Property Investment – December 2010/January 2011



Weekly Property Pulse Professional Edition
This week’s edition covers:
Market Activity Index
Industry Market Wrap
RP Data Quarterly Review available now
Article: Why Australian home owners are staying put for longer
Commercial: Two leases out of three shops
Blog: House values across the capital cities
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Market Activity Index
RP Data’s Market Activity Index, which highlights pre-listing activity by property professionals, has eased slightly over the most recent week. From now until the end of the year we would expect that pre-listing activity will continue to ease as the Christmas / New Year period with its traditional slow down in new listing activity grows nearer.

With new listings coming onto the market now use all the reports available to you as part of your subscription to manage both buyer and vendor expectations. Don’t forget to use CMA’s for buyers as it helps them make informed and confident decisions.  




Industry Market Wrap
There have been few major data releases this week however, the most important has been the release of Construction Work Done figures by the Australian Bureau of Statistics. The data showed that the total value of residential construction completed fell by -6.1% during the September quarter which was the greatest quarterly fall in almost a decade. Clearly the higher interest rate environment, tight lending criteria by the banks surrounding new development and the growth in residential property values since the end of 2008 is impacting on the residential construction sector. These figures are supported by the recent tapering in building approvals. The figures provide greater weight behind the argument for the RBA Board to keep official interest rates on hold when they meet in December.The RP Data-Rismark Home Value Index results for October are released next week. With there now clear evidence that the residential property market is cooling we expect that the results will once again be quite flat with a greater likelihood of a slight fall during the month rather than a slight increase. Along with the prevailing slower market conditions, it is anticipated that vendor discounting and the average time on market will continue to increase due to the high volume of stock available for sale accompanied by fewer active buyers.

Advertised Stock on the Market
The number of new properties advertised for sale has continued to climb over the most recent week, up by 1.0%. With new advertisements increasing, total property advertisements have been amplified, up by 0.8% over the week. The total number of properties advertised for sale is now at a level 16.1% above the 12 month average and 18.8% higher than at the same time last year. With listings climbing so significantly during late spring, the total number of homes being advertised has returned to similar levels to those recorded during the Global Financial Crisis. In coming weeks we expect that the number of properties advertised for sale will ease as we approach the Christmas / New Year period as buyers tend to be much harder to reach during this period. The real litmus test for the market will be around February or March of next year when activity in the market and listings start rebounding out of the Christmas slowdown. Potentially we will see fewer homes being advertised for sale as some vendors decide to withdraw their property from the market.
Latest National Auction Clearance Rates
Last week the weighted average capital city auction clearance rate fell below 50% for the first time since late 2008. During the week there was a total of 2,348 auctions with weighted average clearance rate of 48.3% across the capital cities (compared with 50.9% last week). The number of auctions last week was the second highest for the year, highlighting that vendors are still showing some confidence in the auction process despite the low rates of clearance. In Melbourne, auction clearance rates fell from 56.2% the previous week to 54.5% last week and in Sydney clearance rates fell to 50.6% from 53.1% the previous week. It seems as if the strong volume of auctions will persist with more than 2,500 capital city auctions currently planned for this week.

Number of Properties Advertised for Rent
The number of new properties advertised for rent has increased by 5.5% over the last week and new rental listings are now 17.1% higher than the 12 month average. With new advertisements increasing, there has also been an increase in total listings which are up by 2.5%. Total rental advertisements have now increased to their highest level in 10 weeks.





RP Data Quarterly Review available now
The September quarter has seen some fundamental shifts in the residential property market and Australian economic conditions. Capital gains in the housing market have ceased after 17 months of consistent capital gains between January 2009 and June 2010. Housing finance volumes have recorded a slight rebound whilst official interest rates have increased by 25 basis points and building approvals contiue to weaken. With the shift in market performance we anticipate that property value growth will continue to be at best flat and there may be further falls in home values if interest rates continue to rise during the second half of 2010.





Article: Why Australian home owners are staying put for longer
Over the past five years the average length of tenure of ownership has increased sharply, indicating that Australians have a lower propensity to sell properties.The average hold period, or the average length of tenure for a property, is simply the average difference between when a property is originally purchased and when it subsequently sells. The analysis of average ‘holding time’ provides an indication of how long people are likely to own their property prior to it being sold.
Read the full article…




Commercial: Two leases out of three shops
Three retail shops on a single title in Brunswick, Victoria, have been sold at auction by agents of Fitzroys to a private investor.The shops at 423-427 Sydney Road, Brunswick, were sold with two established leases already in place in addition to one vacant space.

Fitzroys agent, Chris Kombi, marketed the shops, which achieved a final selling price at auction of $2.6 million, a price understood to be 30% above the vendor’s reserve.

Situated between Albert Street and Victoria Street, the 420 sqm site has frontage of 13.78 metres to Sydney Road.

Zoned Business 1, the property comprises three two-storey retail and residential buildings with a combined building area of approximately 472 sqm

Current net passing rental from the two shops is $56,885 per annum, giving the sale a yield of approximately 2.18%.

Mr Kombi said that the property was well received by the wider market, with developers and investors showing very keen interest during the marketing campaign.

“The high price achieved illustrates the appetite for well located inner city retail property remains strong despite the number of properties currently on the market in the $1 million to $3 million range,” said Mr Kombi.





Blog: House values across the capital cities
With the release of the HIA-CBA Affordability Index this week there has been plenty of focus on the fact that Melbourne has overtaken Sydney as the country’s least affordable capital city property market. Also with the residential property market recording value growth coming to a halt, there has been plenty of commentary around the lack of affordability and some suggest property values are set for a significant fall.
Read the full article at…







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