June Newsletter
How are Australia’s key property markets performing?
Posted on Saturday, May 30 2009 at 8:00 AM
“Resilient”, “high levels of interest”, “stabilised”, “buoyant”: which term describes your local property market? Find out as members of the Property Buyers Agents Association of Australia give their take on the state of play in Sydney, Melbourne, Brisbane and Perth.
Sydney
“The Sydney property market has shown huge resilience to the global financial crisis,” according to Peter Kelaher of PK Property Search.
“It’s already experiencing a quick recovery due to the RBA cash rate being three per cent, one of the lowest rates in over 50 years, vacancy rental rates at 1.5 per cent and stock levels 30 per cent less than this time last year.”
Kelaher says rents have risen 12 per cent over the past 12 months and auction clearance rates are around 65 per cent to 70 per cent.
The First Home Owner Boost has been a key driver for the lower end of the market, he notes, but adds that even when it ends, this section of the market “will continue to rise as mortgages are now not much more than the rent tenants are currently paying”.
Kelaher says rising unemployment won’t necessarily dampen the property market.
Melbourne
Monique Sasson Wakelin, director of Wakelin Property Advisory, says she expects the Melbourne residential market’s overall resilience to continue, noting that house prices were up 2.4 per cent in the first three months of the year according to RP Data.
“Auction clearance rates remain high at 75 per cent, but stock levels are 30 per cent lower than 2009,” she says.
“In the entry-level market, property priced under $600,000 is up by around 10 per cent.
“For investors, the best prospects are in the $600,000 to $1 million range. Judicious investors should be able to secure a property with excellent capital growth prospects and a small income to funding differential.
“The rental market is tight and asking rents have risen by 10 per cent each year for the last two years.”
Brisbane
Property prices in the sub-$520,000 market are continuing to attract high levels of interest from first homebuyers keen to secure their expanded First Home Owner Grant, according to Meighan Hetherington from Property Pursuit.
She says any slowdown in activity in this price range as the First Home Owner Boost phases out should be replaced by the return of investors.
“Rental vacancy rates remain under 1.7 per cent in many metropolitan suburbs and gross rental yields on recent purchases have lifted to 4.5 per cent in some locations for freehold houses and above 5 per cent for units and townhouses,” Hetherington says.
“Good buying opportunities also still exist in the $1 million plus price range as purchasers are still hanging back and waiting for others to lead the way.”
Perth
“The market in Perth has stabilised across most price bands and has enjoyed a fairly active and buoyant period over the past few months,” says Simon Moore from Hegney Property Group.
“First homebuyer activity has been strong, so much so that we have witnessed price growth of between five per cent and 10 per cent in some well-located first homebuyer suburbs,” he adds.
“Activity has driven investors into the higher price brackets, where they’re buying properties in the $500,000 to $700,000 range, particularly those properties with gross rental yields of four per cent and above.”
Moore says rental yields have strengthened from three per cent in 2007 to between four and 4.5 per cent in a number of locations.
“The high-value suburbs with property over $1 million continue to struggle, however after falls in value of 20 to 30 per cent in the past year, this price bracket appears to have stabilised as prices in some areas become irresistibly low,” he notes.
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