Greetings from Scoutable and welcome to our May Wrap Up.
I hope you and your loved ones are well.
As social distancing restrictions are easing around the globe, I hope your life is slowing returning to normal.
The property market, so far, has not been as negatively impacted as suggested in the news. CoreLogic’s Home Value Index results for May shows the national index down by 0.4% over the month. Across the state capitals for May, Melbourne has posted the largest fall of 0.9%. Values were also down in Sydney by 0.4%, and Brisbane 0.1%. In comparison, April had reported positive growth of 0.4% in Sydney, 0.3% in Melbourne and 0.3% in Brisbane.
Please see table below showing May’s results.
Source: CoreLogic
The most notable decline in values is in the top quartile (most expensive) of Sydney and Melbourne. In Sydney, the top quartile was down 0.6% in comparison to 0.1% increase in the lower quartile in May. Melbourne reporting 1.3% drop in values in the top (most expensive) quartile, whilst the lowest quartile reported a loss of 0.3%.
CoreLogic head of research, Tim Lawless, said “Considering the weak economic conditions associated with the pandemic, a fall of less than half a percent in housing values over the month shows the market has remained resilient to a material correction. With restrictive policies being progressively lifted or relaxed, the downwards trajectory of housing values could be milder than first expected.”
The national rental index rose 0.2% over May, following a 0.4% decline in April. The average gross yield of the combined capital cities across May was 3.9% for units and 3.6% for houses. Holiday hotspots and CBD locations have seen the highest increase in supply, where many short term rental properties have now been converted to long term listings. The national vacancy rate increased from 2% in March to 2.6% in April.
According to Mr Lawless, there is a strong chance that rental rates will fall more than housing values, placing downwards pressure on rental yields. “The double whammy of higher supply and less rental demand, especially across unit markets, is likely to place further downwards pressure on yields. In Sydney gross rental yields are already around record lows and Melbourne isn’t far behind.”
Whilst the rental market has been impacted, it would seem the sales market is showing signs of recovery. CoreLogic estimate of the sale activity in May bounced back by 18.5% after a drop of 33% in April. Stock levels are also trending higher, with listings up 8.1% compared with the end of April. However, stock levels remain extremely low.
Stock levels are going to be a key driver in property values over the coming months. If stock levels remain low and buyer confidence continues to improve, we will possibly see an upward pressure on pricing. Looking forward, the long-term view on the housing market is hard to predict. (Where is our crystal ball?). Once the government and bank support finishes / taper out towards the end of the year, we could see a rise in distressed sales. It will depend on many factors, including the consumer confidence and the state of the economy.
Professor Steven Rowley from Curtin University's School of Economics, Finance and Property says "The impact of low population growth, a weaker rental market connected to limited overseas migration, consumer confidence and people who were previously in a position to buy losing their jobs will all have an impact. There are an awful lot of factors which mean demand to buy housing has fallen, so that will feed through into what happens in the next few months". He also says, "Different areas will recover quicker, (for example) those areas with your traditionally strong levels of demand, good schools and so forth".
It is also interesting to note, COVID-19 has had a greater impact on sectors of the workforce which have the lowest level of home ownership.
The biggest question many are asking is: Is now is the right time to buy or should I wait? It would seem that property prices are not going to run away from us - you can take your time looking for the right property at the right price for you. Should that property come along, don’t be afraid to buy it as there is no guarantee that a similar property at that price will be available in six months’ time. Of course, you should only be considering buying if your employment is secure, and you can afford the property. Remember, property should always be viewed as a long-term investment. There will always be short-term movements in the market.
If you are thinking of buying or investing in Australian property, get in touch to learn about Scoutable's services and how we can assist with your property search.
Until next month,
Kellie Landrey | Principal Buyers Agent
IN THE NEWS
RENTAL VACANCY RATES RECORD HIGHEST MONTHLY JUMP IN OVER A DECADE
https://www.domain.com.au/news/vacancy-rates-jump-in-april-955234/
FOUR PROPERTY EXPERTS HAVE THEIR SAY ON BUYING PROPERTY
AUSTRALIAN SUBURBS WITH THE HIGHEST STAMP DUTY REVEALED
https://www.realestate.com.au/news/australian-suburbs-with-the-highest-stamp-duty-revealed/
PROPERTY OF THE MONTH
53 HUDSON PARADE, AVALON BEACH
The property of the month is situated on the border of Avalon Beach and Clareville, part of the Northern Beaches region of Sydney. Avalon Beach and Clareville are located approximately 37km north of Sydney’s CBD. The property of the month is named ‘Moon Lodge’, built by Australian architect, Alexander Jolly in 1932. The property sold on Saturday after just 16 days on the market, however, although now sold, it was just too beautiful not to share.
‘Moon Lodge’ is positioned on just over 1,400sqm of land. The property has been reinvented since the original construction in 1932 but retains many of the original features. The property provides three bedrooms in the main house, with a lovely sandstone fireplace in the lounge room and french doors opening up to a wraparound deck, leading out to a swimming pool. There is a double lock up garage at street level for the main house. A separate cottage accommodates a further two bedrooms and additional double lock up garage. The property provides extensive outdoor spaces, with level lawn and sandstone terraced gardens with Pittwater views.
The property is within walking distance to Clareville beach and local retail facilities. The property sold for an undisclosed amount, north of the asking price of $3,100,000.
If you'd like to know more about this property or any others, please get in touch.
