Winter is coming! Other than the anticipation of the new season of Game of Thrones, the word on everyone’s lips is what is the current state of the real estate market and when is the best time to buy. The truth is if you are buying for investment or to own and occupy for the long term, good property acquisitions should always be made with the purpose or intention to buy and hold to maximise benefits of long term equity from strong capital growth and rental return opportunities.
One thing which is highly likely that history has proven in Melbourne, is that inner-city property and generally within a 20km radius of the Melbourne CBD with good access to public transport, employment, key amenities and infrastructure, property and land value should always rise at a consistent rate and achieve good capital growth over a 10 to 20 year period despite economic and market triggers that occur with rises and falls during that period. Even at times when the majority of the market may be in doubt whether to buy or withdraw, houses with reasonable land and building size and villa units and townhouses which meet a good grade for the owner occupier or investor will remain in demand.
Knowing the best way to achieve the maximum benefits during different market trends takes time and experience, no one is born a ‘Master Investor’ it is something that is learnt and developed through years of experience in the property market.
One thing that will have a profound effect on the final result and calculation of profits when one reaches to leverage from equity in a property, capital growth and rental yield will be the initial due diligence and research put into the right property type and location key criteria selection process and negotiation of comparable purchase price.
A Buyers Agent is an ideal advocate who can assist with independent and unbiased education or service when it comes to the buying process.
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In This Issue:
- REIV Market Outlook April 2016
- Core Logic RP Data National Property and Economic Overview April 2016
- The Turnbull Government’s Transport Plan For Victoria
REIV Market Outlook April 2016
MARKET OUTLOOK
• House and unit prices are expected to continue to
grow, although at a moderate pace over 2016
• Auctions continue to be extremely popular across
Melbourne – especially inner and middle Melbourne
• Clearance rates are expected to moderate late this
year, however should remain solid (above 65 per
cent) in the new year
• The rental market is expected to remain relatively
stable in the first half 2016 – as is the vacancy rate
for housing.
REGULATORY OVERVIEW
• Labor have announced their intention to amend negative gearing and CGT rules if
elected:
– Restrict negative gearing tax concessions to new properties
– Reduced capital gains tax concessions
– Grandfathering of existing investments
• Renters will be pushed from the inner/middle suburbs to the city fringe:
– As existing rental properties change hands they’d fall under the new tax regime, and thus be more
likely sell to owner-occupiers than investors.
– Development of new housing in inner & middle suburbs is constrained by factors such as supply of
land, planning issues, and zoning regulations.
– Therefore supply of rental housing will see some shift away from inner/middle suburbs, and will
instead be dominated by CBD apartments and houses in new land estates.
• Those lucky enough to find a rental near the CBD will pay more:
– Reduced supply will lead to increased rents on remaining rental properties in inner & middle
suburbs, especially for houses in middle suburbs which will become relatively scarce.
• Those in outer areas will see a drop in quality of living:
– Increased development in outer suburbs will put further pressure on already strained infrastructure
Enzo Raimondo, CEO REIV
METRO MELBOURNE MEDIAN PRICES
Source: REIV
December Quarter 2015 Median Prices
House
$718,000 (-0.1%)
Unit & Apartment
$537,500 (+1.6%)
TOP QUARTERLY and ANNUAL HOUSE GROWTH
SUBURBS at 31 DECEMBER 2015
Source: REIV
TOP QUARTERLY GROWTH
Dec-15
Median Quarterly Change
1. Warrandyte $1,030,000 (19.1%)
2. Greenvale $655,000 (17.8%)
3. Sunshine $645,000 (17.3%)
4. Essendon $1,315,000 (16.0%)
5. Prahran $1,485,000 (15.1%)
TOP ANNUAL GROWTH
Dec-15
Median Annual Change
1. Mount Waverley $1,281,250 (29.4%)
2. Balwyn North $1,725,000 (29.0%)
3. Box Hill South $1,238,000 (29.0%)
4. Essendon $1,315,000 (29.0%)
5. Box Hill North $1,025,000 (28.7%)
TOP RENTAL YIELDS – MELBOURNE
(QUARTERLY TO 31 DECEMBER 2015)
Source: REIV
Suburb Dwelling Type Gross Rental Yield Weekly Median Rent (Dec 2015) Median Price (Dec 2015)
Carlton 1-bedroom unit 9.0% $365 $210,000
Melbourne 1-bedroom unit 6.3% $401 $333,000
Southbank 1-bedroom unit 5.6% $451 $420,000
Melton South 3-bedroom House 5.5% $261 $247,500
Docklands 1-bedroom unit 5.4% $450 $435,000
Southbank 2-bedroom unit 5.3% $569 $557,500
Melton West 3-bedroom House 5.3% $285 $279,000
Cranbourne West 3-bedroom House 5.2% $340 $339,500
Prahran 1-bedroom unit 5.1% $360 $370,500
Roxburgh Park 3-bedroom House 5.1% $350 $360,000
Core Logic RP Data National Property and Economic Overview April 2016
Residential real estate underpins Australia’s wealth and has reached $6.5 trillion
Home values increased by 0.2% in March 2016 with values 1.6% higher over the first quarter of the year
- Combined capital city home values increased by 0.2% in March with value rises recorded in Sydney, Adelaide, Perth and Darwin while values fell elsewhere
- Home values were 1.6% higher over the first quarter of 2016 with Brisbane an Perth the only capital cities in which values fell
- Over the past 12 months, combined capital city home values have increased by 6.4% however, Sydney (7.4%) and Melbourne (9.8%) have recorded significantly higher growth with moderate increases in Brisbane (4.5%), Adelaide (3.2%), Hobart (4.8%) and Canberra (1.7%) while values in Perth (-2.0%) and Darwin (-1.8%) continue to trend lower
Home sales have trended lower over recent months
- Over the 12 months to March 2015 it is estimated that there were 340,255 houses and 132,359 units sold nationally
- House sales are -3.4% lower over the year while unit sales are -9.7% lower
- It is important to note, the large volume of off-the-plan sales currently means there is a high likelihood unit sales volumes will be revised higher over the coming years
Rentals rates are -0.2% lower over the year, the weakest rental conditions on record
- Capital city rental rates have recorded a -0.2% fall over the past year which is their weakest conditions on record
- With rental rates falling and value growth slowing but generally much stronger, rental yields have trended lower over the year and sit at 3.5% which is also a record low
Selling time of homes is seeing a seasonal spike while discounting is steady over the year
- The typical capital city home is currently selling after 60 days on the market compared to 53 days a year ago
- The average level of discount is recorded at -5.6% which is the same level as a year ago
- Auction clearance rates have rebounded strongly early in 2016 and have averaged 68.5% so far this year
Listing volumes are lower than they were at the same time last year and have started trending lower
- Over the past 28 days there were 41,381 new homes listed for sale which is -2.2% lower than a year ago
- Over the same timeframe there were 235,897 total homes listed for sale which is -4.2% lower than a year ago
Economic data remain mixed
- New lending to both investors and owner occupiers is trending lower with investment demand falling at a greater pace
- Total housing credit is rising however, investment credit growth continues to slow and is now well below APRAs 10% threshold for annual growth
- The rate of population growth at a national level has continued to slow over the September 2015 quarter
- Dwelling approvals remain very high although they are now trending lower
- Consumer sentiment remains at a fairly neutral level
- The unemployment rate fell to 5.8% in February
- Official interest rates remained on hold in March with the market anticipating a 25 basis point cut to official interest rates by the end of this year.
The Turnbull Government’s Transport Plan For Victoria
Melbourne, Victoria
Each year, almost 100,000 people move to Victoria.
Labor has wasted over a billion dollars in scrapping vital transport projects and has failed to provide a clear plan that meets the needs of a growing population.
Victoria needs new infrastructure to support its regions and ensure Melbourne remains one of the most liveable cities in the world.
That’s why today we announced a new Transport Plan for Victoria.
Our Transport Plan for Victoria includes:
- Widening the Monash Freeway
- Upgrading the M80 Western Ring Road
- Upgrading the Murray Basin Freight Rail
- Targeted package to tackle urban congestion
- Funding to help fix regional roads
- Planning work for a new Melbourne Metro Rail system
The Federal Coalition remains completely committed to the East West Link. It is a critical piece of infrastructure that must be built and we will support any Victorian Government that is prepared to build it.
Our Plan will create jobs, tackle congestion in our suburbs, ensure farmers can get goods to our ports and begin planning for a Melbourne Metro Rail system
Supportive information sources: Core Logic RP Data, REIV, Turnbull Federal and VIC State Government with Master Advocates Real Estate Services published April 2016
