Property Market Update

I find capturing the movements of the various markets so beneficial for my clients, particularly those who are looking to invest outside the local area. In saying that, it’s hard to synthesise a whole nation into one email, so you'll have to excuse me for generalising across whole states, and making this a little city-centric. I’ve also included some key regional performers so you can get a sense of the state of the nation.

So, is property the safe bet it once was? Well on the one hand, we have concerning levels of unemployment which were sitting at 7.4% in June, the highest level since November 1998, meaning that close to 1 million of the working population are unemployed. Though, we’re not at our previous lows, as around 35% of jobs lost in Australia since the start of Covid-19 related lockdowns in March have now been recovered, according to government data*. On the other hand we have Australia’s phenomenal track record of delivering price growth after a recession to look back on.

Five years after each of the most recent economic downturns since the 1970s, house prices in capital cities increased substantially. Property in Australia shows remarkable resilience.

Right now, across the nation, we’re finding that a lack of stock and the swarm of opportunistic buyers is keeping prices positive. Then you’ve got the added support of JobKeeper, JobSeeker, mortgage deferrals and economic stimulus. First home buyers intending to live in their property made up 32% of borrowers in April, Australian Bureau of Statistics data showed. They can also buy a home with only a 5% deposit as taxpayers guarantee the rest of the 20%  deposit, under the federal government's $500 million First Home Loan Deposit Scheme.

Looking at home loans, buyers are busy; $16.42 billion in new housing loans were issued in May, in the midst of all this madness. How is that translating to the property market?

Below we look closer at each state and city.

NEW SOUTH WALES

I​ read with great interest that the head of the industry body here thinks NSW regional areas will be a winner from Covid-19. He says more and more city-residents will escape the rat races for more affordable housing as the “Zoom generation” gains momentum (did you know that over 4 million of us have been working from home recently?). Markets including Lake Macquarie (about 2 hours north of the city), Bowral (about two hours south) and Byron Bay (the chic new home of the Hemsworths and reportedly Zac Efron) have had a surge of interest from professionals who are taking the “opportunity” to improve their work-life environment.

SYDNEY

F​or all the dooms dayers out there predicting a catastrophe for Sydney property while the initial lockdown was on, Sydney is officially home to 14 of Australia's 20 best performing real estate markets currently, meanwhile 15 new suburbs have emerged with a $1 million-plus median price. That means there’s now 209 suburbs in Sydney in that once exclusive million-dollar club. The new entrants mostly came from the Hornsby Shire, The Hills and Sutherland Shire with the city areas (long time club members) experiencing extraordinary price growth of 13.3 per cent over twelve months. Looking at those markets more closely, super city-fringe hubs like the inner west and east experienced price growth over the same period that exceeded 20 per cent!

I can’t see prices going backwards in Sydney; particularly given buyer demand (local and international, our global friends view Sydney property as a safe haven of sorts) and comparative lack of stock.

Markets to watch ​North Ryde in the north (median price up 9.9 per cent to $1,520,482) Leppington in the south-west (up 6.1 per cent to $722,377), North Bondi in the east (up 6.1 per cent to $1,982,338) and Bligh Park in the Blue Mountains (up 6.1 per cent to $648,098).

QUEENSLAND

​Queenslanders have really taken advantage of the federal government’s HomeBuilder scheme, particularly in June where a 43.3 per cent increase in uptake occurred. So they’re all busy renovating or building new homes. In terms of transactions of existing property, as with other markets, prestige property is leading the charge particularly in the Gold Coast where the top ten sales last month achieved a combined $100 million. Further north, Kevin Rudd just bought a $17 million Noosa beachfront and Karl Stevanovic bought a $3.6 million home in Sunshine Beach​. But pundits are predicting the other end of the scale is about to get busy. Over the next six months first-home buyers are expected to leverage government stimulus to take advantage of the affordability in the lower end of the market in south-east Queensland.

Then there’s regional areas where increases to sale price medians are mind blowing. Just head to the Darling Downs in the little town of Oakey, they saw a 15.1 per cent price increase last year to $210,000. But it’s not all roses. Nearby Crows Nest copped at a 21.9 percent drop.

BRISBANE​

Supply is not being as affected in Brisbane with the city’s tally of properties on the market remaining steady at 28,814 in June. Pleasingly, particularly during a pandemic, Brisbane saw seven new properties join the million dollar median price club. In the outer burbs, first-home buyer demand is holding up prices.

Markets to watch ​The Gap in the inner-west (up 8.2 per cent to $767,146), and Oakey in the Darling Downs.

VICTORIA

It seems a little futile to be looking at pre-second-wave lockdown data in Victoria. The reality is that restrictions on people movement make the traditional purchasing process irrelevant. Sure, the industry has innovated to compensate: inspections can be done via video, almost every auctioneer is comfortable with running online auctions (though vendors are choosing private treaty more and more, up 7.6 per cent on last year), and buyers seem to be relatively perturbed by not seeing a property in person, but it’s sellers who tend to hit pause. Vendors are reticent to put their property on the market during such strange times in the hope better (or more predictable) times lay ahead. In saying that, the glass half-empty types have been rushing to divest property under the spirit of “it’s better the devil (market) you know.” Transaction numbers are way down, but for the stock that is on the market, buyers are lapping it up. Just look at values.

The state remained buoyant for the last quarter despite the bizarre economy we find ourselves in, with rising unemployment. Demand vastly outstripped supply so median prices stayed more than buoyant. Median prices outperformed the same period last year (you know, back in the days before the global pandemic) across all property types. This has been a remarkably good start to winter for the state’s property market.

Regional houses showed healthy annual growth; the median price is now $420,000. Meanwhile, units enjoyed a high rise, excuse the pun, with a nearly 14 per cent price increase over the previous quarter to $339,000. That’s a new record for regional units in VIC!

MELBOURNE

​In the city, unsurprisingly, house values fell over the quarter. Melbourne had enjoyed four quarters of continuous growth prior, so a 3.5 per cent fall to $864,000 doesn’t do too much damage. Homes are still 6.1 per cent more valuable than they were this time last year. Units fell only 2.5 per cent to $621,000 after enjoying 6.4 per cent growth over the past 12 months.

My final observation is that the new Home Builder stimulus is working. Land sales across Victoria topped 2000 last month, a level not seen since the 2017 boom. ​The next quarter’s data for Victoria will be fascinating. I’ll be sure to update you as soon as I receive it.

Market to watch ​Monash, Bendigo and Ballarat.

ACT

​During the past three months, Canberra reported a respectable clearance rate of 58.7% for 576 auctions, and house prices are sitting at record highs having increased 6.3 per cent in the past year. Last month, the market flattened, and this month, listing numbers are right down so it’s become quite the seller’s market. The median house price is currently $639,965.

TASMANIA

​In a normal calendar year, somewhere between 100 and 180 properties are transacted for over $1 million here. In only the first six months of this year, more than 120 Tassie homes have already been sold for more than $1 million; that’s during a pandemic and during what is normally a quiet winter period for home sales. What’s next for the island state? The isolation and lifestyle offering present an attractive alternative to living in the big cities for work; this is surely going to attract a flood of interstate buyers when the borders open.

Market to watch ​New Norfolk in the city’s north-west (up 7.2 per cent to $308,070).

ADELAIDE

Adelaide reported a minuscule decline in house prices in June of 0.2%. The most notable trend here is the rise in apartment listings. Investors are divesting their portfolio and Adelaide is an apartment-heavy city. Buyers are snapping up cottages and character homes in the western suburb of Ethelton, where the median days on market for houses is just over two weeks. Glenalta and Cowandilla followed closely behind, spending an average of just 17 days on the market, while North Brighton and Glenside rounded out the top five.

Markets to watch ​Both in the city’s west, Henley Beach (up 6.8 per cent to $746,788) and Findon (up 6.8 per cent to $517,690).

NORTHERN TERRITORY

T​hey’re saying the NT is the safest place in Australia during a pandemic. For some years, during the In per year, it’s been an expensive buy in but it’s now, comparatively, one of the cheaper capital cities to purchase into; plus today’s buyers are keen to make the most of low rates. Darwin experienced its second consecutive quarter of growth in dwelling values, which is the first time that has happened in over five years. Agents are reporting a spike in interstate inquiries with Darwin viewed favourably as a safe place to be with an enviable lifestyle.

PERTH

In Perth, property listings are 30 per cent lower than for the same time last year. While the median price has fallen about 1 per cent to $527,000, prestige properties and vacant land sales are cause for optimism. Looking at 1000 transactions over seven days in June, 613 were home sales and 412 were vacant land sales. Both of these figures are significantly higher than the 52-week average. Various government grants and incentives are being felt by the market, so too high networth international interest. Buyers who have been on the sideline about building their own home now have a reason to act.

Apartments experienced 2.3% capital growth in the first quarter of this year to $348,500, with a gross yield of 5.4%. But it’s not all roses. A tonne of patience has been required by sellers, as the average days on market sit at about 150 for both houses and apartments, well above the national average.

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