The rpdata.com Market Activity Index has shown a further easing during the most recent week, the third successive fall in the Index. Whilst the Market Activity Index has fallen in recent weeks, the level of pre-listing activity remains well above average indicating that new residential property listings are likely to remain strong over the next month.
Industry Market Wrap
The RP Data-Rismark Home Value Index is released Monday next week, detailing growth in capital city home values up to the end of April 2010. RP Data have been anticipating for some time that 2010 would see a lower level of property value growth than 2009 however, the first quarter of the year has certainly surprised on the upside with national value growth of 4.2%. With a number of indicators now looking less positive including: higher interest rates, lower housing finance commitments, auction clearance rates and consumer sentiment, we are anticipating that the Home Value Index will begin to show a slowdown in the level of property value growth shortly.
Next Tuesday the Reserve Bank’s (RBA) Board will again meet to determine what action to take on official interest rates for June. Given what we have seen over the last month with weakening indicators as detailed above, coupled with a softening share market and falling Australian dollar we expect that the most likely outcome of the meeting will be that the Board makes no change to official interest rates. This is a view shared by the market with the futures market as at the 25th May recording a 77% expectation that the cash rate will remain unchanged and a 23% expectation that the cash rate will actually fall by 25 basis points.
Advertised Stock on the Market The volume of new properties entering the market and the total number of properties available for sale are both at fairly similar levels to those recorded 12 months ago however, both are at levels well above the 12 month average.
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Latest National Auction Clearance Rates Auction clearance rates have eased for the third successive week and weighted average auction clearance rates were recorded at 62.8% last week. Melbourne's auction clearance rate weakened to 69.4%, its second worst result of the year. Meanwhile, Sydney’s clearance rates also eased to 63.0%, the cities weakest result of 2010.
Want to know the auction results for your local area? Log into rpdata.com and go the Auction Results panel on the top right corner of the home page.
Number of Properties Advertised for Rent Across the nation the total number of new rental listings has remained quite stable during the last week as have total rental listings. In comparison to the results from a month ago, both new and total rental listings sit at slightly higher levels.
Focus on auction clearance rates
The auction market has remained strong for much of the last 12 months but with clearance rates beginning to ease, does this signal a looming residential market slowdown?
As a proportion of overall sales, auctions account for less than a quarter of all dwelling transactions nationally. However, auction clearance rates provide an excellent indication of current market sentiment and the results are much more timely than private treaty results which are subject to time lags. During 2010 RP Data has on average collected results for 80% of all capital city auctions and this collection rate eclipses the typical collection by competitors who generally report results on only 60% to 65% of auctions across the nation’s capitals.
On a national basis, the largest capital city auction markets are well and truly Melbourne and Sydney however, auctions still account in both cities to a relatively small proportion of total sales. The strength in auction clearance rates throughout these markets during the last year has been reflected in the strong growth in property values within both cities during the last 12 to 15 months.
The Australian Retailers Association has sold a freehold building in the Melbourne CBD in a private transaction negotiated by Kliger Wood and Fitzroys.
Situated at 104-106 Franklin Street, Melbourne, the three-storey property is located within the Franklin Street education precinct and close to the Queen Victoria Market.
Kliger Wood agent, Grant McKenzie, acted for the Association as selling agent while the purchaser was represented by Fitzroys.
An IT and educational training group purchased the property for $4.25 million to occupy the building’s two upper floors, each 540sqm, currently fitted out and vacant, having previously been occupied by the Association as its head office before a recent relocation to Exhibition Street.
The ground floor is leased to specialist bookseller, Koorong Books, at a current gross annual rental of $120,000 plus GST from June 2008 with further options.
Mr McKenzie described the building as one of the few smaller CBD freeholds available for sale.
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Australian Property Market Update
The RP Data Research Analysts have compiled 24 graphs focused on the Australian Property Market. Included in the presentation are graphs showing Median House and Unit Prices, Annual Change in Dwelling Values and National Capital Growth and Sales Volume.
Click the button below to download the presentation.
Blog: It’s all about the planning
The Queensland State Government announced two new initiatives this week. The first being plans to develop three new satellite cities capable of housing a total of 250,000 residents at Yarrabilba, Ripley Valley and Greater Flagstone within the Greater Brisbane Region. The second announcement being that the State Government would offer an increase to the current first home owner’s grant ($7,000) of $4,000 for those who purchase and build new homes outside of the south-east corner of the state.
On the surface, the approval of three new cities to be developed within the South East Corner of the state is a welcome initiative. Plenty of people want to live in South-East Queensland and nationwide we have housing supply issues. Housing for another 250,000 persons will satisfy a large component of housing demand but it is important to put this into perspective, over the twelve months to September 2009 there were more than 115,000 new Queenslander’s creating a requirement for 44,308 new dwellings based on the average household size of 2.6 persons. Three large projects such as these will help, but still fall a long way short of solving the supply side issues.
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