HTW Month In Review Septemeber 2015

ATTACHED HOUSING THROUGHOUT THE NATION!

‘Oh give me land lots of land!’ is a war cry for the previous millennium. Our great Australian dream has always revolved around bricks, mortar and freehold dirt all wrapped up on one title, and with our name firmly stamped across the deed.

Here are some of the highlights

– There will be a plentiful supply of apartments in the CBD and inner suburbs in the next few years.

– It is estimated that there will be 160,000 established contemporary apartments in the market by 2018, a, 43% increase compared to 112,000 apartments in 2015.

– Some of the upcoming standout developments include Far East Consortium’s West Side Place, featuring Ritz Carlton Hotel and approximately 2,600 residential apartments over four towers, which neighbours its sister Upper West Side development.

– In April 2015, the green light was also given to three high-rise developments delivering 1,958 apartments in Fishermans Bend. The off the plan sales in the CBD are strongly underpinned by foreign purchasers. 95% of 941 apartments within the proposed 92-storey skyscraper known as Aurora located in the heart of the city were sold in a fortnight.

– Approximately 75% of the buyers are from South-East Asia and China. EQ Tower, another 63-storey skyscraper on A’Beckett Street, was sold out within eight months. The development will comprise 633 apartments on completion in June 2017. There is a growing concern of oversupply in the market. It was recorded that 1,518 new apartments settled in the CBD over the past 12 months to May 2015 (City Scope, 2015).

– Demand will need to remain strong in order to match the large influx of new apartments over the short to medium term. Inner city apartments that are established or are not being sold off the plan, can generally be purchased at a lower price than a new apartment.

– The recent resale of new apartments evidenced that many of the new apartments, even being sold in brand new condition, are struggling to achieve their original off the plan purchase price.

– Attached housing has been growing rapidly within Melbourne. South Yarra is an inner city premium suburb and has a median house price of $1,662,500 (detached housing) (REIV.COM.AU). According to experts, the high demand suburb has been rated as one of Melbourne’s most liveable suburbs with some of the most popular shopping and dining precincts.

– The area has experienced a large influx of new midto high density residential and mixed use attached housing developments which have influenced the area and market previously known for single dwelling housing or low-set small density unit buildings.

– The most attractive type of attached housing available within the area is the boutique residential apartment developments with high end finishes. In relation to attached housing, the area is strongly characterised by mid to high density unit developments, therefore creating a strong demand for townhouses which are considered unique within the area and are extremely competitive at auction.

– The suburb itself is experiencing large population growth and the space within South Yarra is becoming limited for further developments. As seen from the results of the television show The Block, the threestorey townhouse market is strong and unique for the suburb of South Yarra driving the townhouse market up.

– The best opportunity for attached housing is townhouse living, but with limited supply and high competition, the smaller unique, low density developments would be the next best option. The outer eastern suburbs are generally popular among first and second home buyers with families.

– There has also been a noticeable rise in market activity from foreign purchasers. Both builders and developers are active in the marketplace, with an increased focus on purchasing potential redevelopment sites. This has led to a noticeable increase in townhouse unit development in these areas. In 2015, the outer eastern suburbs are still considered to offer value for money which makes these areas attractive and affordable for first home buyers, families and investors alike.

– The Yarra Ranges area and Melbourne’s south eastern area have seen a significant rise in townhouse development within the past decade. Prior to this period the area was characterised by single level detached brick veneer and weatherboard dwellings on a quarter acre block (864 square metres). Today it is a mixture of new attached housing, detached townhouse and backyard development and the conventional 1950s single level dwelling which remain highly attractive to the development market for potential subdivision opportunities. Larger vacant land allotments have also seen considerable interest from local development and investment companies operating within the area.

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Thanks to Alphabroker for the summary

HTW Month In Review August 2015

HTW’s Theme of the Month for August – 2015! The building price is right!

This month, the residential teams gives a rundown on house building costs in each of their areas. To keep it interesting, they’ve also drawn comparisons with costs in 2009 to demonstrate how these figures trending.

Some takeaways

– A typical house in the outer western residential fringe of metropolitan Melbourne is a single storey 3- to 4-bedroom, 2-bathroom brick veneer dwellingwith a concrete tile roof, front porch and an attached double garage.

– These modern builds are prevalent within developing suburbs such as Point Cook, Tarneit, Wyndham Vale and Williams Landing.

– Standard finishes and fixtures for a basic home include a solar panel boosted hot water system, aluminium windows, laminated kitchen and bathroom bench tops, ceramic tile flooring and standard builder’s range carpeting or timber-look laminex. • A typical price range to construct a basic dwelling with turn key specifications will vary depending on the land area, site excavation and building area.

– For example a newly constructed dwelling with a building area of say 150 square metres will typically range from $1,000 to $1,250 per square metre for a midrange quality build.

– Current costs are similar to the construction figures in Herron Todd White’s May 2009 Month In Review in which construction costs were also stated as typically being between $1,000 and $1,100 per square metre of living area.

– This is thought to be because of efficiencies created in the building industry over the past five or so years. Drivers of these building efficiencies include construction times being cut down from an average of 16 weeks to 10 weeks due  to an increase in pre-fabricated building material being used in construction practices, reduced curing times in the slab (waffle slab) and associated reduced labour costs.

– An example of a mid-range quality completed construction is 6 Laurence Way, Tarneit, a 2008 one storey modern, 4-bedroom, 2-bathroom dwelling with an internal living area of 162 square metres. The house comprises ceramic tile and builder’s range carpeting, laminate benchtops in the kitchen and bathrooms and an attached double car garage. The 2008 completed property sold in June 2015 for $365,000.

– Construction of high end prestige residential dwellings can feature double storey reproduction properties with brick walls, terracotta tiled roofs, timber windows and underground basement parking for several vehicles. The finishes are of very high quality with marble bench tops and tiling, timber parquetry flooring with under floor heating, indoor/ outdoor swimming pool and built-in high tech security systems. Construction rates for the high end prestige sector range from $3,500 to $5,500 per square metre, indicating a significant rise from the 2009 report figures of $2,500 to $3,000, indicative of the labour intensity of such builds.

– Two examples of high end prestige completed constructions are:

10 Duggan Street, Balwyn North. A brand new neo Classical style 2 storey dwelling with 5-bedrooms, 5-bathrooms and 3-car basement parking. Features include high decorative columns, 6.4 metre ceilings, a crystal chandelier, European oak parquetry, marble gas log fire, cinema and study, pool with water feature, terrace with views over the valley and around to the city skyline. The building area is 608 square metres on land area of 828 square metres. The main building added value rate equates to approximately $4,132 per square metre. Sale price was $4,428,000.

16 Boandyne Court, Toorak. A two level contemporary style, rendered masonry dwelling with 3-bedrooms and study, 3-bathrooms, 3-car underground basement parking with a total living area of 356 square metres and land area of 710 square metres. The dwelling construction was completed in 2015 and sold for $5,500,000 in the same year. Analysing this sale, the main building added value rate is approximately $4,247 per square metre.

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As always thanks to the team at Alphabroker

HTW Month In Review July 2015

– Melbourne’s residential property market has been performing well in 2015. There have been strong levels of growth throughout Melbourne especially within the inner city suburbs. This can be attributed to many factors such as a record low cash rate of 2% and high levels of foreign investment. This is giving the Melbourne market a positive outlook and affordability is a growing issue.

– Many buyers are being priced out and are forced to buy in outer suburbs. Dwellings in most inner city suburbs are over $500,000, so we have looked at what can be purchased at this price point.

– Once a working class suburb, North Melbourne has transformed into a lively suburb with a vibrant café culture.

– In addition to the walkable distance to the CBD, the suburb is well serviced by North/West Melbourne train stations, three tram routes and buses.

– Errol Street and Victoria Street are famous for the variety of shops, cafes and restaurants. In recent years, a large number of old factories and warehouses have been converted to modern apartments.

– The suburb is highly sought after by young professionals and students owing to its close proximity to the CBD, Victoria Market, hospital precinct and universities. 65% of the population is currently renting with a vacancy rate of 2.95%.

– The median price for units is $493,000 as of May 2015. 2-bedroom apartments in older complexes are generally available at the higher end of the $400,000 mark.

– Bundoora is a northern suburb approximately 16 kilometres from the Melbourne CBD, and is home to RMIT and La Trove University with a demographic mix of students and families. When looking back to July 2014, it was reported that the median house price for a 3-bedroom home was $495,000. In March 2015, statistics indicate that Bundoora’s median house price for a 3-bedroom home grew to $513,000 (http://www.reiv.com.au/Property-Research/MedianPrices/Median-prices-by-bedroom/3-bedroomhouses).

–  When looking at the overall median house price Bundoora recorded an average house price of $587,500. – The median land price for Bundoora was recorded at $717,500 for May 2015.

– This indicates that $500,000 will no longer be sufficient for buyers to purchase houses or adequate size land in this suburb and will force buyers to purchase apartments.

– The median apartment price recorded in May 2015 was $361,000, a large drop from April which was $455,000 and this median price drop is believed to have occurred from the oversupply of apartment developments in the area.

– We have seen continual demand within the new house and land markets in the outer south-western region of Melbourne with areas such as Point Cook, Truganina, Tarneit and Williams Landing having had continual demand over the 2014/2015 period.

– Appeal for these markets is being driven by the relatively affordable entry level properties with buyers still being able to purchase three to four bedroom homes for under $500,000. RP Data Core Logic has reported an annual capital growth of 3.23% for the year so far, reflecting a new median house price of $465,000. Although Point Cook is situated approximately 22 kilometres from Melbourne’s CBD, nearby railway stations such as Aircraft and Laverton on the Werribee line provide access to Point Cook’s town centre as well as Melbourne City.

– Two of the more prominent estates within Point Cook (Alamanda and Sanctuary Lakes) have seen dwellings consisting of four bedrooms and two bathrooms situated on roughly 450 square metres of land sell from $450,000 to $550,000 depending on their street appeal and location. These sales reflect the strength within the current market and the desire to be a part of these established estates.

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Thanks to the team at www.alphabroker.com.au

Quarterly Review, May 2015 By CoreLogic RP Data

Combined capital city home values have increased by 7.9% over the year
– Combined capital cities home values have recorded value growth of 7.9% over the 12 months to April 2015.
– The annual rate of home value growth has slowed from a recent peak of 11.5% in April 2014.
– Over the past year, house values have increased by 8.3% compared to a 5.6% increase in unit values.
– The stronger performance of detached housing markets compared with multi-unit dwellings has been a feature of Australia’s housing market over each of the past four cycles.
– Despite the stronger growth conditions within the detached housing market, we are seeing a growing level of development appetite for medium to high density housing. This is likely due to significantly higher prices in most cities for detached houses compared to units, an increasing desire for residents to live closer to the city centre and changing town planning regulations.

HTW Month In Review June 2015

With the official cash interest rate reducing to a new record low of 2% in May 2015, the property market is starting to see a surge of new and existing investors. Combined with the long-term potential for strong yields and capital gains, many property investors feel this is an ideal opportunity to get into the market.

Here are some highlights from the Review for Victoria

– The Melbourne residential property market is performing well across the board and is described by many property analysts as hot. Units do not seem to be reaching the same levels of growth in some areas, however this can be explained by an oversupply in the market.

– The overall positivity within the residential market in Melbourne can be attributed to many macroeconomic drivers including the low interest rates, increased foreign investment, population growth and job security.

– Foreign investment is one of the drivers in the current Melbourne market. Chinese buyers are especially active and heavily involved in the eastern suburban, prestige and off the plan property markets.

– The suburbs being impacted heavily are Doncaster, Balwyn and Templestowe. It is the financial backing of some of these foreign investors that is keeping local buyers out of the market.

– Consider the suburbs of Northcote, Essendon and Carnegie as examples to gauge current market performance. The price point for all three suburbs is medium to high. – The main demographic is quite similar, the majority being professional couples, some with children and generally in the medium to high income earnings bracket.

– Housing in Northcote is excelling. Median house prices rose 4.2% for the quarter to reflect a median sale price of $943,000. Units are remaining flat or even declining slightly. The median sale price declined 1.81% for the quarter to $487,500.

– Northcote’s popularity can be attributed to many factors such as being seven kilometres from the CBD and access to extensive public transport, Northcote Shopping Plaza and High Street retail strip.

– The high demand for housing in this area has forced entry level prices to rise. Last year entry level buyers could afford partially updated properties in Northcote. The increase in value has forced them into buying houses in original condition.

If you haven’t already, you can subscribe to receive this report directly each month for FREE! Simply jump on the HTW website www.htw.com.au  and follow the prompts.

Thanks to Alphabroker for this summary