National Property Market Update – what’s happening around Australia?

Now that we’re well into 2103, home buyers and investors who were looking to the property markets for direction are seeing positive signs and responding with renewed interest.

This is reflected in more people attending open homes, more offers being made to buy properties, higher auction clearance rates and property values slowly rising.

The biggest change I’ve seen so far this year is the rise in consumer confidence and history suggests this is good for property.

So today I’d like to whip around Australia and see how our property markets are performing. But before I do let’s first look at…

The latest housing stats:
RP Data reported their February house price index and the findings were encouraging.

RPDataFeb

Interestingly I’ve already seen the word “Boom” used in the media.

It would be misleading to say our housing markets are in full scale recovery and a deterioration in economic conditions could easily slow things down again.

However the latest stats will once again disappoint the doomsayers who frequent the property forums and for the last five years have been predicting an apocalypse.

What the stats show
The 5-city dwelling price index recorded a 0.26% rise over the month. This is the second consecutive monthly increase following January’s 1.11% increase in our 5 big capital cities.

What the figures don’t show is how fragmented our markets are, with different states, different price points and different types of properties behaving differently.

Only half our capitals showed price increases and this time round Melbourne was the outstanding performer with it’s third monthly increase in a row.  

RpDatapropertyinvestment_feb

Source – RP Data

The tide is turning

According to RPData’s Tim Lawless most housing markets bottomed out around May last year and since that time the combined capital cities index has recorded a 3.3 per cent improvement in values.

PropertyPriceChangeLast12Months

Apartments Outperformed

Units outperformed houses in Australia’s major capital cities. Over the past year apartment values rose 2.3% compared with a 1.2% gain in house values.

Let’s now look at some of our major property markets in a little more detail:

Sydney
Median house price: $600,000; 2.2% increase in last 12 months.
Median unit price: $4,0000; 4.7% increase in last 12 months.
Vacancy Rate: 1.6%

Sydney performed well over the last year, but the top end of the market is still suffering from an oversupply of property relative to the reduced demand.  However affordable gentrified suburbs within close proximity to the city, transport, amenities and infrastructure are performing well.

In particular, well located apartments in the inner western suburbs and Sydney’s eastern suburbs are being snapped up by investors and owner occupiers at hotly contested auctions according to George Raptis, director of Metropole Property Strategists in Sydney.

“I’d like some of the property doomsayers to come to one of these auctions and see how many genuine bidders are in the market for the small selection of good properties for sale,” says Raptis.

“The market for well-located apartments is likely to remain strong throughout the year. Strong rental demand, a shortage of rental properties, tightening vacancies and rising rents means investors will vie for the same apartments as owner-occupiers, underpinning prices.”

 Melbourne
Median house price: $520,000; -0.6% decrease in last 12 months.
Median unit price: $420,000;  -1.4% decrease in last 12 months.
Vacancy Rate: 3%

Melbourne has been the surprise performer over the last 3 months but different segments of the Melbourne housing market are at different stages of the property cycle.

While there is still an oversupply of property at the top end there is more competition for properties in the middle range of the market, where there is a shortage of well-located properties. This has been evident in strong auction clearance rates this year.

But there are some segments of the Melbourne property market to avoid.

“Builders and developers have got ahead of themselves, and there is an oversupply of newly built house-and-land packages in Melbourne’s outer western suburbs. Currently there is a flood of new properties, but buyers are showing a preference for two to three year old homes which can be bought considerably cheaper than new stock” said Keith Franklin, of Metropole Property Strategists in Melbourne,

“There is also an oversupply of inner-city CBD apartments and the rental vacancy rate in Melbourne’s CBD is 4.4%. The problem is there are many more apartments coming on stream in the next few years at a time when there is less demand from the tenant demographic that rents in the CBD,” adds Franklin.

“This will put downward pressure on prices and rentals. I expect there will be an oversupply of inner-CBD and near- CBD apartments in Melbourne for a few years, causing prices to fall slightly”

“Currently there are some good investment opportunities buying established apartments in Melbourne’s southern or eastern suburbs and adding value through renovations” he says.

 Brisbane
Median house price: $453,000; 1.3% increase in last 12 months.
Median unit price: $350,000; -2.4% decrease in last 12 months.
Vacancy Rate: 1.9%

House prices in Brisbane are still around 9% below their peak, but there are now signs of improvement in this market.

“Last year we saw Brisbane buyers lacking the necessary confidence to re-enter the market, instead sitting on the sidelines waiting for signs that real estate has bottomed before buying a property, but things are very different this year” said Liz Wilcox, director of Metropole Property Strategists in Brisbane.

“More potential buyers are coming to open homes with many are putting in offers within days of properties being put on the market.  There has definitely been an increase in confidence amongst Brisbane based property buyers”

“Like other parts of Australia, the prestige end of the Brisbane housing market is suffering, but well located, more affordable homes within 5- 10 km of the CBD are likely to perform well this year” said Wilcox.

Currently there are a large number of off-the-plan apartments available in the Brisbane CBD and surrounding suburbs. Many of these remain unsold, and this oversupply of properties will put downward pressure on prices and rentals in these suburbs.

Perth
Median house price: $480,000; 3.9% increase in last 12 months.
Median unit price: $410,000; 1.5% decrease in last 12 months.
Vacancy Rate: 0.8%

In the three years leading up to the 2008 peak in house prices, WA house prices increased 20% per annum on average, compared to a national average of 6% per annum. Since then, investors and homeowners deserted the Perth residential property, until the middle of last year when the market turned the corner.

According to Damian Collins director of Momentum Wealth in Perth: “Currently prices are around 4% below their March 2008 peak and with rising rentals (up around 15% in the last year) and a shortage of good stock on the market at a time of strong population growth and first home owners and investors returning to the market, prices in Perth are once again moving up”

Adelaide
Median house price: $395,000; -1.5% decrease in last 12 months.
Median unit price: $320,000; 2.8% increase in last 12 months.
Vacancy Rate: 1.4%

The Adelaide property market has been flat for some time now and prices are likely to correct a little more before the market bottoms.

 Darwin
Median house price: $587,000; 6.3% increase in last 12 months.
Median unit price: $410,000; 4.2% increase in last 12 months.
Vacancy Rate: 1.4%

The Darwin property market was been the strongest performer over the last year fuelled strong investor sentiment at a time of a shortage of properties and rising rents.

What next?

While our property markets are likely to remain soft this year, they should keep consolidating.

We’ve entering the stabilization phase of the property cycle where buyers are returning, slowly taking up available stock and gently pushing up prices in the middle price range.

However these purchasers are being very selective. Well located, well priced properties are selling, but properties in secondary locations or those in areas of oversupply are languishing.

The prestige end of the market, which has been hit hard over the last 5 years, will also slowly improve as our economy and business sentiment picks up.

Rising consumer confidence, low interest rates, a stable economy, rising rents and more good news in the media are likely to auger well for our property markets this year.

But there are plenty of speed bumps ahead.

Home buyers and investors will have to do careful due diligence – they won’t have booming property prices to cover up mistakes.

This means they will need to buy the right type of property…

One that has a level of scarcity, meaning it will be in continuous strong demand by owner occupiers (to keep pushing up its value) and tenants (to help subsidise your mortgage); in the right location (one that has outperformed the long term averages), at the right time in the property cycle (that would be now in many states) and for the right price.

Then hold it as a long-term investment and reap the rewards.

Want to know what I’ll be up to this year?

I’ll be explaining what I’m doing and just as importantly what I’m not doing at our upcoming Property & Economic Market Update 1 day trainings I will be holding around Australia next month.

I won’t be conducting similar seminars until well into the second half of the year, so please click here now and get the full details and reserve your place. I’ll be joined by various experts in the different states including: economic and finance specialist Rolf Schaefer, property analyst Michael Matusik and accountant Ken Raiss, as well as local experts.

We plan to give you straight forward, no nonsense, practical steps and honest answers to improve your property performance this year and into the future. To reserve your place or to find out more, simply click here now and I’ll give you my personal guarantee your time will be well spent. 

I’m looking forward to seeing you on the day.



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About

Michael is a director of Metropole Property Strategists who create wealth for their clients through independent, unbiased property advice and advocacy. He's been once agin been voted Australia's leading property investment adviser and his opinions are regularly featured in the media. Visit Metropole.com.au


'National Property Market Update – what’s happening around Australia?' have 14 comments

  1. March 8, 2013 @ 10:58 am bob hayward

    Hi Michael, your email and data is excellent. For my own continuing research on the Canberra area, are you able to advise any additional data on Canberra market, if possible,
    thank you, regards,
    bob hayward
    Canberra
    0437 357 855

    Reply

  2. March 8, 2013 @ 4:49 pm TSJ

    Michael, Like Bob Hayward, I too, would like more information about the Canberra market. In many reports (yours included), Canberra is either mentioned in brief or not at all. Property owners and investors live in Canberra too! (And although it may be small, it is actually the capital of Australia!) This year with the impact of a Federal Election, will be of particular interest to know what is happening.
    TSJ

    Reply

    • March 8, 2013 @ 5:53 pm Michael Yardney

      Thanks for your comments about Canberra. Please don’t take offense that I leave it out – I have a find spot for Canberra. That’s where I proposed to Pam.
      I’ve included the data on Canberra in the first table from RPData It’s just that it’s hard to find detailed research on that market

      Reply

  3. March 10, 2013 @ 9:29 am jeremy portelli

    Michael. I would like to know if there will be a massive increase in prices of houses in the next 2 years

    Reply

    • March 10, 2013 @ 9:41 am Michael Yardney

      No Jeremy – there is no reason why there should be a massive increase in house prices.
      This could be caused by:
      1. Strong inflation
      2. Significant wages growth or
      3. Sever under supply
      None of these are likely to occur.
      However with inflation at 2-3% we don’t need double digit property price growth to get a good result.
      Warren Buffet said it well: “Wealth is the transfer of money form the patient to the impatient”

      Reply

  4. March 10, 2013 @ 2:40 pm patricia

    Hai Michael,
    I am a foreigner in, purchased a property in CBD melbourne E589, completion begining of 2014.Due to the many upcoming and already in progress apartment unit. Will my property do well in the next 3 years. The exchange rate will kill me should the rental not be able to cover my loan.Please advise me what to do. SHould i see already of wait still.

    Reply

    • March 10, 2013 @ 3:04 pm Michael Yardney

      Patricia
      I don’t know what you paid for your apartment, but like you I am concerned by the many high rise apartments being completed in Melbourne over the next few years.
      Last week valuers Charter Keck Kramer reported that 8 out of 10 off the plan apartment buyers in Melbourne could end up paying more for their properties than they are worth as apartment values in the CBD area have fallen 7 -11% over the last year.
      The oversupply will also affect rents you will be able to achieve. Your challenge is that you may not be able to on sell your property now

      Reply

  5. March 10, 2013 @ 9:33 pm Kim

    Hi Michael. Can you please advise what you see likely to happen in the Hobart market in the next two years? Thanks, Kim

    Reply

    • March 10, 2013 @ 9:46 pm Michael Yardney

      Kim
      Unfortunately Hobart has been the worst performing capital city for the last few years and there is little to suggest that this will change in the near future.
      Like all big cities, there are markets within markets, but I see better investment opportunities in the big capital cities

      Reply

  6. March 12, 2013 @ 4:39 pm eve hanger

    What do you see happing in the Gold Coast ovet the next 4 to 5 years

    Reply

    • March 12, 2013 @ 8:14 pm Michael Yardney

      Eve
      The Gold Coast is a wonderful holiday destination and while it is a large and mature property market, I don’t consider it an “investment grade” market – it is too volatile.
      Currently there is still a large oversupply of property, and this is likely to hang around for some time.
      By the way…I don’t see the Commonwealth Games helping – it didn’t in Melbourne a few years ago

      Reply

  7. March 14, 2013 @ 11:32 am ann-maree

    Hey Michael,
    I have a large renovated terrace house very close to CBD in Sydney.
    I have parking and three beds three baths.
    I have been encouraged by a real estate agent to sell my property now….should I wait another couple of years? I am concerned a bad election result could drop our economy??
    Thankyou

    Reply

    • March 14, 2013 @ 11:41 am Michael Yardney

      Ann-Maree
      I’m not sure how to answer your question – is this your home or an investment?
      If it’s an investment I see no reason to sell it. The Sydney market turned the corner last year and still has significant upside. The upper end of the market is still flat and will most likley turn up later in the year.
      I have no idea how the election will affect the market – but if it does it will only be a short term effect. Don’t make long term decisions based on short term factors

      Reply

  8. June 2, 2013 @ 10:00 am Obtaining Wonderful Lodge Offers inside Europe

    WOW just what I was searching for. Came here by searching for accommodations

    Reply


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