– Best performing capital city: Sydney, +3.9 per cent
– Weakest performing capital city: Hobart, -2.8 per cent
– Highest rental yields: Darwin houses with gross rental yield of 5.9 per cent and Darwin units at 6.0 per cent
– Lowest rental yields: Melbourne houses with gross rental yield of 3.2 per cent and Melbourne units at 4.1 per cent
– Most expensive city: Sydney with a median dwelling price of $680,000
– Most affordable city: Hobart with a median dwelling price of $315,000
– The overall Melbourne residential market has increased in the middle eastern and south eastern suburbs such as Camberwell, Burwood, Balwyn, Doncaster, Glen Waverley and Wantirna.
– The market is currently experiencing strengthening conditions with moderate to strong price growth achieved due to increased buyer interest.
– Purchaser interest has been influenced by the current low interest rates and high clearance rates which have created a confident, positive market.
– In volume terms, owner-occupier demand is pretty steady.
– The interest in purchasing property has grown among average owner- occupiers who are looking for a primary place of residence.
– Owner-occupier purchasers also consider the size of the property, their marital status, occupancy and income in order to find a suitable property to meet their needs.
– Despite recent property growth, in the current market, the average buyer is looking to purchase a detached house on a decent site due to potential capital growth via the possible land value increase.
– In June 2014, best performing suburbs in middle eastern and south eastern suburbs were Mitcham and Burwood with respective quarterly changes of 13.2% and 7.1% for houses.
– Due to popularity and current high demand in these areas, developers continue to subdivide established land and build new dwellings to increase density across these neighbourhoods.
– Most properties are located in quiet residential streets with local views and within 15 to 30 kilometres of the Melbourne Central Business District.
– The median price for houses in the area is around $700,000 and it has increased in part due to availability of sought after primary and secondary schools in the area.
– In terms of investors, they are looking for properties to create greater returns in rent payments or capital growth.
– The Australian Bureau of Statistics released housing finance data for July 2014 with the investment finance commitment increasing by 6.8%.
– In the current climate, investors are occupying the majority of housing finance demand. – Compared to owner-occupied purchasers, investors consider not only location and local infrastructure but also the property growth history and comparable rental properties on the market to maximise returns and minimise risks.
– With returns on safe asset classes extremely low, many investors are purchasing property in Melbourne’s safe suburbs such as Wantirna. – Statistics indicate that 79% of Wantirna properties are owner-occupied with a recent decline in the number of sales. – According to RP Data, Wantirna had only 89 house sales and 17 unit sales in 2014 compared to the previous year of 154 and 33 sales respectively.
– However, with the property sector growth, Wantirna has undergone some redevelopment changes and subdivided sites into two and three unit developments are becoming more common.
– According to the REIV, Wantirna’s house values have grown by 10% in the quarter ending June 2014 compared to March 2014 and the current median price in the area is $672,250 for houses and $472,000 for units
– Property values are continuing to rise due to increased competition for housing driven in part by population growth. – However, at some point in the future, demand will slow as purchasers are no longer able to afford the homes available for sale and future growth in values will slow while interest rates will most likely increase.
– Furthermore, the current market shows a very strong supply-side response with a high number of dwelling approvals over the past 12 months.
– Additional supply could slow price increases and release the pressure from rising values.
– The housing market has generally provided solid capital gains over the past decade with growth conditions across Melbourne currently strong, however the market moves in cycles and the growth being seen in Melbourne will eventually slow and soften.
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Simply jump on the HTW website www.htw.com.au and follow the prompts.
Thanks to Therese from Alphabroker
““Safe as”…Strong fundamentals from around the nation”
Here are some highlights:
– Property is generally considered to be one of the safest forms of investment.
– This is due to a number of fundamental reasons common to all residential property markets.
– First off the property market can be very forgiving when compared to other forms of investment such as shares.
– Over time the rising tide of the property market will cover up flaws in the initial purchase.
– Furthermore you can mitigate a lot of the risks of property investing through insurance, such as landlord and building insurance.
– Although property is susceptible to macroeconomic influences, it differs to that of the share market in that you are in direct control of your investment. – Property allows you to have control and make decisions such as renovations, which will directly affect your return on investment.
– Along with these fundamental factors there are also influences that are unique to certain areas in Melbourne that make some regions a safer investment choice than others.
– For example there has been a strong café culture in recent years, which only seems to be getting stronger.
– Properties purchased within walking distance of these amenities (some would say necessities), would not only benefit on sale day but also experience greater rental demand.
– This has been evident in areas such as Footscray and Brunswick, both of which have a strong café culture and have been gentrified in the past few years. – Investors looking for a safe option may want to stay clear of Melbourne’s central business district.
– Overseas investment has led to an increase in demand for new apartments.
– In turn developers have flooded the market and in some areas supply will be greater than demand.
– Apartments provide investors with a lower entry price point compared to houses and can deliver a better yield.
– Look for apartments that are close to Melbourne’s metro system as public transport is becoming increasingly important.
– Boutique developments of fewer than fifty apartments may fare better both in terms of capital growth and vacancy rates as there is less competition.
– Home owners have a different mindset to that of investors and therefore owner-occupiers generally have a different set of search criteria.
– A safe purchase would be located in proximity to infrastructure such as shopping, schools and parks.
– Regardless of the property type it will be a safer investment if it is also backed by underlying positive location characteristics.
– This is especially true for properties in an area that has features that cannot be replicated or manufactured elsewhere.
– Melbourne’s property market is extremely complicated and diverse.
If you don’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 Therese at Alphabroker
“Warning bell! What not to buy” is the Theme of this month’s HTW Month in Review.
– After experiencing the cycle boom in the middle of 2012, property markets in Australia’s major cities have been booming.
– A new record median house price of $658,000 was achieved by the end of June and the inner Melbourne median price exceeded the million-dollar level at $1,027,500.
– Because of low interest rates and strong investment, it is expected that the Melbourne residential market will continue to grow in the future despite at a slower rate.
– This characteristic of strong market performance can also be identified by a strong auction market this year with an average clearance rate of 74%.
– Some middle ring Melbourne suburbs such as Ashwood and Vermont South have seen stronger market performance with the clearance rate hitting 95%
– Melbourne’s outer suburbs are still the best performance for long-term capital growth, particularly the north and south-east parts of Melbourne.
– In comparison, Docklands was the worst performer followed by South Yarra, Carlton, South Bank and East Melbourne, which have shown lower levels of price increase over the past ten years.
– The talk of an overpriced market has caused buyers to part with their money cautiously and with the property market booming, buyers are more worried about a property bubble and the possibility of significant price drops in the future.
– Harry Dent, an American economist and demographer, judged that the Melbourne property market was highly overpriced as the house prices in Melbourne have reached almost ten times income levels. – However, this opinion has been criticised by many local analysts and economists.
– Though it is difficult to determine whether the property market is overpriced, it has sparked fears of oversupply of new apartments in certain areas, such as the City of Melbourne.
– Around 3,000 apartments have been built in the Melbourne Council area in 2014 and another 3,000 units are planned to be completed by the end of this year. – This trend is expected to last for at least a few years into the future, mainly within Docklands, Southbank, South Yarra, Carlton and the CBD.
– However, it seems that investors do not pay enough attention to the potential disaster of oversupply as almost 50 developments are currently seeking planning permission from the local council. – Offshore investors contribute to more than 40% of residential developments in the city.
– At the same time, poor quality apartments with design flaws account for 55% of the city’s tallest apartment buildings according to a Melbourne City Council study.
– This has generated the current situation of almost 20% of house and unit losses on re-sale in the Melbourne Council area.
If you don’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
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