Do you know the current state of the market?
If you want your property portfolio in stay in top condition, regular checks are essential.
I am a big supporter of good health – in all its forms.
While I cannot offer much help on the physical health front (see your doctor for that), I can offer Australian investors monthly summaries of some of the bigger news events impacting our real estate investments’ health and our future investment plans.
Welcome to the Horizon Property Alliance March/April Industry Round-up 2017.
State of the nation
According to CoreLogic National Housing Update for March, 2017, the overall outlook is upbeat.
There have been dwelling value rises across most capital cities in Australia when compared to February, 2017, helping the country to a 4% increase in capital city prices for the month.
Sydney and Melbourne continue to lead the charge. Weaker conditions have persisted in the mining state capitals of Perth and Darwin, commented CoreLogic director Tim Lawless.
Both showed capital value drops month-on-month. Brisbane dwelling values also tapered slightly between February and March but by less than 0.5%.
However, if taking a national view and looking at the trending over the past year, rolling annual combined capitals’ dwelling value has rebounded to its current level of 11.7% as at February this year.
It is the fastest annual growth rate since June 2010, according to the national data collection company.
Lawless identified the two most recent interest rate cuts, which both occurred in the past 12 months.
Investor buying activity clearly “started to trend higher” on the back of those interest falls, he says.
Big increases in full time jobs’ in Sydney, Melbourne as well as overseas and interstate migration rates are the fuel behind demand for housing – and hence rises in value – over the past 12 months-plus.
Cities with muted or declining jobs/migration growth have also seen sluggish or receding housing prices this year.
Let’s look more closely at Australia’s eastern seaboard capitals
The biggest driver of the national property market’s combined value growth, Sydney property values have grown by 18.4% for the year to date, faster than any year since December 2002.
CoreLogic shows the NSW capital has recorded 58 months’ straight of dwelling growth.
It is steady as she goes in Victoria’s capital city, which has just posted a 1.5% housing price lift for the month.
This takes it 13.1% higher for the past year and 54% higher for the current growth cycle trend, CoreLogic reports.
First-time home buyers in Melbourne, like in Sydney, are struggling to get into the market because of the affordability gap between annual income and median house and unit prices.
This, of course, has created opportunities for investors who have deeper pockets and who are buying well located properties near jobs and transport links that have strong appeal to renters.
However, investors seeking yield in Melbourne will face challenges. Its average gross yield for houses is the lowest of all Australian capital cities, just 2.7%, which rises to 4% for apartments/units.
The Sunshine State’s capital city still offers investors an affordable entry point to the market. Median house prices are $508,000 and units are $385,000.
Brisbane home values have lifted 4.9% in the past 12 months – quiet compared to its southern peers of Sydney and Melbourne.
But observers can see real opportunities for savvy investors in Brisbane.
Established houses close to amenities and up to 20 kilometres from the CBD are still found under $500,000.
Another interesting trend in southeast Queensland is subdivisions of small lots up to 350 square metres in prime locations near amenities, which is creating lower price options.
I can see these types of properties appealing to investors on tight budgets who are hunting well-located affordable assets that intrinsically appeal to future tenants.
What are your thoughts about the state of the market? Send us a comment below.