Greetings from Scoutable and welcome to our May Wrap Up.
I hope you are well.
CoreLogic’s Quarterly Economic & Property Market Review (released in May) provided a staggering figure for the value of Australia’s residential property. As of April 2021, the value has surpassed $8.1 trillion. This is its highest point in history. To put this into perspective;
ASX's value is approx. $2.7 trillion
Superannuation's value is approx. $3 trillion
Residential property is around four times the size of the GDP
Based on CoreLogic's report, this places residential property as the largest share of Australian’s wealth.
CoreLogic has provided the following summary on the key findings by State and Territory.
New South Wales: - Sydney and regional NSW have been among the ‘top performing’ housing markets through the start of 2021 in terms of value change. This follows a peak-to-trough fall in Sydney values of -2.9% between April and September 2020, and a dip of just -0.1% in May 2020 across regional NSW. From January to April 2021, Sydney dwelling values have risen 9.3%, and regional NSW dwelling values are up 9.0%. Both dwelling markets are at record highs.
Victoria: - Various indicators suggest that while a second spike in COVID cases has weighed on the Victorian economy, the state has bounced back strongly amid eased restrictions since the December quarter. Even a sharp decline in rents appears not to have deterred buyers. While rental values remain -20.1% lower across the SA3 ‘Melbourne City’ unit market, purchase prices are 2.0% higher in the same period.
Queensland - Dwelling values across Queensland are currently 13.7% above the previous record high. Alongside low mortgage rates, interstate migration to Queensland has remained a tailwind for housing demand. Migration data suggests that the Sunshine state has been particularly popular since the onset of COVID. The latest (provisional) data for the December 2020 quarter suggests that net interstate migration to Queensland reached 9,763, the highest volume since December 2003.
South Australia: - South Australia’s dwelling market has seen trends continue to break away from averages. In the three months to April 2021, quarterly growth for Adelaide dwelling values was 4.3%, up on the five year average quarterly result of 0.8%. Sales volumes through April were an estimated 36.4% higher across Adelaide on the previous five year average. Total stock on market was -33.6% below the previous five year average in South Australia, with just 9,336 dwellings available for sale.
Western Australia: April 2021 marked the eighth consecutive month of growth in state dwelling values, and the 19th consecutive month of growth in rents. Alongside low interest rates are improving economic conditions in the state.
Tasmania: While the uplift in Australian housing and economic activity has been fairly broad-based, Tasmania stands out as leading in many indicators. Hobart dwelling values increased 7.0% in the three months to April. This was the second-highest increase of the capital cities, behind the extraordinary uplift in Sydney values at 8.8%. In regional Tasmania, dwelling values increased 7.7% over the period, which was the highest uplift of any non-metropolitan market.
Northern Territory: Similar to housing markets across WA, Darwin and parts of the NT have seen continued market momentum through the start of 2021. Darwin dwelling values had the highest annual growth rate of the capital cities in the 12 months to April at 15.3%. This was led by an 18.2% lift in house values and a 9.5% lift in Darwin units.
Australian Capital Territory: The ACT housing market has continued to surge in value through the start of 2021. April marked the 20th consecutive month that ACT dwelling values hit a new record high, putting the market value 19.1% higher than the previous record level in April 2019. The extremely strong growth in demand for dwellings across the ACT, like many smaller capital cities and regional markets, has been exacerbated by low listings volumes. Total stock on the market as of 23rd May were -23.9% below the five year average, with just 1,631 properties available for sale in the region.
The question most asked is, "What does the future hold for the property market?" The collective thought from the experts is that the extraordinary growth rates seen throughout the start of 2021 are not sustainable as affordability constraints / wage growth’s inability to keep up will come into play. Further, there is potential for tighter lending conditions.
If you would like to discuss the property market further, please get in touch.
Until next month,
Kellie Landrey | Principal Buyers Agent
IN THE NEWS
MELBOURNE AUCTIONS GO ONLINE OR GET RESCHEDULED DURING NEW LOCKDOWN
https://www.domain.com.au/news/sydney-melbourne-brisbane-adelaide-canberra-hobart-house-prices-at-record-high-1047969/
RESERVE BANK 'GRAPPLING' WITH HOUSE PRICE BOOM QUESTIONS, INTERNAL DOCUMENTS SHOW
https://www.abc.net.au/news/2021-05-27/reserve-bank-grappling-with-house-price-surge-questions/100167946
WATSONS BAY WATERFRONT HOME WITH JETTY AND SLIPWAY A HIT WITH EXPATS
https://www.realestate.com.au/news/watsons-bay-waterfront-home-with-jetty-and-slipway-owned-by-orthodontist-a-hit-with-expats/
PROPERTY OF THE MONTH
Unit 39, 5 Campbell Parade, Bondi Beach
The property of the month is a cautionary tale of market research and heated auctions.
A studio apartment positioned in the famous eastern suburb of Bondi Beach sold at auction last week. 5 Campbell Parade is right in the heart of the suburb, within 100 metres of the beach. The complex comprises 42 apartments with a common rooftop. The studio is 37sqm, presented in liveable condition with room for improvement. The apartment provides ocean and beach views.
Scoutable was researching the property on behalf of a client. The price guide was $725,000.
August 2020 saw unit 29 within the complex sell for $958,000, providing a similar view and a similar size, however, it was renovated and came with a secure car space. With reference to this sale and other recent comparable sales, we developed an estimate of price for the studio.
The property sold well above our assessment and market range for $1,010,000 during a competitive auction. A significant price for a 37sqm studio, even factoring in the view and market conditions. The sale represents just over $27,000 per square metre. The property provides a great example of how important it is to complete research before getting caught up in the emotion of an auction so as to know when to walk away.
If you'd like to know more about this property or any others, please get in touch.
