Article by RP Data of 11th Sept 2012

Information For Clients, Friends & Associates of LJ Gilland Real Estate Pty Ltd as follows:-

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Residential property capital growth has stalled in five years since GFC: RP Data’s Cameron Kusher

By Cameron Kusher
Tuesday, 11 September 2012

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Since the onset of the global financial crisis in 2008, growth in capital city home values has been much more subdued.

Apart from the economic factors, the slowdown in capital gains can also be attributed to the fact that consumers have increased their level of savings and have subsequently reduced their levels of spending (particularly for housing).

Over the five years to August 2012, home values across the combined capital cities increased at an average annual rate of just 2.4%. Over recent years the rate of capital gains in the housing market has been slowing as the cost of purchasing a home has risen.

Breaking down the market performance into five-year increments highlights the recent slowdown in value growth. Between August 1997 and August 2002, capital city home values increased at an average annual rate of 12.0%.

This rate of growth slowed to 8.4%pa between August 2002 and August 2007 and has further slowed to 2.4%pa over the most recent five years. These results clearly show that as housing has become more expensive over time and since the onset of the GFC capital gains have significantly slowed.

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Source:RP Data

In every capital city, average annual capital gains in the market have been stronger over the first five years of the past decade than they have been over the most recent five years. In fact, across each city except Sydney, the rate of average annual growth over the past five years has been less than half that of the previous five years. Further highlighting the slowdown is the fact that over the last decade, every city except Sydney recorded average annual capital gains of more than 6%, while over the past five years the best performing capital city, Darwin, has recorded average annual gains of just 4.6% per year.
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Source: RP Data

The rate of inflation has been recorded at an average of 2.8% on an annual basis over the past five years. Given this, growth in home values over the past five years has been below the rate of inflation in Brisbane (0.2%pa), Adelaide (2.4%pa), Perth (-0.9% pa) and Hobart (-0.6%pa); while Sydney values have grown in line with inflation.

Source: RP Data

Affordable end of the property market outperforming top end of town: Tim Lawless

By Tim Lawless
Monday, 10 September 2012

Most people who have any interest in the housing market will appreciate that the performance of home values can vary broadly based on a range of factors. Geographically, for example, we have seen Darwin values rise by more than 8% over the first eight months of the year, while Melbourne values have fallen by 2.6% over the same time frame. Across the broad housing types there are differences as well, with unit markets generally showing stronger conditions compared with the detached housing market.

We are also seeing significant differences across price segments in the market, with the most expensive housing markets generally underperforming compared with the more affordable markets. Across the combined capital cities, the most expensive 20% of suburbs have recorded fall of 8.5% since the market peak, compared with a 4% fall across the most affordable 20% of suburbs and a 4.4% fall across the broad middle 60% of suburbs.

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As can be seen from the graph above, the most expensive markets have outperformed the broader capital city average during the growth phases but underperformed during the corrections. Over the past five years the annual rate of growth across the most expensive segment of the market has been just 1.7% per annum, compared with a growth rate of 2.9% per annum across the most affordably priced suburbs and 3.3% per annum across the broad middle-priced suburbs.

The trends across the price segments aren’t uniform across all of the capital cities. Brisbane and Adelaide are showing the opposite performance, with the more expensive price segments of the market returning a better result for dwelling values compared with the more affordable priced suburbs. This is interesting in the sense that Adelaide and Brisbane are also the most affordable mainland capital cities to be buying in (Adelaide’s median dwelling price is $371,500 and Brisbane’s is $405,000). The weaker-performance in these markets can be linked with mortgage repayment pressures being felt across the mortgage belts of both these cities, particularly in south-east Queensland, where many of the most affordable suburbs in the region have shown a higher-than-average level of mortgage arrears.

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The performance across price segments highlights why it is so important to drill down below the capital city boundaries in order to truly understand housing market conditions. Prospective home buyers and sellers should be looking at the dynamic of the housing market from a localised perspective ensuring they are in tune with market conditions at both the macro and micro level. There are bound to be significant differences in how markets are performing.

Tim is national research director of RP Data.

Online residential listings rise 1.5% in August to 373,510, led by Melbourne, Sydney and Canberra

By Jonathan Chancellor
Wednesday, 05 September 2012

Vendors appear hopeful of better fortunes this spring selling season with the total number of residential properties listed for sale online rising 1.5% over August to reach 373,510, according to figures from SQM Research.

This contrasts starkly with the same time last year, when listings fell 3.8% from 377,213 in July 2011 to 362,740 in August 2011.

Sydney and Melbourne both recorded “substantial” 5.9% increases in monthly residential properties listed for sale, to reach 31,310 and 51,194 listings respectively.

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SQM Research managing director Louis Christopher described market conditions as a little better than this time last year, "but it doesn’t mean we are going to head into a big property boom”.

"If rates stay on hold, that will be conducive to stimulating the housing market, and we are likely to see continued market recovery, but there are many X-factors at play,” he told news.com.au.

Christopher says rising rents (up 7% annually over the past five years) are good news for investors, but they have been offset by declining house prices.

He expects there will be further seasonal rises in stock levels as the spring selling season enters full swing.

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While residential stock on market in Sydney is just 0.9% higher than a year ago at 31,310, Melbourne has the highest year-on-year increase of all the mainland capital cities, with stock up 14.1% to 51,194 in August.

In August last year there were 44,859 properties listed for sale in Melbourne.

The other notable increase was Canberra, where stock on market increased by 8.8% over the month to 3,758 online listings. This is up 13.6% up on August 2011.

“Canberra’s large monthly increase may well signify a downturn for that market as federal budget spending is cut,” noted SQM research.

Bucking the monthly trend of rising stock levels was Perth, which recorded the largest monthly decline of 1.8% to 18,053. Residential listings were down 10.7% on the same time last year when there 20,207 listings.

Residential stock levels have declined in Perth, Darwin and Brisbane – which all benefit from Australia’s mining boom

Darwin residential listings are down 23.3% over the 12 months to August to 1,282 while Brisbane listings are down 4.7% to 28,666.

“Increasingly the market is segmented. It is becoming difficult to discuss just one national housing market and in my opinion, that will be to base line story for the remainder of 2012,” said Louis Christopher, managing director of SQM Research.

While Hobart stock on market declined by 1.7% over August to 4,388 properties listed for sale, there are 24.1% more properties for sale than a year ago. At this time last year there were 3,536 listed for sale in Hobart.

Have you seen the new video explaining advertising options on realestate.com.au? It could be a great listing tool to use in your presentations?

http://sellingguide.realestate.com.au/video/why-list-online

Also, here is the link to the Selling Guide website specifically set up for our sellers.

http://sellingguide.realestate.com.au/

Have a great week!

Best regards,

Linda & Carlos Debello

http://www.ljgrealestate.com.au

http://twitter.com/GillandDebello

http://au.linkedin.com/in/lindajanedebello

http://gillandrealestate.wordpress.com/

http://www.facebook.com/pages/LJ-Gilland-Real-Estate-Pty-Ltd/169194919788253

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