RP Data’s weekly leading indicator of market activity once again recorded a slight easing over the last week. Activity still remains heightened and in comparison to last year the downturn to date is quite minor. At the same time last year the index was recorded at 82.1 points, today it sits at a much healthier 114.6 points.
Industry Market Wrap
Last week we discussed whether the recent interest rate rises would have a dampening effect on the RP Data-Rismark Home Value Indices for October, clearly not. The results showed that nationally home values climbed by 1.4% and have now risen an average of 1% a month during 2009. These results, along with a plethora of other positive economic results in recent weeks and months swayed the Reserve Bank Board to lift the cash rate for an unheralded third successive month following their meeting. We still don’t know exactly what impact this will have on interest rates with Westpac raising theirs by 45 basis points and ANZ, CBA and NAB to date remaining tight lipped on their decision. No doubt they will be weighing up their options but given the backlash over Westpac’s decision to almost double the increase the other banks will be carefully mulling over what they should do.
Weekly Key Statistic - Property values and changes Based on the latest RP Data – Rismark Home Value Index results for the month ending October, the market is very strong right now with Perth units the only mainland city and property type which recorded a fall in values over the last quarter. Meanwhile, on an annual basis all cities have recorded an increase in their house and unit values with the strongest increases recorded in Darwin and Melbourne.
Latest National Auction Clearance Rates Last week was the nation’s busiest auction week of the year and this week that has eclipsed that record with more than 2,200 auctions. Clearance rates in Australia’s largest auction market (Melbourne) softened again this week (76.6%) albeit only slightly. Sydney clearance rates bounced back after slumping last week with rates recorded at 72.6%. Nationally, the weighted average clearance rate was recorded at 71.4%
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 third successive week and sit at almost 52,000. Total listings also increased with approximately 2,000 additional listings this week. These results are extremely unexpected, with less than a month to go to Christmas it was expected that listings would begin to slow, but with such strong market conditions who can blame vendors for wanting to sell.
Want to know what is happening in your local patch? Make sure you have subscribed to rpdata's On the Market® service. Click here or phone 1300 734 318 for a free 2 week trial.
With the release this week of the October National Home Value Index results we thought it would be timely to look at some of the key housing indicators.
Currently the average capital city level of vendor discounting sits at -5.1% for houses and -4.6% for units. These results suggest that, vendors expectations of what they will sell their property for are fairly closely aligned with what the purchaser is willing to pay, with vendors only having to reduce their initial list price by a small amount in order to obtain a sale.
During the last four years, vendor discounting for houses reached its greatest level (-7.1%) during December 2005. Meanwhile, discounting levels for units were at their greatest during March 2006 at -6.8%. During both these periods, the market (outside of Perth) was quite flat and witnessed minimal levels of growth. However, after strong growth between 2001 and 2004, vendors obviously felt that they could still ask a premium for their properties, clearly this was not the premium that the market was willing to meet.
On a historical basis, current levels of discounting are actually quite low. Across the last four years the average level of discounting has been recorded at -6.1% for houses and -5.7% for units.
On a capital city basis, Canberra had the lowest level of vendor discounting for houses during October at a miserly -2.5%. Coincidentally, Canberra recorded the strongest level of value growth for houses during the month at 2.6%. On the other hand, Hobart* which recorded the greatest fall in values during the month (-1.2%), also recorded the greatest average vendor discount (-6.4%).
Across the unit market, the lowest level of discounting during October 2009 was recorded in Perth (-3.2%). However, Perth was one of the poorer performers during the month with values increasing by less than 0.1%. The greatest discounts were recorded in Hobart at -6.5% even though the city witnessed value growth of 1.9%.
Average time on market levels within capital city markets sit at 31 days for houses and 28 days for units. On a historical basis these results represent quite a short time on market. Over the last four years the average time on market has been recorded at 36 days for houses and 33 days for units.
The graph shows that each year there is a spike in time on the market during January to March as many real estate agencies revert to skeleton staff and many potential home buyers hold off on their decision making as they take off on holidays. Outside of this period, the greatest time on the market was recorded during August 2008 for houses (45 days) and September to October 2008 for units (42 days). It’s no real surprise to see such weak results at that time with property values falling during late 2008 and the Global Financial Crisis having its most significant impact at a similar time.
On a capital city basis, Canberra had the lowest average time on market for houses along with its lowest level of vendor discounting, at just 24 days. As previously stated, Canberra recorded the strongest level of value growth for houses during the month at 2.6%. On the other hand, Adelaide which recorded below average value growth (1.1%) recorded the longest average time on market during the month (39 days).
For units, the lowest average time on market during October 2009 was recorded in Perth (19 days). Again, Perth also had the lowest level of vendor discounting during the month. The greatest time on market was recorded in Hobart (as were the largest average discounts) at 43 days.
Vendor discounting and time on market tend to go hand-in-hand as the results show. If it takes longer to sell, the vendor is likely to have to drop their asking price in order to achieve a sale. The results also show that currently the market is strong with low levels of discounting and below average time on markets, indicating extremely healthy conditions. This fact is reinforced by the latest National Home Value Indices results which show an increase of 1.4% during October 2009.
Commercial: Victorian hat trick
Three Victorian commercial properties have been sold at auction by agents of Gross Waddell and Lemon Baxter.
A retail shop at 266 Glenferrie Road, Malvern, a café at 186 Faraday Street, Carlton, and an office building at 226 Albert Road, South Melbourne, were all sold at auction.
The 140 sqm convenience store property in Malvern with two car parking spaces was leased for $51,100 per annum, generating a yield of 5.8% from the $880,000 sale at the auction that attracted a crowd of 40.
As previously reported by the Australian Property Review, Victor’s Café and Bar in Carlton was leased for $68,250 per
annum for five years with two further five-year options.
Bidding from the crowd of 60 people started at $500,000 before finishing at $1.1 million, giving the sale a yield of 6.2%.
This week our rpdata.com blog follows on from out topic last week (please refer) and provides a ‘compare & contrast’ of the Australia’s population by looking at how centralised it is.
Last week I highlighted the fact that most people live in the capital cities. As at June 2008, Australia’s estimated residential population was approximately 21.3 million persons. Of these 21.3 million, just under 13.7 million persons or 64.1 percent of people lived in the capital cities, 61 percent of the population lived in our five largest cities (Sydney, Melbourne, Brisbane, Perth and Adelaide).
How you can use the RP Data Property Pulse As a participating RP Data subscriber, you are authorised by RP Data Limited to, at your choosing, forward this content to your customers or publish as editorial content on your website and newsletters in an unedited fashion provided that RP Data is appropriately quoted.
Conditions of Syndication You should not rely upon the opinions expressed in this report for any investment decision. RP Data will not be held responsible for any loss or damage suffered as a result of relying upon the opinions and information contained in this report. You should always take specific advice from a professional advisor so that your particular circumstances can be assessed and an investment decision appropriate to your circumstances can be determined.
You may not under any circumstances take a whole or part of the content and forward to any media outlet at any time.
You may not re-publish this content as your own without our express written permission. All Intellectual property used in the creation of the RP Property Pulse remains with RP Data Limited. The research and opinions expressed remain those of RP Data Limited.If you have any questions about syndication obligations, please firstly speak with the RP Data Research Division on: 1300 734 318.
Three Victorian commercial properties have been sold at auction by agents of Gross Waddell and Lemon Baxter.
The 140 sqm convenience store property in Malvern with two car parking spaces was leased for $51,100 per annum, generating a yield of 5.8% from the $880,000 sale at the auction that attracted a crowd of 40.
annum for five years with two further five-year options.