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.

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 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

HTW Month In Review May 2015 – Prestige Homes

The upper crust! … is the theme for this month’s HTW Month In Review!

Prestige property sectors around the nation – is up for discussion…… Prestige markets are just great fun to analyse. On the serious side, the sector is often a weathervane on market direction. Prestige buyers and sellers also appear to be reasonably immune to interest rate movements.

 

Here are some of the highlights

– Properties valued at over $3 million are generally considered prestige properties in the Melbourne market.

– Prestige properties located in the Stonnington and Boroondara area, as well as inner bayside suburbs such as Middle Park and Brighton have been highly sought after over the past year.

– Suburbs to the inner east and south east of Melbourne’s CBD such as Armadale, Canterbury, Deepdene, Hawthorn, Kew, Malvern, South Yarra and Toorak have a high proportion of dwellings that sell for in excess of $3 million.

– Today these suburb’s retain some of the look and feel of earlier times and the Victorian era, period homes, either in original condition or renovated, are extremely popular with purchasers.

– The prestige apartment market through Melbourne’s CBD, St Kilda Road, Southbank, South Yarra, Toorak and Port Melbourne was stable across 2013 and 2014.

– The average clearance rate in March 2015 was 79.5%, much stronger than the 73.7% recorded last March. It is noted that high-priced areas generally achieve better results than budget suburbs.

– The market is strongly driven by international, primarily Asian investors, securing property within the CBD and the surrounding well-known suburbs with prestigious schools within close proximity.

– The market demand for prestige properties is currently very strong and more high-priced sales are anticipated this year.

– Since the RBA started to cut interest rates in August 2013, the current record low interest rate of 2.25% has sustained housing demand for local investors, while the depreciation in the Australian dollar has continued to attract foreign investment.

– The low mortgage rate is expected to further stimulate the existing strong market conditions. The rates are set to also attract first home buyers and local residents with self-managed superannuation funds who are looking to invest. This will strongly impact the average housing and apartment market.

– The fall of the Australian dollar has generated enormous interest from foreign investors, especially Chinese property buyers as more Chinese investors want to diversify their portfolios and they consider Australia a safe and long-term investment destination.

– Asian buyers are looking for properties within appropriate school zones and near universities.

– Within Melbourne buying property is strongly influenced by the zoning of the property in relation to the school zone requirements.

– Wealthy Asians and locals are ensuring they are within good school zones which are some of Melbourne’s most prestigious suburbs, including Kew and Toorak. This factor is a driver within the high end property market in Victoria.

– There is an increasing amount of large developments set to begin throughout the CBD and outer popular Melbourne suburbs.

– The prestigious property market will also continue to grow steadily with the Australian dollar declining, low interest rates and the appeal of Melbourne to Chinese buyers.

 

As always thanks to Alphabroker for this summary