rpdata.com’s measurement of real estate professional pre-listing activity, the Market Activity Index recorded a slight improvement this week after it had trended lower during the previous six weeks. Despite the increase in activity last week, we continue to anticipate a lower level of market activity during the winter months.
Industry Market Wrap
The Housing Industry Association (HIA) in conjunction with RP Data released the Residential Land Report for the March 2010 quarter this week. The report findings show that nationally the volume of residential land sales has eased, down 40% compared to the first quarter in 2009. Adelaide is the only capital city market which has recorded an increase in the volume of sales during the March 2010 quarter when compared to the same quarter last year. Although the volume of land sales has been softening, the national median land value has remained virtually unchanged at $184,574 and on an annual basis values have increased by 6.9%. Across the capital cities, median land values recorded strong increases over the March 2010 quarter in Sydney (8.9%), Perth (6.4%), and Melbourne (4.1%). Median values were flat during quarter in both Brisbane and Adelaide, while values in Hobart fell by 13.8%.
The Reserve Bank of Australia (RBA) released the minutes of their July Board meeting this week. Specifically relating to the residential property market the minutes noted,
“There were some signs that conditions in the established housing market had eased. In particular, auction clearance rates in Sydney and Melbourne had declined from their earlier elevated levels, with the clearance rate in Melbourne in June back to around average levels. Price data to May were mixed but provided some tentative evidence of a deceleration in growth relative to earlier in the year. Members noted that price growth had been very strong in Melbourne. Housing credit growth in May had remained at around the average pace of the preceding year.”
Advertised Stock on the Market The number of new residential property advertisements recorded a large increase last week recording a jump of 9.5% compared to the previous week. The total number of new advertisements were also well above (12.1%) the 12 month average level. Despite the large increase in new listings, total advertisements eased slightly during last week. Although total advertisements have softened, they remain well above 12 month average levels at a time when the residential property market is slowing.
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Latest National Auction Clearance Rates The weighted average capital city auction clearance rate recorded an improvement last week, sitting at 59.6% which was the strongest result in five weeks. The number of capital city auctions remains healthy with more than 1,300 auctions undertaken during last week. In the two largest auction markets, Melbourne and Sydney each recorded their healthiest clearance rates in five weeks at 66.1% and 64.4% respectively.
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Number of Properties Advertised for Rent The number of new rental listings has increased by 3.2% over the last week with more than 41,000 new properties advertised over the last four weeks. The total number of rental listings has also increased by 5.2% during the last week with more than 20,000 additional rental listings last week compared to the same time a month ago.
Distance versus dollars
Buyers seeking an affordable detached home may not necessarily have to look in the outer fringes of the city. The range in house prices located similar distances from the city can be quite extraordinary. Housing affordability is an issue that is likely to be with us for the foreseeable future. Home ownership is becoming more expensive (last year the average capital city home increased in value by 12.1%) and price sensitive buyers are likely to be the ones that are primarily feeling the pinch.
This is especially the case now that the boost to the First Home Owners Grant has been removed and interest rates have increased by 150 basis points since last October.
For developers, delivering affordable housing stock to a price sensitive market is a real challenge. Median house prices are above $400,000 across all the mainland capitals and range as high as $602,250 in Sydney. Also, many new development projects are hampered by high government charges on development and in many instances this cost is passed on to the end user (the purchaser).
A retail property leased to an Indian restaurant in Hawthorn, Victoria, has been sold at auction by agents of Gorman Kelly.
The two-storey building at 353 Burwood Road, Hawthorn, achieved a yield of approximately 3.7% from the sale.
Gorman Kelly agents, Sandro Peluso and Jai Wallis, marketed the property, which achieved a final selling price at auction of $1.55 million.
The two-storey building of 165 sqm on a 223 sqm Business 1 site achieved values from the sale of $9394/sqm for the building and $6951/sqm for the land.
The property is leased for four years with a five-year option to extend at a rate of $57,612 per annum net.
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Blog: Auction clearance rates are an important lead indicator
It has been suggested that reporting on auction clearance rates is a waste of time: we want to dispel this myth once and for all.
Our estimates show that during 2009 about 57,500 capital city properties were auctioned. Over the same period there were about 317,000 house and unit sales across the combined capital cities.
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