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I write this property market update from a warehouse in Surry Hills, Sydney. It’s a beautiful old building, however with not much insulation - so it’s been a cold winter, which has been in line with the Sydney market starting to cool. Let’s take a look a how each Australian capital city performed in July.
Sydney, cold but still dazzling in the winter sun. Capital growth increased a further 1.4% in July. On the ground, however, we continue to see reduced numbers and a lot more hesitation with the paddle at auctions. Blue chip suburbs are now starting to replicate what has been happening outside the inner ring with properties sitting on the market for longer and sellers showing greater willingness to accept offers pre-auction - a far cry from 3 months ago. As reported by CoreLogic, total listing numbers in Sydney are now 14% higher YTD. This means there are more properties on the market for buyers to choose. When this happens supply Vs. demand flips and property prices start to ease. Herron Todd White is also reporting that Sydney is at the start of a declining market for houses and units - could it be?
Capital Growth (all dwellings): 1.4% ⬆︎
Median Dwelling Price (all dwellings): $856,000 ⬇︎
Gross Rental Yield (houses): 2.7% ⬇︎
New South Wales Unemployment Rate (June): 4.8% -
Melbourne had some unprecedented wild winds in July and the property market, well it continued to remain strong in July. The housing market in Melbourne is propped up by strong population growth, strong employment and to a lesser extent, affordability when compared to Sydney. Melbourne was the best performing capital in July, this is easy to believe given the strong auction clearance rates recently recorded in the high 70's.
As a whole REA Group, the owners of realestate.com.au are reporting new listings and searches up and down and somewhat out of pattern for the Sydney and Melbourne markets. By this we mean the patterns are irregular to what would be typical of declining or incresing market.
Capital Growth (all dwellings): 3.1% ⬆︎
Median Dwelling Price (all dwellings): $655,000 ⬇︎
Gross Rental Yield (houses): 2.6% -
Victorian Unemployment Rate (June): 5.9% ⬇︎
Brisbane is still one to watch. We've all been waiting for it to kick off, but we might add, suburbs we have been monitoring are kicking off so it's a matter of finding the strong markets within a market to maximise your investment. Herron Todd White is reporting that houses are at the start of the recovery phase, there are certainly pockets of the city and surrounding areas that are performing well. On the other hand, they are reporting units are in a declining market and we strongly advise that you stay away from CBD apartments and off-plan purchases.
Capital Growth (all dwellings): -0.6% ⬇︎
Median Dwelling Price (all dwellings): $490,000 ⬇︎
Gross Rental Yield (houses): 4.1% -
Queensland Unemployment Rate (June): 6.5% ⬆︎
Adelaide, very much on par with Brisbane continues to tick along ever so slowly - according to the macro Adelaide market numbers. But, if you break it down and look at the smaller markets in the inner ring, growth is very strong. Driving this is still a relatively low house median, good access to the CBD and amazing heritage style homes with plenty of character. We don't mind this market, but, it's very important to understand the micro markets here as this could affect your long term capital growth if you don't get it right. The highest national unemployment rate and an economy in limbo mean it still needs to be monitored closely.
Capital Growth (all dwellings): 1.1% ⬆︎
Median Dwelling Price (all dwellings): $434,000 ⬇︎
Gross Rental Yield (houses): 3.9% ⬇︎
South Australian Unemployment Rate (June): 6.6% ⬇︎
Canberra has continued to perform well, achieving the status of best performing capital city in the last three months. Good rental properties are in high demand, with vacancy rates at 1.2%. In areas like Belconnen, this is even tighter at 0.9%. ACT investors have also backed what bills to be Australia’s largest community solar project in Symonston. The attraction of large parcels of land at an affordable entry price with scope to extend and add granny flats is a strong driver for investors.
Capital Growth (all dwellings): 2.4% ⬆︎
Median Dwelling Price (all dwellings): $614,000 ⬇︎
Gross Rental Yield (houses): 4.0% ⬇︎
Australian Capital Territory Unemployment Rate (June): 4.4% ⬆︎
Hobart is still the most affordable city with a median dwelling price of $338,000. Gross rental yields sitting at 5.1% are still the nations highest. We predict there is still some steam left in the Hobart market as the numbers balance themselves out. This month David Walsh the founder of Mona also unveiled his grand expansion plans for phase two of the museum, which has been credited as revitalising the apple isle. However, with all this, it must be said, how much longer can this market sustain its growth for given its sole economic driver is tourism? Population growth is stagnant with the gen Y's heading to the mainland to seek greater employment opportunities and baby boomer retirees heading back to the isle. Who's generating the rest of the economy outside of tourism?
Capital Growth (all dwellings): 0.9% ⬆︎
Median Dwelling Price (all dwellings): $338,000 ⬇︎
Gross Rental Yield (houses): 5.1% -
Tasmania Unemployment Rate (June): 5.6% ⬇︎
Perth, Herron Todd White is continuing to report that Perth houses are approaching the bottom of the market and that units are in a declining market. Whilst as a whole, the Perth housing market is flat, there are suburbs in the Inner West and northern beaches that are showing strong growth and it will only be a matter of time before this spills out to neighbouring suburbs. Look for improvement come the end of 2017 and into early 2018. The new Perth Stadium is nearing completion and will be stellar once completed. The $240 million redevelopment of Raine Square also kicked off in July.
Capital Growth (all dwellings): -1.3% ⬇︎
Median Dwelling Price (all dwellings): $475,000 ⬇︎
Gross Rental Yield (houses): 3.6% -
Western Australia Unemployment Rate (June): 5.6% ⬆︎
Darwin takes the award for the worst performing capital city in July. Herron Todd White is reporting that houses have reached the bottom of the market and units are approaching the bottom of the market. In the 2017 budget, the government has committed to spending focused on infrastructure, community projects and maintenance jobs across this states.
Capital Growth (all dwellings): -1.2% ⬇︎
Median Dwelling Price (all dwellings): $485,000 ⬆︎
Gross Rental Yield (houses): 5.1% -
Northern Territory Unemployment Rate (June): 3.1% ⬇︎
Whilst the federal government is creating policy to curb price growth in hot markets, that some policy doesn't help the struggling markets. It's a tough balancing act for our pollies!
That’s a quick snap shot of July for you.
Milk Chocolate was founded seven years ago by Richie Ragel and Michael Cleary, to purchase residential and commercial property in Australia on behalf of our clients, looking for a home or investment property. To see how we can help you get in touch here.
Thanks, Michael
Source: CoreLogic / Herron Todd White / Cordell / Australian Bureau of Statistics / REA Group
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