RP Data’s weekly leading indicator of market activity eased slightly again over the last week with activity remaining strong as we nudge ever closer to the end of spring and the looming Christmas/New Year period. In comparison to last year, the Index is proving to be very resilient, sitting just 0.5 points lower than it was at the start of November. Last year, the index fell almost 7.5 points during November.
Industry Market Wrap
On Monday the rpdata.com-Rismark National Home Value Index is released and the results should be very interesting. Last month we reported that during September 2009 home values had increased by just 0.1%, the slowest rate of monthly growth during 2009. During the month negative growth figures were recorded in Brisbane, Adelaide and Perth. Interestingly, if you look over the last seven years these have been the three best performing capital city markets nationally. With value growth slowing in September, prior to the initial wind back of the First Home Buyers Grant Boost and the two successive interest rate rises it will be interesting to see if this has a dampening effect on value growth for October. We have already seen a fall this month in the Westpac-Melbourne Institute’s Consumer Confidence Index, with many attributing the fall to the successive interest rate rises which led to the 2.5% drop in the index during November.
Weekly Key Statistic - National Auction volumes Last week’s dip in clearance rates happened to coincide with the nation’s busiest week of the year for auctions. During the week there was a total of 1,846 auctions.
Latest National Auction Clearance Rates Last week saw auction clearance rates take a fall right across the country. Clearance rates in Sydney fell to 65.7% which was the lowest recorded clearance rate since late May this year. Melbourne auction clearance rates also fell slightly to 76.9%. Clearance rates fell by around 10% in Brisbane and 15% in Perth whilst Adelaide was the only city to record an improvement on last week’s numbers. Nationally, the weighted average clearance rate was recorded at 68.7%.
Want to know the auction results for your local area? Login torpdata.com and go the Auction Results panel on the top right corner of the home page.
Advertised Stock On The Market New listings to the market increased for the second successive week and remain slightly above 50,000, total listings also nudged slightly higher. The number of listings remains extremely resilient, yet to start falling in the lead up to Christmas. If trends are consistent with those witnessed during the last two years, next week should signal the beginning of the Christmas/New Year slowdown.
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Insights into why people move - Housing Mobility and Conditions Survey
The ABS reported the results of their Housing and Mobility Conditions Survey last week and some of the findings are imperative for property investors to take on board to keep their tenant turnover low.
Mobility
The results of the survey were quite surprising with 19.0% of persons surveyed reporting that they’d lived in the same property for more than 20 years with 37.3% having lived in the same property for 10 or more years.Victorian’s were the most likely to have lived in their property for more than 20 years followed by those from the ACT. Residents of the Northern Territory and Queensland tended to have shorter tenures with only 24.8% of Territorians and 28.6% of Queenslanders having lived at their current address for 10 years or more.
On the flip-side of these results, 43.4% of person surveyed had moved house during the last five year. Those most mobile were located in the Northern Territory (58.8%) or Queensland (51.3%). Whilst the least mobile persons were found in the ACT (38.9%) and Victoria (39.3%).
Results for capital cities showed that residents were slightly more likely to have lived at their current residence for more than 10 years and they were slightly less likely to have moved during the last five years.
Main reason for moving
The survey found that persons moving house were most likely to move due to: purchasing their own dwelling (16.5%), because they want a bigger or better home (16.1%) or for lifestyle/other reasons (14.1%). Conversely, persons were least likely to move due to: allocated housing reasons (1.7%), accessibility reasons (2.3%) or because they are looking to downsize (2.8%). Reasons such as breakdown of marriages (11.2%) and employment reasons also heavily contribute to people moving home.
Satisfaction
Generally those people surveyed were quite happy with their current residence. Across owner occupiers 91.0% were either very satisfied or satisfied whilst renters recorded 78.3% satisfaction. It is interesting to look at the reported reasons for dissatisfaction.
In relation to dwelling location owners were generally dissatisfied with the distance from services and facilities (40.1%) or noise level (28.2%). Across renters, dissatisfaction was greatest due to noise level (43.1%) or security (42.7%).
Looking at dissatisfaction with lots, the greatest reason for displeasure was that it was too small (40.0%) followed by too steep (26.1%). When analysing all reasons for dissatisfaction, the dominant reasons were reported as: poor condition of dwelling (51.7%) and that the dwelling was too small (41.6%). Conversely, people rarely reported that dwellings were too big (3.7%).
Overall the results of this survey provides some important insight into the mind of the home owner and renter. Residents are quite mobile and do not appear opposed to moving home however, it would appear when they find the right property they are just as happy to stay there for many years.
People are likely to move because they buy their own home (moving out of rentals), they want a bigger property (upgrading) or due to migration to Australia, back to Australia or to another state (increasing demand). This would seem to suggest that many residents still aspire to a bigger and better property than the one they currently own and most renters still look to eventually own their own home. What it also highlights is that demand remains strong.
When people are dissatisfied with their residence they are generally unhappy because: it’s too noisy, it’s not safe enough, it’s too far away from quality amenity, the lot is too small, the dwelling is too small or the property is in poor condition.
The results of the survey show that as an investor, if you wish to keep tenants happy there are a number of things you can do to help the cause. Primarily you should: maintain the property and keep it in good working order, include devices such as air conditioners and/or heating, make sure the property is secure with good quality grills and locks and look to buy properties close to quality infrastructure but not so close so they become noise affected.
For someone looking to develop new property the following is important to consider: size (bigger appears to be better) of both houses and lots; proximity to quality amenity such as schools, shops and public transport; look to build relatively flat blocks; preferably have the properties built away from noisy infrastructure such as train lines or main roads; use good quality, durable and long lasting material and finally look to build in safe areas and include features such as deadlocks and grills on any new property to help ensure the property is as secure as possible.
Assets acquired in Brisbane and Perth
Colonial First State Property, manager of the Commonwealth Property Office Fund, has announced two strategic asset acquisitions in Brisbane and Perth.
The fund is to acquire 145 Ann Street, Brisbane, to be developed by Leighton, and a 50% interest in Alluvion at 58 Mounts Bay Road, Perth.The fund is to acquire 145 Ann Street, Brisbane, to be developed by Leighton, and a 50% interest in Alluvion at 58 Mounts Bay Road, Perth.
CPA fund manager, Charles Moore, said that the acquisitions are value enhancing to the existing portfolio and in line with the fund’s strategy of investing in prime quality office buildings located in central business districts and major suburban markets in Australia.
The property at 145 Ann Street, Brisbane, to be known as King George Central, was purchased for $208.1 million and is to be developed by Leighton Properties into a 27,820 sqm A-grade office tower over 28 levels as part of the purchase agreement, with CPA to be nominated to be granted the 120 year leasehold interest.
An A-grade office tower of 22,395 sqm over 21 levels, currently under construction at 58 Mounts Bay Road, Perth, and due to be completed in April 2010, had a 50% share purchased for $95 million.An A-grade office tower of 22,395 sqm over 21 levels, currently under construction at 58 Mounts Bay Road, Perth, and due to be completed in April 2010, had a 50% share purchased for $95 million.
Blog: What to do, what to do about affordable housing and supply?
There was some very interesting commentary this week on the state of the property market. Firstly, Ric Battellino the Deputy Governer of the Reserve Bank gave a speech on myriad of issues including dwelling supply at the national Housing Supply Conference in Melbourne this week.
His comments agreed with the consensus (yours truly included) that Australia hasn’t built enough dwellings. However, Ric’s analysis suggests that this is not due to a cutback in dwelling investment, dwelling investment continues to increase. He gives four reasons...
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