The real estate market continues to record a strong start to the year with higher than normal levels of property professional activity during the first week of February. Comparable Market Analysis activity has continued to increase and sits at its highest ever level. This activity is a great lead indicator for future listing activity and we would expect listings to ramp up further during the next month based on this activity.
Industry Market Wrap
Housing finance data released by the Australian Bureau of Statistics this week detailed that finance commitments well and truly slowed during December 2009. For owner occupier housing loans, the number of commitments for first home buyers fell by -7.8% during the month whilst non first home buyer commitments fell by -1.8%. Perhaps more worrying was the fact that commitments for the construction of new dwellings fell for the second consecutive month, after falling by -7.1% in November 2009 they fell a further -6.4% in December. The fall in finance for construction of new housing comes at a time when the market desperately needs to see new supply additions. The lower levels of construction loans suggests housing supply shows no real sign of improvement. The trend of more investors in the residential market has continued over December with the value of investor housing finance commitments growing by 1.9%. Investor numbers have been trending upwards since August 2009, moving in the opposite direction of first home buyers.
Westpac and The Melbourne Institute released their Consumer Sentiment Index this week also and sentiment across their survey fell by -2.6% during February 2010. Although sentiment remains strong, this was the third time in four months the Index had recorded a fall.
Following the lead from the Market Activity Index, the amount of new listings coming onto the market nationally have remained higher in every state than at the same time last year. Nationally, new listings are 43% higher during the last month than they were over the same period last year. Despite new listings being well above last year’s levels, total listings remain at levels below those from 12 months ago in most states and -2.9% lower on a national basis. Clearly, properties coming on to the market for sale are being absorbed at quite a rapid pace.
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Auction markets are continuing to see activity levels grow with more than 600 auctions held last week, The weighted clearance rate across the combined markets was 59%, with the largest auction market (Melbourne) recording a much stronger result during the most recent week with a clearance rate of 74% compared to 39% the previous week. Clearance rates nationally and in most individual markets remain well below levels recorded during late 2009.
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Data highlighting the number of properties advertised for rent during the last month shows that both new and total advertised listings are well above levels recorded during the traditionally quiet period of late December early January. Compared with last week’s results listing numbers are much higher thanks in large to a jump in new listings of almost 10,000 properties.
Most expensive properties are the best performers nationally
Despite the fact dwelling values climbed 11.1% during 2009 the story was much different across different price points and markets, with more expensive properties generally seeing the strongest growth.
During 2009 the residential property market rebounded well following a peak to trough fall in property values of 3.8% between February 2008 and December 2008.
On a national basis, the top 20 percent of most expensive postcodes have recorded the strongest property value growth during 2009 increasing by 11.9% during the year. Meanwhile the middle 60 percent of postcodes nationwide have seen property values grow by 11.8% and the 20 percent of most affordable postcodes have recorded value growth of a much lower 8.2%.
Blog: Strong employment figures set the scene for higher interest rates
The surprising fall in unemployment figures (national unemployment down from 5.5% to 5.3% in January) has caught almost everybody off guard. The consensus amongst economists prior to the announcement was that Australia’s unemployment rate would rise to 5.6%.
The rate of unemployment has fallen now for three straight months on a seasonally adjusted basis after bouncing between 5.7% and 5.8% between May and October last year. The trend certainly suggests that unemployment has peaked significantly lower than the 6.75% forecast by the Federal Treasury June this year.
Commercial: Deal for Dandenong
distribution centre
A private syndicate has purchased a distribution centre in Dandenong South, Victoria, on a yield of approximately 8.2%.
Presently leased to R&E Auto, the property at 375-383 South Gippsland Highway, Dandenong South, was sold following an Expressions of Interest campaign.
CB Richard Ellis senior associate director, Gab Pascuzzi, negotiated the $2.8 million sale of the office and showroom facility after receiving five expressions of interest.
The new 12-year lease to R&E Auto is understood to be at a net rate of $230,000 per annum, and Mr Pascuzzi described the lease as the main drawcard for interested buyers.
The property has a net lettable area of 2513 sqm and is situated on a 5630 sqm site.
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