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There are a few things going on in Australia this month. Our cricket team are a national disgrace! Manly have been caught cheating. And, the banking royal commission has kicked off, which is sure to be a long and arduous process. Due to this, we have seen a tightening of requirements for our client's mortgage applications. A state election was held in South Australia (more on that below) and the ANZ Roy-Morgan consumer confidence index is up 2.5pts to 118.5, with Australian's generally feeling confident about the current economic outlook.
Let’s take a quick look how the real estate market performed in each capital city in February.
Sydney:
Capital Growth, Units: 0.0% -
Capital Growth, Houses: - 0.8% ⬇︎
Median Dwelling Price, Units: $760,814 ⬇︎
Median Dwelling Price, Houses: $1,041,791 ⬇︎
Gross Rental Yield, Units: 3.7% -
Gross Rental Yield, Houses: 2.9% -
New South Wales Unemployment Rate (February): 4.8% -
Property Cycle, Units: Starting to Decline
Property Cycle, Houses: Starting to Decline
The data continues to show the Sydney market is slowing down. It’s important to note that on the ground, homes are still selling for their fair market value. Open homes are busy, however, auction campaigns are typically running there full length and come auction day we’re seeing a handful of registered bidders and typically only 2 or 3 getting involved. Vendors are much more willing to accept offers prior to the auction as the market continues to shift from a seller to a buyers market. In saying all of this, equilibrium has been restored and the market is sitting at normal levels.
Melbourne:
Capital Growth, Units: 0.2% ⬆︎
Capital Growth, Houses: - 0.1% ⬇︎
Median Dwelling Price, Units: $575,204 ⬆︎
Median Dwelling Price, Houses: $834,318 ⬆︎
Gross Rental Yield, Units: 3.9% -
Gross Rental Yield, Houses: 2.6% -
Victoria Unemployment Rate (February): 5.7% ⬇︎
Property Cycle, Units: Peak of Market
Property Cycle, Houses: Approaching Peak of Market
The Melbourne housing market has come off by -0.4% since it’s peak level in November last year. This month auction clearance rates have been hovering between 65% - 70%. We are seeing regional hubs performing well, areas that are a commutable distance (1.25 - 1.5hrs) by train from the CBD. These areas are appealing to first home buyers looking to enter the property ladder and families looking for larger homes and blocks of land that are more affordable. On average in the past 12 months, prices in regional Victoria have grown by 4.3%.
Brisbane:
Capital Growth, Units: 0.0% -
Capital Growth, Houses: -0.1% ⬇︎
Median Dwelling Price, Units: $383,007 ⬇︎
Median Dwelling Price, Houses: $533,308 ⬆︎
Gross Rental Yield, Units: 5.4% ⬆︎
Gross Rental Yield, Houses: 4.2% -
Queensland Unemployment Rate (February): 6.2% ⬆︎
Property Cycle, Units: Declining Market
Property Cycle, Houses: Rising Market
We're still seeing state to state migration remaining high, particularly with NSW residents moving to QLD, namely south-east Queensland, around Brisbane, the Gold Coast and Sunshine Coast. In February QLD was second to NSW for the largest increase in employment up 4,200 people and YoY saw an increase of 110,000 employed people, again only being pipped at the post by NSW. On the ground, it's still a case of knowing the right areas to be investing in. We are seeing some stark contrasts in various markets on the ground that paint two completely different pictures. In some cases, you'd think it's doom and gloom, and in other cases, it's reminiscent Sydney circa 2013 all over again. Know your market and do your research!
Canberra:
Capital Growth, Units: -0.6% ⬇︎
Capital Growth, Houses: -0.3% ⬇︎
Median Dwelling Price, Units: $430,802 ⬇︎
Median Dwelling Price, Houses: $671,077 ⬇︎
Gross Rental Yield, Units: 5.5% ⬆︎
Gross Rental Yield, Houses: 4.2% -
Australian Capital Territory Unemployment Rate (February): 4.1% ⬆︎
Property Cycle, Units: Starting to decline
Property Cycle, Houses: Rising Market
The infrastructure boom in Canberra continues with the demolition of decommissioned buildings as you enter the capital, being replaced with new residential and commercial towers. On the ground, we are seeing homes fairly priced selling at auction and prior. As the market is doing well some vendors have unrealistic expectations on price and those properties are certainly passing in and sitting on the market for longer periods of time. The ACT once again took home the gong for the highest national increase in weekly wages from 2016 - 2017, being 4.9% to a national average of 1.9%. In the past 12 months to February ’18, the ACT also saw the highest annual employment growth rate of all capital cities and territories of 4.7%.
Adelaide:
Capital Growth, Units: -0.1% ⬇︎
Capital Growth, Houses: 0.0% -
Median Dwelling Price, Units: $332,778 ⬇︎
Median Dwelling Price, Houses: $459,570 ⬆︎
Gross Rental Yield, Units: 5.0% -
Gross Rental Yield, Houses: 4.2% -
South Australia Unemployment Rate (February): 6.3% ⬆︎
Property Cycle, Units: Bottom of Market
Property Cycle, Houses: Rising Market
The big news in South Australia this month has to be the change in state government. The state has been governed by the Australian Labor Party for the past 16 years. So to some - and whilst we must stay politically neutral - it's been a long time coming. On Saturday, 17/03 the state voted, handing power to the Liberal party and premier Steven Marshall. We typically find a change in long-term government is generally positive for the state economy and in turn property prices. To note in the last quarter (November - February) Adelaide along with Brisbane are the only capital cities to have recorded price growth, Adelaide at 0.1%. Watch this space.
Hobart:
Capital Growth, Units: 1.2% ⬆︎
Capital Growth, Houses: 0.6% ⬆︎
Median Dwelling Price, Units: $341,686 ⬆︎
Median Dwelling Price, Houses: $438,918 ⬆︎
Gross Rental Yield, Units: 5.1% ⬇︎
Gross Rental Yield, Houses: 5.0% -
Tasmanian Unemployment Rate (February): 6.0% ⬇︎
Property Cycle, Units: Rising Market
Property Cycle, Houses: Rising Market
Hobart is now the only capital city where property prices remain at historic highs. On the ground, there is a real housing crisis brewing with a huge lack of houses on the market for sale or long-term rent, (vacancy rates are at 0.5%). Families literally can’t find homes to live in, as a point of reference the number of homes offered on Airbnb in the Hobart local government area was around 870 in late February. In mid-2016 that number was circa 251, being a cause of the rental shortage. The state still holds the lowest weekly median wage, with employment remaining steady in February at 246,400 employed people. Property wise, we watch with caution.
Perth:
Capital Growth, Units: -1.1% ⬇︎
Capital Growth, Houses: 0.0% -
Median Dwelling Price, Units: $403,921 ⬇︎
Median Dwelling Price, Houses: $486,306 ⬆︎
Gross Rental Yield, Units: 4.3% -
Gross Rental Yield, Houses: 3.8% -
Western Australia Unemployment Rate (February): 6.0% ⬆︎
Property Cycle, Units: Declining Market
Property Cycle, Houses: Bottom of Market
Perth property values have continued to decline and have been since 2014, although as we have been reporting the state of decline is really slowing down. With the second highest weekly median wage behind the ACT, in the past 12 months (February ’17 - February ’18) the state saw an increase in employment by 30,600 people. There is still a long road ahead for the Perth market, however one we are watching keenly as these numbers point to a positive transition from the dark days to more filled with blossoms and daisies.
Darwin:
Capital Growth, Units: -2.1% ⬇︎
Capital Growth, Houses: -0.2% ⬇︎
Median Dwelling Price, Units: $342,646 ⬇︎
Median Dwelling Price, Houses: $475,210 ⬆︎
Gross Rental Yield, Units: 6.3% ⬆︎
Gross Rental Yield, Houses: 5.7% ⬇︎
Northern Territory Unemployment Rate (February): 4.4% ⬆︎
Property Cycle, Units: Bottom of Market
Property Cycle, Houses: Bottom of Market
Darwin still continues to falter, with property prices now down 22.3% since the last peak in May 2014. Unfortunately, employment figures tell a similar story, with 5,000 less employed people YoY. Due to the continuing downward trend of property prices, rental yields continue to be the highest in the country. None of our key indicators are pointing to an upward swing in the Darwin housing market anytime soon. For those wanting great yields, could be an option, but don't expect any capital growth anytime soon.
If you’re thinking of renovating or purchasing in Australia and simply unsure how to progress please get in contact to see if we can help.
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
Sources: CoreLogic/Herron Todd White/Australian Government, Department of Employment/SQM Research/Australian Bureau of Statistics/Hobart City Council.
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