at home, but still be close enough to the action to keep life simply enjoyable.
Purchase Example
This inviting Spanish Mission style home, circa 1971, is situated on an 827 square metre allotment. The home offers large open plan lounge/dining, spacious timber kitchen, four generous sized bedrooms, fenced in ground pool, under cover entertaining area and large back yard with landscaped gardens and fruit trees.
Sold for $952,000. View the agent listing.
Vacancy Rates and Median Prices
Following on from the rest of the year, the Adelaide rental market continued to stay steady. The reported vacancy rate from November was 1.1%, the second lowest in the country! Considerably lower than what is seen as the norm or acceptable being 2 -2 .5%
While rental rates haven’t seen the spike that they sometimes can during this period, they also haven’t gone backwards. Tenants continue to want a low maintenance home, but with the space for outdoor entertaining. They are becoming more particular about the upkeep of the property and those that show evidence of being well maintained will always receive greater interest and more quality applications.
We had great enquiry on an advertised property at Largs Bay, which also helped secure tenants off-market for another Largs Bay home. Both lots of successful tenants were moving from interstate for work purposes. Sometimes, this can entail thinking outside the box and being more flexible with viewings of properties. It is important to build a strong relationship with tenants from the beginning to ensure as smooth tenancy as possible.
Generally speaking, most properties are being leased within 1 – 2 weeks of advertising commencing. This does all come down to location, pricing, presentation and the type of property itself and of course, the type of tenants that the owners prefer.
The Adelaide rental market should continue to hold strong over the first quarter of the year which sees Adelaide live up to its Festival City title. Being on the world stage with the Tour Down Under and then the wonderful vibe that is created through the Adelaide Fringe, Adelaide Festival and Writers’ Week, WOMADelaide and the Superloop Adelaide 500 – who wouldn’t want to be a part of our wonderful city!
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
We have prepared three case studies on properties we purchased in Q4 for our client’s.
Matching Requirements to Budget (VIC)
Suburb: Oak Park
Agent Listing: Click here
Client type: First Home Buyers
Budget: $630,000
Purchase Price: $627,000
Property: Townhouse
Service: Search > Assess > Negotiate
This is why you engage a Buyer’s Agent! Brenton Potter helped his clients secure the perfect townhouse for their requirements in a suburb they weren’t even across.
Brenton’s first home buyers approached him with a detailed list of requirements and a firm budget and a list of preferable suburbs. They had been watching the market and were struggling to find properties that matched their needs and budget. Brenton quickly determined that their budget and preferences were not aligned. He asked if they were open to him recommending alternative suburbs that would meet their requirements.
Oak Park (11 kms North West of Melbourne) was quickly agreed upon on as an excellent alternative to their original suburbs preference. Brenton commenced the search and promptly identified great opportunity.
This property ticked nearly every box for them: proximity to the city, excellent school zone (including Strathmore School Zone) public transport, parks and bike paths on their doorstep, open living and a garage.
The property was scheduled to go to auction in late November. To secure the property with the least amount of competition, Brenton advised his client’s to submit an unconditional pre-auction offer. The written offer triggered the property being placed on the market. The selling agent, who Brenton had a working history with advised it was a multi-offer scenario. Brenton agreed a ceiling price with his client and negotiated for the property and secured it for $627,000 before the auction.
This was a great outcome for our clients, their original requirements conflicted with their budget but Brenton was able to secure them a property that ticked nearly every box for under $630K. Well done Brenton. Your clients have already written a glowing testimonial for you.
“…Brenton was very helpful and responsive. He spent time to find out what is important to us and made this process very easy for us and relatively stress-free. With Brenton’s help we were able to purchase a property that ticks most of our boxes which seemed impossible before we engaged him…Thank you!”
Buying Smart not with your Heart (SA)
Suburb: Myrtle Bank
Address: 23 Glenford Avenue
Agent Listing: Lincoln Marshall – OC
Client type: Home Buyer – Search > Assess > Negotiate
Family looking for modern home or block/knockdown home suitable for building on
Property: An original two bedroom home on a block of more than 700sqm. A wide frontage of almost 20m and the block was also relatively level. The home was also vacant, allowing for a quick settlement to be able to take place.
Solution: Our clients, being locals, knew exactly what they wanted and where they wanted it. Situated within Myrtle Bank which was one of their preferred suburbs over others in their search criteria due to their involvement with schools and sporting clubs. The property ticked all the boxes with size, frontage that would cater for a double garage which was also a non-negotiable criteria and council regulations allowing for the home to be demolished and their planned design to be built.
Purchase: Given that our clients had been searching for 12 months prior to engaging with us, we knew it was imperative to be on the front foot if we were going to secure this property. Within half an hour from the home being advertised, we were in touch with the agent discussing price point, the possibility of placing an offer prior to his advertised open inspection and the market in general. We conducted our due diligence and like the majority of interested parties in this property we would be looking at land value. We knew there would be a good amount of interest as allotments such as this don’t become available often.
Negotiations began with a fair and reasonable offer, which was slightly under the advertised price point. Our clients, while purchasing for their forever home, still had a budget they needed to stay within and we needed to ensure we listened to the brain as much as the heart and not overspend.
The offer was soon responded to and advised that they would need to align with the asking price for it to gain the vendors’ attention. We also had a subject to finance clause within the offer, which after speaking with the broker involved was assured finance was no issue, but we weren’t going to advise to remove this to make the offer more appealing as suggested by the agent. We never want to see any of our clients in a situation that they are not 100% comfortable with.
After reassessing, our offer was aligned to a best and final and just over the advertised price. It was imperative that we stayed strong on this offer and showing we were genuine, not just an enquiry. While we knew that there would be lots of enquiry, we also knew that the block wasn’t quite large enough for most developers to split and build on, therefore putting us in a position where we were hopeful we could secure the property fairly and fast.
There were lots of behind the scenes talk, strategy and negotiations, including the finance broker speaking to the agent to settle any nerves surrounding a conditional offer. The result was the vendor accepting the offer, a huge relief to our clients. Within 48 hours of the property hitting the market, the contract was signed!
Finding your dream property interstate (QLD)
Suburb: Wakerley
Agent Listing
Client Type: Family relocating from Melbourne
Budget: $1.04m to 1.08m
Service: Search > Assess > Negotiate
Purchase:
One of the key benefits of our service is our willingness to share our industry knowledge and educate our clients on where the best buying opportunities are whether investment or primary residence.
Recently clients were referred to us by an industry associate. They were relocating from Melbourne and searching for their new family home with little luck.
During our initial consultation, our client provided us with a list of their requirements including suburbs they had been searching unsuccessfully in themselves (as recommended by a friend). They wanted a family home on a significant land component in the outer south-western suburbs of Brisbane.
After our consultation and with a better understanding of what they were looking for I believed there were better opportunities and better value for money in Ransome, Gumdale and Wakerley, suburbs in the Eastern bayside areas of Brisbane they were unfamiliar with. After discussing the suburbs with them I suggested they conduct some research online and see what they thought. Needless to say, they loved what they saw and accepted that they needed our help on their side.
The property hunt commenced and we adjusted their selection criteria accordingly. During our conversations, the client revealed they were concerned about having to fly up and down to view properties they would either eliminate or not be successful in purchasing. I advised them we could build a condition into our offer so that if it was accepted it was subject to a building inspection and an inspection by our client. This alleviated a significant amount of stress and potential costs for our client. I would physically inspect the properties and our client could review the recommended ones online in conjunction with our independent property report. As listing numbers were in low in our preferred suburbs for good properties this also enabled us to act quickly if required.
I located and inspected a good property just on market in Wakerley. It ticked a lot our boxes, including the land component. Our clients viewed the property online with the safety net of viewing after the offer was accepted and I commenced discussions. In my opinion, the property was overpriced and we would have to negotiate hard to get to its true market value. However, the vendor who wanted in excess of $1.1m didn’t seem willing to budge.
Whilst we were still in discussions with the sales agent another property appeared on line in the same area with a real estate agent who I had known for 10 years. The property appeared to be far superior property with a seller who appeared to me a little more motivated. However, we now found ourselves in a position where we had to move fast or lose two properties. I knew this property was the one for our client, it had great street presence and ticked all our client’s boxes and more.
The second property was a new listing and had not had its first open for inspection yet. I requested a private viewing before the first open. However, the selling agent had recently undergone a shoulder reconstruction and not able to drive. Due to our long work history, I suggested I play chauffeur and drive us both there. He readily agreed to the suggestion.
I inspected the property Tuesday, made an offer on Wednesday (subject to our special conditions) and it was accepted Thursday. The contract price was under our client’s budget and also well under what the previous property seller was demanding for an inferior property.
The client flew up to inspect the property on the Saturday morning and when the client saw the property for the first time they were smiling from ear to ear. And that is why we do what we do.
If you want to know more about any of the markets covered in this edition don’t hesitate to contact our State Managers here.
Or if you would like one of our experienced advocates to contact you to assist with your transaction, fill out our Help Us Help You form!