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.
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.
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Thanks to Alphabroker for this summary
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
– Best performing capital city: Sydney +5.4%
– Weakest performing capital city: Perth -1.6%
– Highest gross rental yields: Darwin houses at 5.7% and Darwin units at 5.9%
– Lowest gross rental yields: Melbourne houses at 3.2% and Melbourne units at 4.2%
– Most affordable city: Hobart, with a median dwelling price of $320,000
The cost of housing close to the centre of capital cities is continuing to climb due to the inherent shortage of land, high buyer demand and abundance of amenity in these regions which is resulting in buyers paying a premium in order to secure a home.
It is somewhat unfortunate, however, the liveability of an Australian capital city generally increases substantially as you move closer to the city centre. The reason being that the provision of roads and public transport are better, there is more local social and retail amenity and emergency services and hospitals are more readily available. Furthermore, the better schools are often also located around the inner city suburbs. As a result, demand for housing in these areas is typically much higher resulting in the cost also being higher.
This week we highlight the 5 suburbs in each capital city which have the most affordable median value and are located within 10 kilometres of the CBD.
Top 5 suburbs with the lowest median house & unit value within 10km of the CBD
The point that is immediately noticeable from the table provided with this release is how expensive the median value is for houses within the suburbs listed in Sydney. Turrella is the most affordable suburb listed in Sydney with a median house value of $839,676 which is significantly higher than the most expensive median value listed across all other capital cities. It is a similar story for Sydney units although the gap isn’t as large compared to the other capital cities as it is for houses.
Sydney – all of the suburbs with the most affordable median house value are located south of the city close to the airport. For units, it is a bit more varied with suburbs south, east and west of the city.
Melbourne – the list for houses are scattered across the city however, none are located to the south. Again units are a bit more varied and the locations are scattered around the inner city.
Brisbane – the suburbs for houses listed are typically south, the one exception is Keperra north-west of the city. For units, three suburbs are located south and two located to the north.
Adelaide – all of the suburbs for houses listed are located to the north of the city where values are typically much lower. For units, all of the suburbs except for Brooklyn Park are located to the north of the city.
Perth – all of the suburbs listed for houses are situated north of the city, predictably all away from the water. Similarly for units all are located north of the river.
Hobart – housing close to Hobart is much more affordable than in all other capital cities. All of the most affordable suburbs for houses listed are on the eastern bank of the river except for Goodwood. For units most of the suburbs listed are situated to the north of the CBD.
Darwin – all of the most affordable suburbs for houses listed are in a similar location just north of the airport. It is a similar story for units with all of the most affordable in a similar area north of the city.
Canberra – all of the most affordable suburbs for houses are situated in the Belconnen district of the city. For units all suburbs listed except for Downer are either in the Woden Valley or Belconnen districts.
In all cities, unit stock offers a much more affordable entry point into the inner city areas, given this it is no wonder that unit construction in inner city areas is booming across most cities. In the more expensive cities such as: Sydney, Melbourne, Darwin and Canberra it has become increasingly difficult over recent years to secure houses close to the city at relatively affordable prices. This is a trend that we anticipate will continue over the coming years given that buyers are willing to pay a premium for the lifestyle benefits associated with living closer to the city centre.
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DISCLAIMER
In compiling this publication, CoreLogic has relied upon information supplied by a number of external sources and CoreLogic does not warrant its accuracy or completeness. To the full extent allowed by law CoreLogic excludes all liability for any loss or damage suffered by any person or body corporate arising from or in connection with the supply or use of any part of the information in this publication. CoreLogic recommends that individuals undertake their own research and seek independent financial advice before making any decisions. © 2014 CoreLogic.
