the month in revie€¦ · the place has gone pretty haywire of late – no doubt about it. the...
TRANSCRIPT
april2011
www.htw.com.au
1300 880 489
The Month in review
�
The month in review
Page Topic
3 Feature - Cheap and Tasty - The State of Play and Affordable Property
4 API eNews Article
5 - 15 Commercial – Industrial
16 - 31 Residential
32 Contacts
33 - 38 Rural
39 - 55 Market Indicators
Contents
Peace of mind for your property decisions.
CoN
TeN
TS
�
The month in review
occasionally, it should be about a little bit of ‘you’ time. A moment of measure to sit back, take stock, check your temperature and just be.
The place has gone pretty haywire of late – no doubt about it. The earth itself appears to be stamping its feet at the moment and plenty of us have been ready to jump in and do whatever we can to help whenever possible. This sort of frenzy is a gauge of what terrific beings we humans can occasionally be… not always perfect but at least trying when it counts.
With this environmental madness beset upon the globe, it can all become overwhelming and quite frankly, exhausting. our compulsion is to react immediately to challenges and it seems that just as we get on top of one, another pops up to try our patience once more.
This month, we have decided to take a moment in our little neck of the woods and see if there has been any market fallout over past few months. Property is a reactionary beast with all sorts of factors able to impact upon it, for example:
Interest rates rise + economies fall = confidence falters.
A tough enough equation to solve but throw in a natural disaster or political upheaval and you’ve got a real headache.
Herron Todd White professionals from around the nation have decided to contribute thismonth by simply sitting back and observing how our property markets are playing out. The boys and girls of valuation have sought to settle in and give you some insight on how the bricks and mortar from around Australia are performing upon the current high wire.
To give a little perspective to our musings, we’ve also placed some focus of the affordable end of town. The idea is that entry level stock in most locations usually has a reasonable amount of buyer interest. This issue of the Month In Review highlights some of the prospects in the low priced brackets that bound the land. The wisdom within will give you a nice mix of the big picture state of play and micro dealings at the inexpensive end of town.
our commentary as usual isn’t just limited to the bright sparks of residential. This month our commercial team has formed a scrum around industrial property to come up with a tasty overview of the state of play as well as some of the entry level industrial options designed to tease you into the sector.
So dear reader, pour yourself something soothing and try to relax for just a moment while Herron Todd White eases your furrowed brow. Take the time to see how things really sit in the market and what opportunities may lay in wait.
To you and yours, all the best from us and ours.
Kieran ClairCertified Practising Valuer1April 2011
Cheap and TastyThe State of Play and Affordable Property
FeAT
uRe
�
The month in review
The fallout from the GFC has seen extreme pressure being placed in the valuation profession in Australia, said the Senior Vice President of the Australia Property Institute, Philip Western in a statement earlier today.
Professional Indemnity Insurance (PI) has become extremely difficult to obtain with insurance underwriters vacating the market worldwide. If able to obtain insurance it comes with a significant price increase that includes restrictions and exclusions which bring in to question the viability of many valuation firms in Australia Western said.
Mr Western said that the increase in PI claims against valuers has exacerbated the situation in Australia, where sectors of the Banking and Lending Mortgage Insurance industry have been active in taking action against valuers.
To attempt to shift the cost of poor investment decisions by corporate executives to valuers is an attempt to rewrite history Western said. However, it does not assist the valuer who is used as a default position to attempt to recover losses suffered irrespective of the level of contributory negligence by the parties involved.
Mr Western said unless the front end issues where accepted and acknowledged by the lending sector, the valuation profession was facing a very bleak future. Whilst there have been great efficiencies achieved through technological advances and the amalgamation of many “cottage” valuation firms, to suggest that a valuation can be produced at a lesser scale of fees which included a fee of $975 for a residential property with a market valuer of $500,000. Not only has the fee been driven to an almost impossible level, but the turnaround time has contracted to the extent where the valuer often only has 48 hours to complete the task - both are a recipe for a potential disaster commented Western.
There is a need for the profession to be paid a fee commensurate with the quality of product and associated risk, including the ability to be able to pass on substantial cost increases such as those occurring as a result of the PI market. The alternative will see the large scale departure of valuers from undertaking residential mortgage valuations for the lending sector in Australia Mr Western said.
The Australian Property Institute is the nation’s peak industry body representing over 8,500 members from the professional property sector, including the valuation profession.
For Further information contact:
Mr Philip Western, Senior Nation Vice President
Australian Property Institute
(source: 2010 “Valuers face tough times” API eNews 2 March pg 7)
Valuers Face Tough Times
API
eN
eWS
ART
ICLe
�
The month in review
The commercial property sector rides high upon confidence and falls hard from uncertainty. The state of affairs globally is precarious at present and the fallout will impact upon all facets that drive our economy.
The industrial property market is well and truly in the mix. This month, our offices have taken a moment to sum up the state of play in their particular market. In addition they’ve concentrated on the affordable end of town to look at the opportunities and pitfalls that beset entry level industrial real estate across Australia.
Sydney
The performance of the Sydney Industrial market is highly fragmented. At one end of the market institutional properties have returned to favour, with the number of sales transactions increasing, subsequently driving yield compression. In the non institutional space however, investor demand remains weak, with owner occupiers behind the majority of purchasers
The Sydney unit estate market has witnessed significant growth over the last 15 years, following a surge in the number of small to medium business which require industrial floorspace. Since the onset of the global financial crisis however, a fall in occupier demand has seen rental rates fall and investor demand wane. Capital values have however, been somewhat maintained by a high presence of owner occupiers who have taken advantage of lower interest rates to secure a business premises.
The non institutionalised warehouse market within Sydney has been subdued for some time. Tenant demand remains weak and lengthy letting up periods are common. Investor interest has also yet to return to this sector, with investors remaining hesitant about the long term growth prospects for these properties.
With owner occupiers driving up capital values for low cost industrial premises within Sydney, bargins which would appeal to an investor are few and far between. In many of the industrial sub-regions within Sydney, capital values in comparison to rental rates are suggesting yields around 5%, well below that accepted by an investor.
Canberra
unlike other capital city industrial markets, the market within the ACT does not benefit from being co-located nearby or within a major transportation node. Subsequently demand for industrial space within the ACT, is limited to the internal needs of the ACT economy. over the past 12 months, a reduction of office construction and a subdued retail market has seen demand for industrial floorspace slide, placing downwards pressure on rental rates. While exact figures are difficult to obtain, we estimate that rental rates have fallen by up to 7% in the past 12 months, across all three of the ACT industrial markets.
Mimicking the fall in tenant demand, investor demand has also dried up, with potential investors unwilling to commit to properties without strong lease convenants. Capital values however, maintained some level of stability over 2010, with owner occupiers moving to capitalise on lower interest rates. Looking forward, we expect that the depth of the owner occupier market will decrease as increasing interest rates diminish the benefits of owning your business premises.
....we estimate that rental rates have fallen by up to 7% in the past 12 months....
But it isn’t all doom and gloom for the ACT industrial market. 2010 saw demand remain consistently higher for bulky goods/showroom type premises within Fyshwick. Sales volumes within this market have outperformed both the Mitchell and Hume markets for some time. Much of this sales demand is however, specific to properties which can be occupied by a multitude of industrial and non industrial users.
Commercial overview
CoM
MeR
CIA
L
�
The month in review
As for bargain buys, there are certainly a number of affordable industrial properties within the ACT, the old adage however ‘you get what you pay for’ certainly applies. If pressed we may point towards strata industrial estates in Mitchell, which can be had for under $600,000 and stand to benefit from the population growth throughout the Gungahlin district. We would however, urge any prospective buyer to undertake in depth due diligence on any prospective purchase of an industrial property within the ACT.
Newcastle
outside of the main estates there are a few smaller boutique locations that attract investors and owner occupiers primarily for the benefits of the location.
Whether the benefits are proximity to transport links like the Morisset industrial estate, which is situated within seconds of the F3 Freeway and approximately equidistant between Newcastle and the Central Coast. Almost stuck in no-mans-land. but the location is characterised by a fast growing population, and the central street of Morisset is now like Pitt Street Sydney at peak hour!
It may be proximity to a skilled workforce like Toronto or Redhead, both small estates close to residential areas around Lake Macquarie where owners have indicated that moving to Beresfield or Thornton would result in them losing their present staff. Staff retention in this day and age is one of the most valuable commodities and a reduction in rental often doesn’t compensate from losing your best staff due to an increase in commute times. Poor staff however……………..
It could be proximity to your industry and customers. Rutherford or Mount Thorley in Muswellbrook is a prime example. The proximity of the large coal mines in the Hunter Valley drives the growth and uptake in these locations. Maitland is one of the large growth corridors of the Hunter Valley and the increasing population and proximity to the mines dominates the growth of these industrial estates.
It could be the proximity to a draw card business. Taylors Beach in Port Stephens is a small fledging industrial estate that supports the Nelson Bay/Corlette locations. A large Bunnings is being constructed and this will provide an anchor to other tenants to occupy this area. There is limited competing industrial land in close proximity with either Koorangang Island/Mayfield West, approximately
40 minutes drive to the south or Tomago/Heatherbrae approximately the same to the south-west.
It could be to service the surrounding area like Kurri Kurri where there is a small industrial estate which services the local population, predominately owner occupied this area is older in style and construction and tends to be a wide mix of uses.
It could be The Hunter economic Zone and well………………………….. sorry we’ve got nothing for you there, can’t really explain it!
Yields in most of these locations will be higher than the established estates and rental rates will be lower. They tend to suit operators where cost is a deciding factor. By and large the quality of the building will be inferior, with Kliplock metal the order of the day. As an investor you may be able to secure a local tenant who will remain loyal and largely wedded to the area. Could be a win–win.
NSW Far North Coast
The industrial market on the NSW Far North Coast within the localities of Yamba, Lismore, Ballina and Byron Bay has generally been slow over the past 12 months with continued low sales volumes and stable to steadily increasing supply.
The supply of industrial properties is limited with generally soft to moderate demand in the current economic climate. Large industrial properties are rarely available as they tend to be closely held and tend to be sought by owner occupiers/larger local businesses rather than investors. Smaller industrial properties are being sought by both owner occupiers and investors, however asking prices need to be realistic.
The industrial market in Byron Bay was particularly strong between 2004 and 2007, driven by owner occupiers and investors, who were taking advantage of low interest rates to secure their own freehold premises or entry level investments in a rapidly increasing market. This high level of demand saw very strong increases in values due to a shortage in supply.
....large industrial properties are rarely available as they tend to be closely held and tend to be sought by owner occupiers/larger local businesses rather than investors....
Currently, demand for industrial properties within Byron Bay has continued to be soft due to continuing economic conditions and negative market sentiment. Strata titled industrial units within this locality have generally attracted reasonable interest due to entry level investment opportunities (under $400,000), with investors competing with owner occupiers, some of whom utilise premises for residential use, albeit illegally.
The industrial market within Ballina is also currently soft, however, buyers in the lower end of the market are still evident subject to the asking prices for stock
CoM
MeR
CIA
L
�
The month in review
being realistic. Recent sales of lower priced strata titled industrial units and within Ballina include the following
No 1 � �
Address unit 2, 17Piper DriveBallina
unit 1, 17Piper DriveBallina
unit 14, 7Piper
DriveBallina
Sale Date 13/09/2010 13/08/2010 1/02/2011
Sale Price $620,000 $430,000 $155,000
Land Area(m�)
1,570 1,507 1,322
Building Area(m�)
464 295 121
Yeild(%)
5.60%
% / m�Building Area
$1,336 $1,458 $1,281
overall, the market for industrial properties is currently being adversely affected by a soft rental market and increasing statutory outgoings. owners are being forced to accept low returns on investment, however, there is an expectation in the market that conditions will improve over the coming years. We feel that an improvement to net returns would not necessarily result in an uplift in values, but would increase investment yields to a more acceptable level.
Central NSW
The industrial property market in orange is becoming stronger, with increasing demand and limited supply. The market continues to be fueled by mining-related activities and its flow on effect into the economy. A summary of industrial activity is graphed below:
In the first three months of this year, there have been six vacant land sales with an impending shortage of land emerging. Sale prices have been higher, starting at about $90 per sqm. Improved sales are graphed below:
The graph indicates an increasing tend. The fall in 2009 is related to the GFC and reduction in mining related activity at the time.
The markets in Bathurst, Dubbo and surrounding districts remain subdued. There is some optimism with favorable seasonal conditions and increasing mining activity but there is no evidence of increasing values or activity. Rental levels are generally under downward pressure and the markets are dominated by owner occupiers.
....there is some optimism with favorable seasonal conditions and increasing mining activity....
Southern NSW & Northern Vic
ALBuRY
The industrial market in Albury has remained fairly static the past 12 months or so with no significant market movemnt or capital gain. Yields remain at 8% to 9.5% depending on age, location etc and rents at $40 to $150 per sqm, also depending on age, location and fitout etc. An entry level property would be an older small office and workshop building or a modern tilt slab workshop - however supply is currently low. The market is expected to pick up with the recent rains improving the moisture profile of rural land and therefore more money (though somewhat delayed) in the local and surrounding townships.
WAGGA
The Wagga Wagga industrial market has seen a fairly slow start to 2011. While there have been some transactions, the market is in no way moving along at a great speed. entry level properties in Wagga Wagga range in value from slightly below $500,000 up to $800,000. Rents range from $60 per square metre gross up to $90 per sqm gross depending on the location, condition and size of the property. Yields generally sit in the range between 8.5% and 9.5%.
Melbourne
When discussing affordable industrial investment options we must firstly consider the target market. Industrial property trusts generally consider affordable properties as modern industrial premises with strong depreciation benefits and high profile tenants in the $10 million-plus category. After the 2007/2008 Global Financial Crisis the tightening of available finance severely limited market activity in this sector. only now are there some signs of recovery and transactional activity in this buyer profile group.
For Mum and Dad investors, affordable industrial property is generally below the $1 million price point. We have chosen to focus on this small private investor category within the Melbourne industrial market.
CoM
MeR
CIA
L
�
The month in review
Numerous industrial properties are available to purchase across Melbourne and more specifically in the sub-$500,000 category. These properties can be either small recently constructed concrete tilt slab strata office/warehouse units or small freehold older style brick warehouses generally with lower clearance. Small modern strata units generally range in size from 150sqm to 300sqm and indicate selling rates of $1500 per sqm to $2000 per sqm. The older style brick warehouses are slightly larger and indicate selling rates of circa $1000 per sqm to $1500 per sqm.
These smaller industrial offerings are reasonably well sought after and more so by owner occupiers than investors. Yields in the lower price ranges are in the 6% to 7% category. Rents range from say $60 per sqm to $110 per sqm with the lower rental range applicable for the older style warehouses and the higher rates for the smaller well located modern industrial units.
Industrial demand is driven fundamentally by affordability, interest rates, access to transport linkages, and other cyclical forces. We would expect reasonable demand for well located properties close to key transport linkages. A key factor in the sector is over supply as yields and rents can suffer if too much stock is released on the market at one time. owner occupiers are likely to continue to drive this lower end of the industrial market.
Generally speaking, as vacancy levels decrease and tenant enquiry rises, prelease activity should increase over the next 12 months. Some upward pressure on existing rents is also expected in the second half of the year. Investors remain the most likely purchasers of property over $5 million; however we expect to see developers and possibly Australian ReITS becoming more active in the market as 2011 progresses. Capital values are forecast to record moderate growth in 2011.
Regional Vic
MuRRAY RIVeRINA
As always the commercial market appeared pretty steady though a very difficult summer trading period that may have some adverse affect on the local economy - which in turn may flow through to the commercial sector of the market. There are investment options available at entry level by asking around as not all vendors are openly advertising so it would pay for genuine buyers to make enquiries with agents.
Adelaide
The industrial property market in Adelaide is traditionally a very steady market with the limited supply making this sector somewhat resilient to outside pressures. However the market has remained slow for quite a while now and there has been a slight contraction in prices (mostly for the smaller properties), whilst rents have remained relatively stable. Transactions are still somewhat extracted due to a more careful approach by purchasers and the continuing difficulty in securing credit.
When focusing on the affordable or lower end of the market, Adelaide’s industrial sector is dominated by small lots of vacant land and basic shed/warehouses, historically the realm of the owner/occupier. entry level starts at $75,000 and although affordable, should be avoided by investors as the potential downside is high with difficulty in securing leases at commercial rates and minimal capital growth. Current yields are nudging 10% reflecting the associated risk.
....the market has remained slow for quite a while now and there has been a slight contraction in prices (mostly for the smaller properties)....
There are definitely investment options available under $1 million - modern office/warehouses located in multi-unit complexes in established industrial areas. However whether these are classed as affordable is questionable. These properties are quite rare, tightly held and those that are securely leased come with a higher price tag.
Brisbane
Whilst 2010 saw a general improvement in industrial activity compared with the depths of the financial crisis in 2008/2009, this improvement is by no means considered to be indicative of a sustained recovery. The lower end of the industrial market, particularly in the sub-$2 million bracket, continues to be dominated by owner occupiers. Strata titled stock is also still the most common form of entry level purchase, and interest in this class of industrial asset has remained comparatively stable.
There have been tentative signs of some confidence returning to the industrial market in prime industrial areas such as the TradeCoast Precinct. Passing yields within the $2 million to $5 million price point are generally ranging from 7.75% to 8.75% for modern industrial buildings and between 8.75% and 9.75% for older style developments with poor levels of income security. Rents have remained stable in these prime industrial areas and are achieving $100 to $140 per square metre for modern improvements with good overall utility. Determining factors for achievable rents include warehouse clearances, gantry cranes, age and quality of the improvements, location,
CoM
MeR
CIA
L
�
The month in review
proportion of office accommodation, exposure and access of the site and overall utility.
For industrial properties with a sub-$2 million quantum of value that are more suitable for owner occupiers, Banyo is considered a popular area on the Northside of Brisbane that continues to develop into an established industrial precinct. Banyo accommodates Nudgee Road, a major arterial route that carries high volumes of traffic, and is within close proximity to the Gateway Motorway and the Brisbane Airport. Banyo services both light and general industrial users. Sale prices in primary industrial locations on the Northside of Brisbane such as Banyo, eagle Farm and Pinkenba have remained stable, given the demand for users who wish to remain within reasonable proximity to the Brisbane CBD and the Port of Brisbane.
Recent natural disasters, and in particular the January 2011 floods, will impact the Southside industrial market going forward into 2011. The floods are considered to be of particular relevance as a number of the key Southside industrial precincts, including Rocklea and Sumner, are some of the worst affected areas in Queensland. Whilst it is too early to gauge the exact fallout from these areas, agents have reported net rentals as low as $50 per sqm of gross floor area per annum in these flood affected areas, with some tenants looking for ‘out’ clauses in their lease agreements and even filing for bankruptcy in some cases. It should also be noted that many operators have been unable to secure business interruption insurance in the abovementioned locations. As a result we expect those areas hardest hit to experience higher vacancy rates, longer leasing up periods and comparably softer yields for some time to come. The flipside of this of course being that the areas which weren’t affected by the floods are expected to capitalise on the exodus.
We are also aware of a heightened amount of mortgagee asset sales within the greater Southside industrial area. This is a result of developers oversupplying certain precincts, slower purchaser demand, and banks significantly tightening their financing criterion for developers. The two complexes we discuss below have achieved high volumes of sales following the appointment of receivers, and both provide an interesting insight into demand levels at the owner occupier end of the Southside industrial market.
Commercial on Cairns is a newly developed, 49 lot strata titled industrial development in Loganholme. The complex presents to a good standard and the units are typically sub-400sqm, with tilt panel ‘shell’ style accommodation. The mortgagee appointed receivers in the final quarter of 2010 and to date; approximately 17 of
the 20 lots available have been contracted for sale. Sales achieved in the complex typically reflect rates between $900 and $1150 per sqm of surveyed floor area, which reflects a significant discount from sales achieved pre-GFC which ranged between $1600 and $1800 per square metre. owner occupiers have dominated the purchasing and the selling agent has advised of high levels of interest due to the price point of the units.
....whilst it is too early to gauge the exact fallout from these areas, agents have reported net rentals as low as $50 per sqm of gross floor area per annum in these flood affected areas...
oracle Business Park is also a newly developed, strata titled industrial complex located in the core south-western corridor suburb of Acacia Ridge. The complex consists of tilt panel construction and the units are substantial in floor area, with sizes typically ranging between 1000sqm and 1200sqm. The mortgagee appointed receivers in the second half of 2010 and to date; approximately seven of the 14 available lots have been contracted for sale. Sales achieved in the complex typically reflect rates between $900 and $1100 per sqm of surveyed floor area (depending upon actual size, office ratio and position within the complex). These rates are low and are indicative of the mortgagee in possession nature of the sales, as well as the large size of the units. The selling agent has however advised that owner occupiers have dominated the purchasing, and that interest levels due to the price point have been reasonable.
Whilst the rates being achieved in both these mortgagee complexes reflect significant discounts from pre-GFC levels, the bright side is that transactions are occurring and the stock is finally being absorbed by the market. There are other complexes on Brisbane’s Southside that are in the hands of receivers, and no doubt will be more that will fall into receivership; however the demand for owner occupiers at this lower end of the market still appears to be reasonable when buyers are presented with a value proposition.
Gold Coast
The industrial market got off to a slow start in the first quarter of the year with more leasing activity than sales occurring in the market place. Leasing enquiry was mostly for small industrial units to medium size industrial premises across the Gold Coast. Vacancy levels are gradually reducing for some of the modern strata complexes from Molendinar to Yatala. These leases generally confirm that rental level is stable at the $100 to $120 per sqm per annum net. However, landlords have been accepting short term leases of one year with a short option, instead of the usual two to five-year terms recognising the current situation but not wanting to be short changed when the market improves.
The area with the least visual pollution of agents’ signboards is probably the Labrador/Biggera Waters/
CoM
MeR
CIA
L
10
The month in review
Arundel corridor and this area is likely to have the highest potential for resurgence, considering that Bunnings is planning to relocate to the site on Brisbane Road that was bought last year.
There have been a few new leases of large standalone premises of 1000 to 2000sqm. The rents for metal industrial sheds are still low (from $80 to $100 per sqm per annum gross) while modern concrete panel premises are being leased from $100 to $115 gross. Larger buildings of more than 3000sqm are still difficult to lease or sell. In the northern Gold Coast industrial region, some properties that have sold or been leased after a long period of time have been replaced by others so there is no appreciable net reduction in available stock.
With new supply dwindling and occupancy improving, a trickling of investors are returning to the market to compete with end users to buy entry strata titled level units priced from $180,000 to $250,000. There is still a wide selection of properties for buyers to choose from and many keen sellers so values are expected to remain subdued.
Most readers will know that there has been a development boom in strata title industrial units. This has been especially evident on the Gold Coast. This market has been largely fuelled by owner-occupiers who have taken advantage of historically low interest rates to secure their own premises in order to escape the rental trap. A by-product of this is that potential tenants are in short supply as they are now owners of their own premises.
There are many locations in and around the Gold Coast where strata title industrial units can be found. Such suburbs include Burleigh Heads, Nerang, Molendinar, Southport and Yatala. This is not an exhaustive list and the old saying of ‘location, location, location’ still applies. If anything, purchasers should concentrate even more on the basics of investment criteria which have got a bit lost in the hype, euphoria and easy money of the ‘boom’ years.
Whilst purchasing a strata title industrial unit gets you into the market, there are trade-offs. You don’t own the land so there are no redevelopment prospects, you can’t do what you want with the property as there are other owners in the mix and you are dealing with a small businessman as a tenant whose ability to trade, pay rent etc., is not a given.
The upside is, however, that you are in the market. It’s difficult, but not impossible, for the tenant to seriously damage the property as it comprises a concrete floor, four concrete walls, a roller shutter door, a toilet and a metal
roof. Not much to go wrong. The investor can negatively gear the purchase and can claim significant depreciation allowances against tax.
....the commercial property is currently subdued after several years of extraordinary activity and price growth....
The commercial property is currently subdued after several years of extraordinary activity and price growth. Well located industrial property should be considered a medium to long term investment and should generally show steady growth.
Southern Queensland
TooWooMBA
The Toowoomba industrial market is steady, with limited sales activity and stable rents. Two estates are expected to commence this year in the Charlton-Wellcamp Regional Industry Zone, which is a large greenfield industrial development area of approximately 1000ha, located approximately 13km west of the Toowoomba CBD. The area is planned to accommodate larger manufacturing and transport-warehousing uses, with lots from around 2ha being developed.
Limited investment sales have occurred during 2010 and 2011 to date, with most activity being dominated by owner occupiers. entry level industrial product generally offers little scope for suitable investment yields, with this product being actively sought by owner occupiers, such as builders, small manufacturers and automotive industries.
one investment sale of note during 2010 was an industrial shed in the Wilsonton Industrial estate, which was occupied by a national tenant on a five-year lease. The sale of $2.175 million reflected a yield of 8.6%.
Strata titled industrial units offer an affordable price point, however there is generally an over supply of this product type across Toowoomba. Rents for this property type have recently declined, resulting in disappointing investor returns in many cases. However, those units that are well located with high exposure to arterial roads are in demand from tenants with a retail focus, reflecting the need for buyers to research the market carefully before committing to a purchase.
CoM
MeR
CIA
L
11
The month in review
Central Queensland
RoCKHAMPToN
Looking for something cheap but not necessarily nasty?! The Rockhampton commercial market provides plenty of options at the affordable end of the scale.
Yields in the industrial market are currently showing reasonably tight levels at 8% to 8.5%. However, sales volumes have been slow over the past two years. The most recent investment sale in the area is a newly constructed tilt panel warehouse with a floor area of 480sqm on a 2000sqm allotment a developing estate. The warehouse is rented at approximately $165 per sqm. This rental level is at the higher end of the scale. Generally industrial rents range from $110 -to $145 per sqm.
The most recent industrial sale for vacant possession is a large high bay warehouse in Alexandra Street which sold for $1.84 million. The warehouse provides a floor area of approximately 1500sqm and an attached office of approximately 140sqm.
In terms of rental availability there are a number of newly constructed, tilt panel warehouse with floor areas ranging from 100sqm to 200sqm including small office and mezzanine level available for rent ranging from $140 to $165 per square metre gross.
....yields in the industrial market are currently showing reasonably tight levels at 8% to 8.5%....
At these levels, the Rockhampton industrial market is still a long way behind our other regional counterparts including Townsville, Gladstone and Mackay.
Developed industrial land for light/medium use is firm at $140 to $150sqm for 2000 to 4000 square metre allotments. There is still a good supply of land, particularly for light industrial use in Parkhurst. A number of options are currently being mooted for the diversion of highway traffic and rail in and around Rockhampton. Planners are seeking public comment on the proposed diversions at present. Some of the possible options could make areas suitable for heavy industry accessible. This is likely to be attractive to some heavy industry players servicing the Bowen and Galilee Basins.
A number of owner occupiers and investors have acquired aged buildings for refurbishment. This is considered a far more affordable solution to constructing new premises and provides a better overall return. The refurbishments are slowly changing the aesthetic of the Rockhampton CBD for the better.
There is plenty of opportunity for smaller premises in the CBD under $500,000. These may not provide the best returns in the short term. However, they could well be a good source of cash flow and capital growth in the long term.
BuNDABeRG
The Bundaberg Industrial market has been performing steadily. The lower end of the market is where most activity is concentrated, however it does not necessarily provide the best value for money. Properties with a price up to in the order of $750,000 appeal to a reasonably broad market. There is limited demand for property in excess of $1.5 million. Likewise smaller tenancies with an annual rental in the $25,000 to $50,000 range attract reasonable interest resulting in limited vacancies. Generally industrial rents range from $60 to $85 per sqm for metal sheds and $100 to $140 per sqm for tilt slab premises with higher office/showroom components.
Vacancy levels for larger premises have been increasing, however anecdotal evidence is to hand that two large scale tenancies are under negotiation to manufacturing/engineering firms choosing Bundaberg as a base to service the growing opportunities from the development of the gas fields to the west and in Gladstone to the north. The benefits available to Bundaberg from the gas developments are yet to be established however Bundaberg offers a stable and skilled workforce with generally far more favorable operating costs in comparison to Gladstone and Rockhampton.
HeRVeY BAY
Hervey Bay has been experiencing an oversupply of vacant land and strata units for well over 12 months. unfortunately this does not appear to be reducing any time soon. Whilst vendors are remaining relatively firm on asking prices, lessors are beginning to lower asking rates to attract tenants. Given the high level of supply, good incentives are on offer for those willing to negotiate. A lack of business confidence, declining building approval numbers and falling population are all currently having a negative impact on the market in general not just industrial. A majority of property available for sale is either strata titled or vacant land. Improved properties that are leased with good tenant on good terms are still receiving interest however yields have softened. Investment property priced below $1.5 million appeals to a broad market however there is very limited demand for property over this price due to the increased risk. This was evident with the most recent sale at $2.55 million reflecting a 10% yield.
Mortgagee sales are only achieving sales at perceived ‘bargain’ prices however with an increasing number of these sales, new (lower) benchmarks are beginning to be set. A continuation of downward pressure on rental rates and asking prices is most likely until current levels of supply for vacant land and improved property declines.
CoM
MeR
CIA
L
1�
The month in review
MACKAY
In the Mackay Industrial market there is presently limited ‘tasty’ and ‘cheap’ properties for sale.
The mining industry surrounding the Mackay region has a major influence on the industrial market within Mackay and is seeing positive future prospects with numerous mine expansion and new mine projects in the pipeline. Port expansions under approval assessment are also a positive indicator for the industrial market.
Keeping the above in mind, workshop / office tenancies with crane capacity should be more sought after in the current climate of the market, however there is a low supply of this type of property available for purchase.
Development of new workshop tenancies is the alternative to purchasing established buildings, however due to high construction costs, higher rental rates are required in order to make projects feasible.
Notwithstanding the above, there is a significant amount of vacant, developable land in the Paget area which may increase supply of industrial warehouse/workshop premises in the future, putting downward pressure on demand for industrial properties in Mackay.
....the mining industry surrounding the Mackay region has a major influence on the industrial market and is seeing positive future prospects with numerous mine expansions....
There have been limited transactions of stand-alone industrial investment properties. Terminus Industrial Park is a good quality modern industrial unit complex within the Paget industrial estate and is fetching yields ranging from 7.87% to 8.57% for lower price bracket properties. Terminus has received reasonably strong demand with enquiry increasing for the remaining stock.
So where do we find the ‘cheap and tasty’?? If you’re after ‘cheap’ options, older style industrial properties in secondary industrial locations such as Slade Point and North Mackay are the more affordable locations, however these precincts appeal to local businesses and have historically been tightly held. If ‘tasty’ is more your style, then modern style industrial units in the Paget locality generally produce better returns.
GLADSToNe
The Gladstone Industrial Market is yet to see the positive flow on effects of the residential market. Activity is fairly limited with very few sales in recent years. New leases are steady. Good demand can be expected for a property with a secure lease in place.
Cairns
The industrial sector in Cairns is relatively small, with areas close to the CBD showing the strongest demand. The market has come back from its peak of early 2008 with a slowing in the rate of sales and yields having eased back by about 10% from the record low levels observed at this time. We believe yields for industrial premises at present analyse in the 8% to 8.5% range, from the 6.75% to 7.25% range previously evident. Commercial agents advise limited availability of good quality, stand alone warehouse stock with reasonable demand for same. Strata titled industrial warehouses are proving more difficult to lease, with most demand being from owner occupiers as opposed to tenants.
The tight serviced industrial land supply situation that previously existed has now been alleviated to some degree with the State Government introducing some additional lots to the market at Woree. There are now about 30 lots with areas of 2000sqm to 3000sqm available, albeit at ambitious asking prices. Lots of this size are also much larger than the typical small owner occupier requires, which is more in the 1000sqm range.
Due to the downturn in the local economy and reduced demand from tenants and purchasers, rents have shown slight decreases over the past three years.
There is limited quality investment stock available for purchase in the Cairns market. This will tend to support values over the short to medium term. The outlook for secondary stock and smaller industrial units is for continued slow activity over the next 12 months or so. A recovery in the vacant industrial land market in Cairns may depend upon a more widespread recovery in the local economy.
Townsville
The industrial market remains at the ‘bottom of the market’ cycle, finding it difficult to rise from the doldrums with most current activity arising from bargain hunters swooping on forced sales.
The affordable/entry level market for industrial property is the $400,000 to $600,000 price bracket, which is mostly dominated by owner occupiers. Within this price bracket, properties may include a house with an industrial shed in an older/secondary industrial area and older style small industrial premises.
The $600,000 to $1 million price bracket includes both the owner occupier and investor market. This price bracket includes modern stand-alone industrial warehouse in the
CoM
MeR
CIA
L
1�
The month in review
newer industrial estates. owner occupiers are the main players in this market at present with limited investor activity due to return on investment being soft.
The $1 million-plus sector is typically investor stock. This sector remains quite with finance proving difficult to obtain due to extended lease-up periods and softer rental rates.
one of the biggest impacts on the property market at present is the escalating development cost, which is seen as a deterrent for prospective buyers. These new infrastructure charges are proving to be a very contentious issue in the local property market. The overall impact of these escalating costs will be an ongoing scenario to follow.
Darwin
The Darwin industrial market is in an odd place at the moment.
on the one hand, as the Chief Minister pointed out at a Property Council of Australia workshop about ‘The Greater Darwin Land use Plan towards 2030’, business confidence is the highest in Australia, and at a minuscule 2.3%, the unemployment rate is the lowest in Australia – as it has been now for 17 consecutive months. under the surface, some of those in the very big end of business are looking at developments such as the proposed east Arm Marine Services Precinct and elsewhere, and the Chief Minister said Darwin could become ‘the Aberdeen of Australia’.
Hmmmm. And on St Paddy’s Day too, t’be shore, t’be shore. oi tink he meant Aberdeen as be’in ‘the energy Capital of europe’. So, Darwin would den be ‘the energy Capital of Australia’. oi hope he wasn’t talkin’ about cloimate change; now, dat would be a turrible ting!
But here’s the real thing. Logistically, and even with its existing infrastructure as a base, Darwin could – and should – be the supply base for much of the development of not just the NT, but of Northern Australia, just as the Chief Minister claims. But the industrial property market remains very, very slow. So on the one hand, it’s all those wonderful economic indicators; on the other, all that awesome silence in the industrial property market. While
it got quite carried away with massive increases before the GFC, it hasn’t shown declines in values since then (as have happened elsewhere in Australia). Instead, it has shown static values both in properties and rentals, with growth around CPI being the best results in general.
There is some activity at the very small end of industrial property, but even at these grass roots there is usually a mismatch between what the buyers want, and what the sellers have to offer. In general, the sellers have lots of small units of 60-150sqm on offer, but most of those buyers are looking for 200sqm to 500sqm sheds, and they can afford to be picky. Going up the value scale, there are very few more sales or rentals until you get to the big end of town, which in little old Darwin includes a new $600,000 per annum rental agreement on the east end’s industrial dress circle, o’Sullivans Circuit.
The trouble is, markets are complex systems. As such, solutions may involve more than one variable. They are far more like people than they are like artefacts such as cars, but a car simile may help explain this paradox. Darwin’s economy used to be like travelling in a rusty old ute; Darwin’s future performance could be like travelling in a limousine. Both vehicles need a lot of different things working at the same time to get anywhere at all. If one bit doesn’t, often the lot doesn’t. But even when everything is in good working order, they still have to have fuel to move, and a limousine needs a lot. When it comes to the property market, the fuel is money, and that is mainly from finance, and the lack of that is the single main thing stalling the Darwin industrial property market. Not business confidence; not infrastructure; not skills, not even the sometimes dauntingly high property values that resulted from too much easy money before. Darwin needs deliberatively allocated, well managed, finance. It has the people here in the finance sector to deliver it; it just needs the funding.
....there is some activity at the very small end of industrial property, but even at these grass roots there is usually a mismatch between what the buyers want, and what the sellers have to offer....
So is that going to get any better soon, with the massive demands for finance from the infrastructure sector, especially to assist reconstruction locally in Queensland and Victoria, and internationally in New Zealand and Japan?
our answer? Quite possibly. Watch this space. This space being all of Australia beyond the gravitational pull of the eastern seaboard, and similar areas north of Adelaide, and similar areas north of Perth. That area is where little Darwin is still the biggest town of all, and it has the seed transport infrastructure to open much of that to Asia better than other capitals can, and is not that much smaller than Aberdeen, and is the closest capital of all to the emerging giants of Asia. And when we are talking energy, we don’t just mean LNG. There are major alternative energy sources in that huge space as well.
‘The Aberdeen of Australia’? Be it a long, cold beer, a wee dram of whisky, or a pint of Guinness, I’ll drink to that!
CoM
MeR
CIA
L
1�
The month in review
Perth
This month’s theme is what’s hot and what’s not and we’re going to have a brief look at the continuing tight lending conditions in regards to industrial property and how this is impacting the industrial property market. Generally Perth’s industrial market was the quickest commercial property sector to show recovery following the corrections caused by the GFC. The super quick turn around in the fortunes of the mining sector following China’s massive government stimulus programmes and the uS government’s stimulus and its Federal Reserve Quantitative easing policies has seen unprecedented rises in commodity prices which was very good news for local businesses. To a lesser extent Australia’s own stimulus package which focused funds towards infrastructure spending and bolstering up the residential property market with the First Homeowners Boost meant good news for local builders and businesses supplying inputs to these sectors. Therefore the recovery is almost solely due to owner occupiers requiring larger and better facilities to accommodate a growing demand for their products and services. Many investors suffered as a result of the GFC and since then have been shut out of many industrial properties as owner occupiers showed a willingness to purchase at levels that an investor could not hope to make a reasonable return on investment. As more and more owner occupiers entered the market, rental rates have either fallen or remained static. The outcome of these factors has been an increasing disparity between prices achieved for vacant properties over leased properties.
....not only have owner occupiers demonstrated a high level of confidence in their business outlooks and the state’s economy in general, it is also apparent that their motivations are also dictated by factors associated with non-economic factors....
obviously owner occupiers have had a high level of confidence in their business outlook, willing to compete with each other to such an extent that sale prices simply don’t stack from an investment point of view. While leases associated with industrial property generally incorporate fixed annual reviews, they tend to incorporate market reviews at option, which under current market conditions can result in losing a tenant. Vacancies too are variable with some suburbs such as Wangara, Landsdale to the north and Bibra Lake and associated suburbs to the south, with a high proportion of smaller strata titled units still tending to have an uncomfortably high level of vacancies. All in all, if global financial markets don’t stabilise and catastrophic (both environmental and political) events don’t abate we may again see contraction in the mining sector, and this will certainly impact industrial property values.
What became clearer as time passed was that the recovery in Perth’s industrial property markets was unevenness in
price movements. obviously in volatile times, premium properties fare better over secondary markets, particularly those positioned in close proximity to the Perth CBD and nearby transport and infrastructure hubs. This differential was further exacerbated to some extent by tight lending conditions, particularly for purchasers with unproven track records and those with limited equity and income buying in secondary markets. We have noted, particularly in these secondary markets, advice from selling agents indicating having sold the same property more than once, due to contracts falling over due to a lack of finance.
Not only have owner occupiers demonstrated a high level of confidence in their business outlooks and the state’s economy in general, it is also apparent that their motivations are also dictated by factors associated with non-economic factors. For instance, the outer industrial suburb of Kelmscott, which is a suburb typified by older developments generally reveal rates higher than for say Jandakot or Cockburn Central which in general comprise newer and superior developments. This is also despite the fact that Jandakot and Cockburn Central are located nearby the Kwinana Freeway. It appears that buyers are also considering factors such as the property’s proximity to their homes and perhaps even other factors such as familiarity of the suburb and proximity to their favoured hotels. Therefore, acquiring good value industrial property in Jandakot and Cockburn Central has a potential to result in reasonable returns on investment over the longer term.
For developers, lending conditions are even tighter, so there has been a decline in developments overall. However, this may not be such a bad thing particularly in some suburbs that have probably undergone an over development in recent years resulting in a glut of properties. Again this appears particularly acute in the strata titled unit segment of the market.
overall under current market conditions it appears that the best, most secure industrial property types to acquire are in the stand alone larger property segment. often demand for these types of properties exceeds supply and for investors who have sufficient funds and don’t require a substantial level of debt funding, returns on investment of these properties appear stronger and more stable. The key for buyers willing to invest in this market under current conditions is keeping gearing low and carefully analysing their potential acquisitions. Indicative passing yields at this end of the market range from 7.5% to 8.5%. on the other hand, mitigating risk by limiting gearing doesn’t protect investors from broader economic, environmental, financial and political vagaries. Despite the generally myopic economic commentary that has tended to dominate the media in recent years,
CoM
MeR
CIA
L
1�
The month in review
the world is facing unprecedented challenges ahead and with industrial properties values being high, it appears that capital gains are unlikely over the short to medium term.
up until the GFC, many investors and owner occupiers purchased industrial properties with a high expectation of high capital growth in a short period of time. To some extent this expectation still prevails among buyers and investors alike, although significantly more among owner occupiers. This expectation has resulted in buyers possessing a shorter term view in regards to their industrial acquisitions, and willing to gear their acquisitions to the maximum possible. This expectation must change if stability is to return to the market, and property will again hold the mantle as a stable long term investment. Clearly higher interest rates and tight lending conditions will force this upon buyers to a greater or lesser extent depending on how high interest rates will climb and whether banks maintain strict covenants on their loans. Hence opportunities still exist but require broader analysis and less reliance on debt. obviously looking at buyer behaviour is something many investors and owner occupiers have not taken notice of to date, but looking at a property’s income potential rather than capital gain are good places to start in the current market.
South Western WA
It has been a slow period for the industrial property market in South West WA, with business remaining cautious due to the increased interest rates and general economic and political uncertainty.
There has been a small but steady volume of sales transactions with prices generally stabilising into 2011. There is however a reasonable stock of industrial properties either for sale or lease and as a result extended selling and letting up periods could be expected.
Building activity by owner occupiers and investors continues with a steady supply of new warehouse/workshop stock becoming available in the small to medium light industrial property segment. As such rental rates have remained stable and we would not expect much increase until the supply situation decreases.
The market appears at or near the bottom of its cycle and while prices have mostly stabilised, it remains a buyer’s
market. Note there is a general over-supply of vacant land in the Greater Bunbury Region which is holding back market growth and could potentially impact land values in the short to medium term.
They say the best time to buy is during a weak market. on that rationale now is probably not a bad time to buy. However I do not expect any great market increase during the coming year, at least while the global economic uncertainty continues. So make sure the fundamentals of the property are right and be prepared for a possible continuing slow period before market conditions swing back in the seller’s favour.
CoM
MeR
CIA
L
1�
The month in review
Residential overview
Here we are at April and already so much has happened that you would think we’re due a little respite. The relentless upheavals from all corners have taken us by surprise. The manner in which we react impacts numerous sectors of the economy.
The property market is no exception. uncertainty and fear are a dangerous combination. This month we have decided to address the state of the market at this very moment. By taking a snapshot of each area’s bricks and mortar, we hope that this month’s issue will allow all observers to see both the threats and opportunities that have come to pass this year. our contributors have also drilled down into the affordable sector to see what low priced property thinks of the market’s machinations.
Sydney
Inner west, Eastern suburbs and Lower North Shore
Following on from the usual market respite over Christmas, market sentiment throughout the ‘inner-ring’ suburbs remains relatively robust. A consistent demand for well located property is ensuring adequately priced, quality properties turnaround quickly, while less soughtt after properties require a longer marketing period.
Despite healthy levels of market activity, generally speaking, property values themselves appear to be static. Properties priced upwards of two million are experiencing some resistance, but both houses and units prices below that price point remain stable. This stability is forecasted to continue into the second quarter, unless there is a significant movement in interest rates.
units at the ‘affordable’ end of the market (sub-$550,000) continue to experience strong yields, underpinned by the tight rental market occurring throughout Sydney. Low
vacancy rates have been placing upwards pressure on rents for some time now, providing good fundamentals for investors with access to surplus capital.
Demand to live near the CBD will always remain strong, especially as traffic congestion worsens and the population continues to swell. Depending on the outcome of the upcoming State election, proposed planning reform could see a significant shift away from in-fill development within Sydney to greater vacant land releases on the city fringe.
If in-fill unit development is limited for a prolonged period, this policy shift will ultimately drive inner city prices in one direction. unless demand wanes, limited supply would see rental prices follow suite, meaning both yields and capital values would hypothetically strengthen.
....demand to live near the CBD will always remain strong, especially as traffic congestion worsens and the population continues to swell....
Bellavista
Property values within the South West Sydney market have remained stable over the past 12 months, recently however uncertainly has crept into the market, with local agents noting a slight decrease in interest in certain areas, as buyers move into a ‘wait and see’ mode.
With demand from first home buyer market segment falling as a result of increasing interest rates, the proportion of first home buyers seeking properties under $450,000 has fallen. This fall in demand has been particularly prominent in the Liverpool and Fairfield Local Government Areas, which have traditionally appealed to first home buyers. With further interest rate rises now weighing on the minds of first home owners, growth in property values is unlikely. Well priced stock however, is subject to heightened levels of demand, particularly from investors seeking attractive yields.
As shown below, there have been some recent sales confirmed by local agents that have worked to draw
ReSI
DeN
TIA
L
1�
The month in review
investors seeking rental returns back into the market. Some examples include:
• 1970s and 1980s units in Liverpool/Warwick Farm area, achieving values of around the $180,000 to $230,000. Depending on elevation, parking and internal condition, a rental return can range between $260 to $320 per week. Good return!
• units within Bankstown with good proximity to the railway line and Bankstown City Centre are recording comparatively lower capital values in comparison to their achievable rents A basic/original 1980s to 1990s two-bedroom unit will achieve a price between $270,000 and $310,000. Rents should be between $330 and $400 per week. Another great return.
With the constant increase of living costs, uncertainty with the global market, people are just waiting to see what is going to happen with the property market, the feel is, if the Reserve Bank increase interest rates, it could be the start of a downturn in the property market.
Bellavista Western Suburbs
The property market in the western suburbs of Sydney is still considered strong, with local agents reporting that sales enquiries have picked up, coming out of the traditional quiet Christmas period. overall confidence in the market and economy remains possitive and properties in the first home owner or small investor bracket are selling at or close to asking price.
Two suburbs which have seen strong periods of trading resulting in some capital growth are St Clair and erskine Park. Traditionally these suburbs are the home of middle income earning families. Recent times have seen the property market in these suburbs shift upwards, with selling periods of less than two weeks common. The performance of these suburbs directly correlates to the lower median price of houses found in these suburbs, which provide affordable, family homes, appealing to first home owners looking to upgrade.
For those looking for cheap, affordable investments with good rental return, this remains the domain of Mount Druitt. Three-bedroom properties in average condition in suburbs such as Tregear, Lethbridge Park and Whalan can be picked up for as little as $190,000 to $240,000 and achieve rental figures between $280 and $310 per week. These properties have the added bonus that with some affordable renovation and refurbishment, value can be added to the investment.
Wollongong
The Illawarra has seen some growth in the past 12 months in all sectors, but there is a sense in the market that things are levelling out – particularly in the $700,000-plus section of the market.
Affordable housing has had a blip from the lows of late 2008 and early 2009, but there are still suburbs where it is possible to get something in the sub $300,000 range. In this sector you are looking at well located 2-3 bedroom units or townhouses, or older 1960-1970’s dwellings generally in the southern suburbs. This is genuine first home buyer territory. In the north, suburbs such as Berkeley, Warrawong, Dapto and unanderra are represented here. All are good locations with access to public transport and close to employment centres. But properties (standard dwellings) under $300,000 are now few and far between and the market has moved appreciably.
In the deep south, there are still some older houses under $300,000 in the Shellharbour LGA but these are getting hard to come by. This is a big change from two years ago when properties could still be bought under $200,000. We all wish we had bought some then.
....there are still suburbs where it is possible to get something in the sub $300,000 range....
As usual it is always the lower end of the market that moves first and sees the better percentage increase in value. Never forget the low end of a market in the better located suburbs. You will be a clear winner when the whole market moves.
The mid range has remained strong during the last year and we have seen the $500,000 to$850,00 range record more strength – depending on suburb. This is the second home buyers sector and those who bought late in 2008 have seen some genuine increases, particularly around the northern beaches. Suburbs such as Figtree, Keiraville, Balgownie, Corrimal, Woonona and Towradgi have experienced some good growth in values in this time.
Above $750,000 the depth of the buyer’s drops off, but there is still reasonable activity. over $1 million there are still some good sales but it is thinly traded, and in recent months has become even more so. The major influences in this sector are interstate investors and Sydney buyers looking for an upmarket house close to the beach, but within commuting distance to Sydney. Bulli, Thirroul, Austinmer, Coledale and Stanwell Park are all attractive to this buyer sector. Kiama and Minnamurra area also
ReSI
DeN
TIA
L
1�
The month in review
included in the southern parts of the region, but we are not seeing a genuine strength in the upper end market; generally one off’s here and there.
Whilst there is no tangible proof of an election having an influence on the market, the result will certainly be a pointer to the future. Traditionally a strong Labor area, the Illawarra still suffers from lack of white collar job opportunities, and the major employers (apart from jobs destined for Sydney commuters) are the mines and steelworks. The next government in NSW should look to boost the opportunities for tertiary level employment in this area by decentralising some Public Sector jobs. This would be a stimulus for the economy through a knock on effect to the building and retail sectors.
overall, the Illawarra property market has remained quite steady especially in the low and mid range, while both the prestige and affordable markets appear to have eased. Moving forward, the outlook for the Illawarra property market appears to be in a steady but not spectacular growth mode.
Canberra
With reports that universities in Canberra have had tremendous growth in international enrolments this year, vacancy rates continue to tighten, providing investors with continued solid rental returns.
on the horizon, dwelling supply will be on the increase as total dwelling commencements continued its upward trend, with the latest ABS figures showing that about 1700 new developments began in the December 2010 quarter.
Unit commencements (ABS)
Despite the RP Data-Rismark Hedonic Home Value Index results showing a drop of 3.8% in the median house price to $510,000 last quarter, the HIA-Commonwealth Bank Housing Affordability Index for the December 2010 quarter reveals that Canberra housing affordability declined by 3.5%. This is predominately the result of the Government tightening monetary policy by increasing interest rates throughout 2010 and the removal of the ACT First Home owners Boost. This also resulted in a drop to the volume of annual property sales during 2010 from 9309 to 6808 (RP Data).
Consequently, there has been much local discussion of late which focuses on the lower spectrum of income earners being priced out of the market. However, there are a few cheap and tasty options for this bracket of wage earners.
unless owners are willing to commute for just over an hour to get to work, then three- bedroom houses have been selling under or around $300,000 in Goulburn. Furthermore, about 50 minutes away in Yass you can find a three-bedroom house under or around $350,000.
otherwise, affordability means buying one and two bedroom units or townhouses closer in to Canberra under the $350,000 mark. The best value for money at this point is 17km away in Queanbeyan, where for under $200,000 you can get a one bedroom dwelling or for up to $300,000 for a two bedroom place.
Gordon has schools and local shops nearby and is approximately 25 to 30minutes from the city. Two-bedroom townhouses are available under and around $350,000.
....on the horizon, dwelling supply will be on the increase as total dwelling commencements continued its upward trend....
New and future developments in Gungahlin must have 20% of stock allocated to affordable housing. At this point, one bedroom townhouse/units are priced under and around $330,000. Gungahlin is 17km from Civic and boasts new schools and local shopping.
Finally, new and older stock of one bedroom townhouse/units has been available in Bruce around and under $350,000. The advantage of this location is that it is in an established neighbourhood with good public transport, close to schools and Belconnen Shopping Centre. Bruce also offers good rental investment returns of up to 6% due to its proximity to the university of Canberra, easy access to ANu and its surrounding infrastructure.
Newcastle
The camera focuses on the market. We can see in shot the market is poised like a panther lying in the bushes and waiting, tail swishing backwards and forwards in a steady rhythmic motion. Why is it poised? What is it going to pounce on? Who will be the victim?? The tension, the almighty tension is almost becoming unbearable……………………
ReSI
DeN
TIA
L
1�
The month in review
The camera pans slowly from the market and filters past various national tragedies, floods, earthquakes, cyclones, tsunamis and nuclear fallout. The impact at of these tragic scenes is dramatic, the general populace is less likely to entertain the market whilst human misery is unfolding elsewhere.
The camera keeps on panning, past government promises of new taxes and aggressive political rhetoric.Flood levies pop up in the background and are lost in the scene-stealing performance of Carbon Tax much to the foreground. The impact of political games and tax football is like a handbrake to the economy.
onwards the camera moves and the sweep slows past the primary villain of the scene -cost of living. The headliner, the anti-star, the legend. When cost of living appears, the other players shrink into the background. The presence is overwhelming, the natural disasters which seemed so real become very much a second thought, and the government squabbles fade into insignificance. Cost of living plays to the heart, cost of livings hits all the emotional buttons. Fuel, electricity, food and rent, all staples of everyday life are increasing significantly and the fear that the interest rates will appear sooner than predicted on the back of rising inflation is the elephant in the room as it were.
....it appears that purchasers are biding their time and waiting for the market to show solids sign of either recovery or retreat....
The camera keeps panning and comes to rest fitfully on man and a woman, in silhouette, shoulders slumped. They appear fragile and vulnerable. The man has his hand resting weakly on the shoulders of a small girl, who is holding hands with a smaller child, almost an infant. The camera settles on the family, known in the credits only as ‘Aussie Battlers Family’. They look vulnerable and uncertain what to do. We know from their back-story they want to enter the market as first homebuyers. The screen then fades to black. No. this can’t be the end of the movie, what happens to the family? Does the market pounce and trample them underfoot? Does the family raise their heads and spirits and defiantly tackle the market head on despite the gloomy prevailing miasma?
That’s the question that everybody is asking at present. The agents are sending us mixed messages, some are still bullish and optimistic and others more circumspect. It’s the circumspect ones who are worrying, they are playing against type and not in a role we expect. We are noticing properties remaining on the market for longer periods and less interest from open homes. It appears that purchasers are biding their time and waiting for the market to show solids sign of either recovery or retreat. The higher-priced houses definitely appear to be following this closely. Many homes stay on the market for extended periods if priced even marginally too high. Many homes that do sell, transact for a reasonable discount over list price. We think many people are expecting the market to fall and will expect bargains in the future. They are in no rush.
It’s the fringe areas with relatively lower entry prices that are expected to perform the strongest. As the first home buyers lower their sights somewhat and look further from the centre of Newcastle, we anticipate the fringe areas to
remain strong. Wallsend, Beresfield, Teralba, Fassiefern and Pelican/Blacksmiths all come under this category, although if the price of fuel continues to increase, those commuters may feel the pinch and the attractiveness of these locations may diminish.
Despite all that has been written, we have not yet seen a contraction in prices and many are optimistic that prices won’t fall and we are in for a period of uncertainty.
NSW Far North Coast
Sales activity across all market segments of the NSW North Coast property market have decreased since April/May 2010 as a result of the gradual removal of economic stimulus, the reduced volume of available buyers and the impact of rising interest rates (total of 1.75% since october 2009).
This month, we are specifically looking at the affordable end of the market segment, which is generally located within the smaller rural townships of Casino and Kyogle, and the larger regional centre of Lismore and its surrounding suburbs.
Properties considered to be in the lower/more affordable end of the market within these localities include:
• Lismore City (including the suburbs of Goonellabah, Lismore, South Lismore, Girards Hill, east Lismore, Lismore Heights): < $300,000.
• Casino and Kyogle: < $220,000
The lower end of the property market within these localities continues to show signs of softening due to current subdued market conditions. This softening of the lower priced market is also related to the erosion of the first home buyer grants. It now appears that the lower priced market segment was somewhat artificially inflated in an otherwise soft economic and real estate climate. Sales volumes in this market segment had a flow on effect for higher priced property as vendors upgraded.
What has been increasingly noted since the slowing of the property market since 2008 and 2009 is the relationship between the period of time properties are listed on the market and the unrealistic expectations of vendors in regard to their estimate of value.
The cold hard facts in the current market place are that prospective purchasers (owner occupiers and investors) are becoming far more selective and ‘unhurried’ in their purchase decisions. It is not uncommon for properties to
ReSI
DeN
TIA
L
�0
The month in review
be on the market for more than six months, even with a realistic selling price.
While sales activity and volumes of sales have slowed, in particular the month of February, which was one of the quietest months on record, properties situated within the lower end of the market still sell PRoVIDING the initial asking price is realistic and reasonable.
Investors targeting more affordable property are also closely monitoring potential rental return. In light of softening rental rates in recent times, this has resulted in little activity among investors. There have been however, more reports of increased buyer enquiry in recent weeks.
In summary, the lower end of the market could see further softening if consumer confidence associated with possible rising interest rates, weaker real levels of employment activity and the sluggish business market currently being experienced on the North Coast, continue.
NSW Mid North Coast
Traditionally in our region, the summer months see weakened sales activity, and the first quarter of 2011 has been no different, however a more subdued start than normal has occurred this new year. Whilst all transactions for this quarter are yet to be recorded, the volume of residential sales has noticeably fallen, largely due to buyer caution over economic uncertainty. Despite this, median prices have remained steady and no stand out under or over-achievers are in place.
During the recent down-turn, it became evident one good indicator of the health of the local economy was by viewing sales volumes at Pacific Palms and along the Manning River east of Taree. Sales have tended to occur in times of positive outlook and become very scarce during times of uncertainty or market downturn. over the past six month period, we are once again seeing minimal sales activity above $600,000 in Pacific Palms and above $600,000 along the Manning River and it will be interesting to see when these areas again start performing.
In the three main cities and towns on the Mid North Coast of New South Wales, namely Port Macquarie, Forster, and Taree, sales volumes for houses were fairly consistent over the past three quarters of 2010 for both affordable, medium range and upper end price sectors.
In analysing the recent trends in sales volumes, Forster is on average down 50% to60% to all sectors, Port
Macquarie down 55% to65%, and Taree down 35-45% for the firs quarter of 2011. The most noticeable falls are for mid price houses in Port Macquarie (say $380,000 to $550,000) and for the upper end Taree market (above $450,000). It thus appears families in the more expensive areas are sitting tight waiting to see where the economy leads and not over extending themselves with debt.
Despite extended sales periods, the upper end markets of Port Macquarie ($550,000-plus) and Forster ($520,000-plus) have proved slightly more resilient to this current market as purchasers in this price range are often cashed up retirees from Sydney who are less likely to baulk at the prices on offer. Whilst sales volumes are down in the upper end markets, achieved sales prices are still by and large relatively healthy. examples we have witnessed in the past few months, a number of $750,000-plus sales around Lighthouse Beach at Port Macquarie, several $800,000 transactions on the outskirts of Forster and a $1.35 million riverfront sale just north of Tuncurry.
The sales statistics also indicate that affordable prices in the more populated areas are currently the best performing, being attractive to a wide range of purchasers, including first home buyers, investors, families, and retires. Affordable property within the main populated areas is often of dated construction (between 1960’s to 1985), gives the best investment returns, and most importantly is centrally located (Location, Location, Location!). It’s for these reasons we consider affordable property to be the best place to invest at present.
our expected outlook for the overall market in the short term is a continuation of the current trend, i.e. soft sales volumes, however with median price levels being maintained, until stronger confidence again returns.
NSW Central Coast
The real estate market on the Central Coast seems to have been undergoing a slight transition over the past several months and we could almost say that overall, it is a slowing market.
How do we know this? Well properties are still selling, but most of the activity seems to be at the lower end of the market. Large gaps in sale prices are emerging in many areas. For example, we are seeing sales data with a number of sales below $350,000 and over the $600,000 mark, with comparatively fewer sales in between.
Finance is still available, but there seems to be more hurdles at present, with lenders showing a greater level of diligence in their lending practices. We know this from the feedback received from bank customers commenting on this and the level of enquiry on completed valuations the lenders (and their insurers) are making.
....properties are still selling, but most of the activity seems to be at the lower end of the market....
Further evidence of the slowing market can be seen by the number of real estate agents on the Central Coast who are ‘talking down’ the market. This is very symptomatic of
ReSI
DeN
TIA
L
�1
The month in review
a slowing market, whereas in a rising market or buoyant market, they are ‘talking up’ the market.
The lower end of the market, in the $250,000 to $350,000 range, usually refers to the unit market in Gosford and Wyong, along with several established residential areas up and down the coast, such as San Remo, Budgewoi, some parts of Killarney Vale, Narara, Woy Woy and umina Beach.
units can still be readily purchased in this range and lower, for an old unit. older style, two- bedroom mostly fibro homes are still being purchased within this range. Yields are found to be very generally around the 5% gross mark.
For those seeking a newer house close to the freeway, areas like Hamlyn Terrace, Woongarrah and Kariong are quite popular with prices generally upwards of $365,000. Predominantly, houses in these areas are project style four-bedroom brick and tile with a double garage. These areas are well within reach of the first home buyer and investor returns are also around the 5% gross mark.
Mortgagee sales are still being seen in many of these areas and these continue to attract the bargain hunters, some of whom are very pleased with their purchases.
Southern NSW & Northern Vic
ALBuRY
The Albury property market at present is relatively flat with sales activity continuing on steadily as it has for the past few months of 2011.
Sales are wide spread across the Albury property market with no real market segment showing any indication of being the standout amongst the rest. each market segment throughout Albury has continued on at a steady pace throughout 2011 on the same path as it did in 2010 with no real strong signs of improvement in the near future.
The impacting factors on the residential property market in Albury in the past have been the drought which has influenced property values a great deal. Now the drought is officially over, consumer confidence will continue to rise. The recent rains which are improving moisture profiles to farming soils will therefore boost the local economy which relies heavily on the rural sector. The flow-on effect from the rural sector will bring more consumer confidence and should see property sales increase throughout Albury and surrounding regions.
....sales are wide spread across the Albury property market with no real market segment showing any indication of being the standout amongst the rest....
At present there aren’t any dark clouds on the horizon which seem to show any concerns to the residential property market in Albury.
WAGGA
Presently in Wagga Wagga the market is weakening, this is being felt at the high end of the market the most, where houses that have been on the market for two to three months continue to be marketed and lay dormant. Properties that are priced right are selling and selling quickly the properties at the higher end of the market are priced out of the market on some instances. Factors contributing to this include construction of new homes vs buying an established home. As Wagga Wagga grows more land is being released and being developed this is having an effect on values as new houses flood the market driving older properties values down. There certainly seems to be a ‘why buy a dream home when you can build a dream home. At the lower end of the scale a suburb like Mount Austin is recording a steady volume of sales for standard three-bedroom, one-bathroom dwellings. These properties are only on the market for as little as three weeks and are being snapped up - due to the strong rental market in the city where a house like this, which can be boought for between $200,000 and 220,000 can rent from anyway between $240-$270 per week. The lower to middle end of the property market offers good rental returns and houses in this market are being purchased for that one purpose.
Melbourne
The Melbourne market has performed strongly since the start of 2010, however towards the end of 2010 Melbourne experienced a comparative slow down. Clearance rates were low and properties were spending longer on the market with local agencies reporting fewer buyers at auctions. This trend is expected to continue for the start of 2011 with a levelling off period and or possibly a marginal decline in some prices expected. This being said, there are future signs that there maybe buoyancy in some markets which could be an indication of some improvements within the market.
Where we are seeing solid sale figures is in the growth corridors of Melbourne, being outer South east, South West and Northern suburbs. These areas are still offering value to buyers, in particular first home buyers. The majority of the stock is free standing ‘family’ three and four-bedroom homes. The relatively low ‘buy in price’ is also offering attractive yields of up to 5% which is enticing the smaller mum and dad investors, with minimal income to expenditure gaps.
ReSI
DeN
TIA
L
��
The month in review
We expect this trend to continue with these areas still offering the best value for money within metropolitan Melbourne. A recent change in government has sparked new optimism that there will be an increase in government spending on infrastructure to these areas. Political promises of future upgraded of arterial roads, new train lines and greater capacity on existing public transport services has helped sell these areas, making them more accessible.
In a sense, if we were to ‘crystal ball the future’, Melbourne will still offering great value for money in comparison to other Australian capital cities. Melbourne’s median house price has just crossed over $650,000. Which, considering it is a city of roughly four million people, this could be considered good value. With interest rates on hold and some analysis predicting a reduction in coming months, now could be a great time to grab a good deal!
Regional Vic
eCHuCA
Record low rental vacancies are likely to see improved yields for residential properties in echuca and this should stimulate some more investor activity following an extended period of limited enquiry from this segment of the market. Standard modern four bedroom/two bathroom homes up to eight years old are selling for $320,000 to $340,000 depending on size and age, with rentals between $300 and $330 per week depending on when the lease was struck. providing gross yields of approximately 5%. Whether there is sufficient growth in this sector of the market to provide adequate returns to investors remains to be seen in the coming years. The market is generally patchy with most agents working hard to achieve sales and the odd strong result.
MILDuRA
The Mildura residential market has been patchy over the past 12 months, however some trends have emerged which are considered likely to continue for the foreseeable future.
The ‘cheap and nasty’ end of the market has been particularly slow, with both investors and first home buyers preferring to bypass this segment in preference for houses in the greater than $170,000 segment.
At the same time, there has been good interest in the $250,000 to $400,000 price segment, with well presented
homes selling relatively quickly. Buyers in this segment represent both locals stepping up to their second home and buyers from other areas that are either moving to Mildura or buying investment homes. The shortage of rental accommodation and the comparative affordability of homes in our market are expected to see this segment continue to perform.
New building activity has slowed dramatically in the past six months, partly due to higher interest rates and possibly also in response to concerns over the local economy.
Adelaide
The Adelaide property market had currently stalled at various levels and it is suspected that in many subsectors there is a correction in values occurring. This is evident in properties staying on the market for extended periods of time and by some vendors having to reduce their price expectations in order to gain a sale. It is expected that even though the market is correcting at present time by mid-year the market levels should essentially be established for each market.
The affordable price bracket is represented by the outer suburbs of Adelaide. The trend in pricing in this market is not so obvious with the percentage decrease relative to expectations not that large. However overall prices have contracted, with interest rates rises and increases in unemployment having a marked effect on this sector.
Whilst there are currently more houses on the market, there is a historically low turnover rate, probably as a result of the significant reduction in the first home owners grant for established houses. It will be some time before numbers of first home buyers increase, especially as interest rates continue to increase, however the price correction should make this market slightly more affordable.
If now is a trough in the market then one could speculate that it is a good time to invest in property. However it is important not to expect any short term capital gain and the investment should be for the longer term.
The rental market is currently experiencing extremely low vacancy rates, a factor which is also encouraging for the investor, however this may be absorbed by sellers, unable to sell their properties, renting them out instead, so one needs to keep this in mind.
The middle to lower end of the unit market currently may be an affordable investment option. By being patient, tenacious and unemotional with strong consideration given to location there may be some good purchases to be made.
...the affordable price bracket is represented by the outer suburbs of Adelaide....
Looking on the bright side, the Adelaide market is historically very resilient, with supply and demand
ReSI
DeN
TIA
L
��
The month in review
tending towards equilibrium so the market doesn’t experience the extreme highs and lows that often occur in the eastern states.
Brisbane
The present market in South east Queensland (SeQ) is one to appeal to the optimistic romantic in us all. After the trials and tribulations that have beset our little corner of the nation, Brissie residents look onward and upward for a happily-ever-after ending.
Things haven’t really been the same since late 2008 with swings and roundabouts dictating the market. A near constant stream of bad news in the form of the GFC and interest rate hikes appeared to suck the life out of a once vibrant real estate sector. While we have always traded fairly steadily due to ours being the ‘destination of choice’ for quite a few overseas and interstate migrants, there was a palpable deflation in demand in 2009/2010 that caught more vendors unaware. We thought that 2011 might see Brisbane gain some property traction only to have it washed downstream by the flood in January.
Sure, the locals are a resilient lot. We muck in and get things done in order to move on with life, but the whole experience has undoubtedly left potential buyers shell shocked and it is showing in the sale rates.
....a near constant stream of bad news in the form of the GFC and interest rate hikes appeared to suck the life out of a once vibrant real estate sector....
There have been some post-flood sales in the new wet lands that are displaying a reasonable discount on their pre-flood values. It’s worth noting however, that the slowdown isn’t limited to the muddy areas. Agents across the board are reporting a general sense of pessimism no matter what elevation the property enjoys. Property must be very carefully priced in order to get potential buyers through the door and then all offers are to be taken seriously. There are particular sectors that some agents are reporting continue to trade well, but if the temperature of the overall market were taken, it would most likely register ‘lukewarm’.
As for the affordable sector, we’ve sampled a few localities of note.
Caboolture is to our far north and offers some pretty attractively priced property. A three-bedroom, single-bathroom dwelling on a site greater than 600sqm will set you back somewhere around $250,000, with a potential rental income of $270 to $300 per week. Not a bad return I’m sure you’ll agree, but the agents just can’t seem to get the market enthused. The buyer base is owner occupier with investors pretty much deserting the market. There are a few tyre kickers around, but when it comes time for the rubber to meet the road, it has become a tad difficult to get the motor running.
Morayfield is faring a little better with a highest three-bedroom, one-bathroom hardiplank home priced around $295,000. If it’s space you’re after, then Burpengary’s detached homes on around 1000sqm at $320,000 might be more your style. once again, the agents here are earning their keep.
For some super cheap real estate near water (and mangroves), Deception Bay offers a standard quality circa 1990 dwelling with three bedrooms for about $300,000. Agents in the area have given mixed reports throughout most of the year although they all seem to concur on March being ridiculously slow to date.
If you’re coming closer in then perhaps Banyo might be the place to check out. Post-war three-bedders on 600sqm, priced from $350,000 to $400,000, rent well at $350 per week. But even here the entry level property is slow, as buyers seem spoiled for choice.
Another option might be to look at some of the more established suburbs closer to see what your money can buy. Kenmore in Brisbane’s western suburbs has sales around $450,000 that appear to offer good buying. It has been observed that the sub-$500,000 bracket represents the new first home owner price point in this area. Property in Kenmore and surrounds at below half a million are certainly piquing plenty of interest for the upwardly mobile looking to get a foot in.
All in all, it’s hard to call Brisbane a galloping real estate market at present and we wait with somewhat bated breath for things to start showing a spark… perhaps we’ll relax until everything dries out.
Gold Coast
Southern Gold Coast
Beachside areas west of the Gold Coast Highway such as Miami and Palm Beach are offering houses for under $500,000, which were selling for 20% more a few years ago. Beachside locations such as Palm Beach, Currumbin and Coolangatta also offer very good buying with properties generally available in the $800,000 to $1 million price bracket. Beachside housing is also one area that moves first when the market does rebound.
ReSI
DeN
TIA
L
��
The month in review
Central GC (Surfers Paradise to Burleigh Heads and west to Mudgeeraba)
Without any certainty, this market under $500,000 now appears to have reached the bottom with most agents reporting more demand and a slight increase in sales activity in 2011. overall, value levels have declined in the order of 5% to 10% from the peak of the market and reduction in first home buyers grant - not a bad result relative to other areas of the Coast. Properties which are realistically priced at current market levels are selling within a two-month selling period. Most agents are reporting quite limited demand from first home buyers. Rental demand and rental rates have improved for housing in this price bracket, and there appears to have been a minor improvement in rental demand for units in this price range.
Based on the further anticipated increase in rental rates, it may be an appropriate time for prudent investors to invest in housing in the under $500,000 price bracket in the central Gold Coast localities. a good example is Ashmore which offers brick homes under $500,000 close to good schools, shops and 5km to beaches.
North Shore (Southport to Hope Island)
The majority of sales are occurring in the lower priced brackets such as townhouse/villa and duplex units in the mid-$200,000s to early $300,000s. These properties are receiving steady rental returns, are considered to be the affordable option for a number of buyers trying to enter the property market and continuing to be the bread and butter for a number of real estate agents.
entry level housing in suburbs such as Southport, Labrador, Biggera Waters and Hollywell has become slighty more affordable with a number of recent house sales falling between the $350,000 to $400,000 price brackets. As reported last month, properties located within close proximity to Griffith university and the under construction Gold Coast university Hospital are proving to be more appealing to investors given the steady rental demand and potential future growth within these areas.
Properties with any issues such as being situated on a busy road or units with high body corporates are being hit hard with offers well below asking prices. Furthermore, the higher end price brackets and waterfront market (houses and vacant land) has continued to soften within Runaway Bay, Hollywell and Paradise Point - sales of original houses are circa $700,000 (getting back to 2004 prices in some cases).
Gold Coast M1 Northern Corridor (Coomera to Beenleigh)
If you are looking to purchase an investment property or if you are seeking to buy your first home, right now could be the best opportunity to buy within the northern corridor of the Gold Coast. Local real estate agents have advised that buyer activity within the region has continued to slow over the past month.
unemployment between ormeau and Beenleigh was reported in Gold Coast Bulletin last month to be over 12%. This has had an obvious effect on the property market.
We have found recently that there have been bargain buys across all suburbs within the northern corridor since the beginning of 2011. Right now, we are seeing housing within upper Coomera being the pick for most attractive buying. Whilst we note that there has been a steady flow of house and duplex unit sales in the area this past month, we note that sale prices have hit the lowest levels for some time. Typical three-bedroom, two-bathroom duplex units were selling for between $340,000 and $360,000 during 2007/2008, however, recent sales have indicated that prices have fallen significantly. After collecting the latest market feedback and sales from local agents we have seen these typical three-bedroom duplex units now sell at $300,000 to $320,000.
To give you an example, a duplex unit at Balintore St, upper Coomera, containing three bedrooms, two bathrooms and double garage recently sold for $300,000. This property was purchased back in March 2008 (near peak of the market) for $358,000. Typical residential property within this area has been always seen good investor activity because of it being a relatively high rental area, but we should highlight that buying right now while prices have dipped should be a very attractive prospect for all.
Sunshine Coast
The property market on the Sunshine Coast is tough. The buying public lacks confidence and has put most decisions on hold. Potential purchasers are only interested in buying if they are getting a bargain. There are some obvious reasons for this.
The terrible weather events that have been experienced through the first three months of 2010, have sent a shock
ReSI
DeN
TIA
L
��
The month in review
wave through the local economy. Tourism occupancy rates are well down with local tourist attractions such as Australia Zoo undertaking redundancies.
The building industry has fared no better. The ‘under employment’ of trades people is having a dampening effect on spending. Also, a number of builders have indicated that there doesn’t appear to be a great deal of work in the ‘pipe line’. There are also some cases of builders going into receivership.
These factors have led to all markets on the coast appearing to be patchy at best. our office has experienced a slight increase in sales volumes over recent weeks, however in discussions at the water cooler, values appear to be ‘cheap’. After digging in behind the circumstances of some of these sales, a number of them indicated that there was significant vendor pressure and mortgage stress. on this front, the number of ‘mortgagee in possessions’ are certainly rising.
As mentioned in previous MIRs, there is a ‘re-pricing’ occurring in the marketplace on the back of these pressured sales at value levels being lower than what they once were. This ‘re-pricing’ first started to occur within the prestige markets, in particular the Noosa area, but has now spread throughout most of the coast, in most value levels.
Traditionally from adversity, opportunity often arises. The opportunity will not only lie in buying a property at the ‘right price’, but also having the possibility of getting into an area that is traditionally tightly held.
....a number of builders have indicated that there doesn’t appear to be a great deal of work in the ‘pipe line’....
The more affordable areas close to amenities and major infrastructure projects continue to be the best bets for future investment. Areas around the proposed hospital and the major service hubs such as Nambour are more for typical rental stock with better relative rental returns and less exciting capital growth. As they say - ‘the small fish often make the best eating’.
Southern Queensland
TooWooMBA
Toowoomba is starting to return to some normality after a tumultuous January/February period. The current market trends and conditions are weak but strengthening as time continues.
Personally I think people seem to reassess their lives after extreme events, they tend to slow down and reconsider their options. People certainly pay more attention to their spending habits and look at their direction in life and this affordability trend is quite noticeable in the market at present.
Generally the Toowoomba market is static with most property experiencing slightly extended selling periods. This trend becomes more pronounced as value increases.
Properties which offer good buying, are well located and presented are selling well. Those properties which are in secondary localities, poorly presented and un-maintained are finding it tough and in isolated instances are showing a regression in value.
Buyers appear to be looking for affordable housing which can offer the benefit of location near shopping, parks and services. At present there is a reasonable amount of stock on the market and personal experience leads me to believe that some sellers are wishing they had accepted that earlier offer rather than holding out for a better one.
Affordable housing is more common in the older, more established areas of Toowoomba, which are close to the CBD. older timber homes in these suburbs offer exceptional value with most renovations, extensions and additions adding value.
Given some early signs of recovery plus other poignant factors. including low unemployment and good forecasts for our local agricultural, mining and energy industries, it is hard to see that there would be any dark clouds on the horizon. Perhaps the silver linings in our local market may be the sharp corrections in rentals which have been exacerbated by very low vacancies which should ultimately lift values.
IPSWICH
The bottom end of the market in Ipswich has declined over the previous six to 12 months and it is a good time to buy in this sector. Prices in the lower sector fluctuate by 5% to 10% through peaks and troughs of the market, so buying now while the market is low gives opportunity for capital gain when the market turns in the future. Also favourable to the lower sector is the current rent received for these properties.
on the back of the floods, rents have risen on average $5 to $10 a week due to increased demand, and current yields are strong. The best suburbs for property in the lower sector are east Ipswich, North Ipswich, Silktone, Booval and eastern Heights. All of these suburbs are positioned either close to the city centre or to public transport and shopping.
ReSI
DeN
TIA
L
��
The month in review
Central Queensland
BuNDABeRG
The residential market is slowly moving on with similar volumes on the previous month where the region dealt with the results of the flooding rains and rising waters that hit the area at the start of the year. The floods put the brakes onto a solid end to 2010.
We are seeing a slight increase in residential sales at the moment with the highest concentration in the $200,000 to $300,000 range. The $300,000 to $400,000 range is also quite strong. After that the buyers are somewhat thinner on the ground.
The $200,000 to $300,000 price range still represents the best prospects for buyers, whether investors looking to capitalise on the solid rents or owner occupiers looking to pick up their very own ‘castle’.
Bundaberg still represents an affordable place to live.
HeRVeY BAY
Sales in the Hervey Bay region have reflected a steady demand for turn-key house and land packages on approximately 600sqm lots. These packages represent good value for money with most sales within an affordable price range of $320,000 to $410,000. estates selling this type of product include Augustus in urraween and Parklands in Wondunna, which appear to maintain a steady turnover with owner occupiers and investors.
older stock is remaining on the market for longer periods in competition to the new house and land product. Agents have commented that affordable properties are ‘everywhere’ at the moment, with excess stock at bargain prices with little or no buyers. Vendors who support unrealistic perceptions of value, and hold onto ‘what the property used to be worth’ appear to be most affected by extended selling periods. The rental market has improved over the past six months, with only a limited supply of stock available coupled with short vacancy intervals.
The Maryborough property market has shown some signs of improvement since the new year, with sales
mainly occurring within the $200,000 to $300,000 price bracket. Agents report that stock which is priced to meet the market is more likely to achieve a sale in this economic climate. Rental demand has stabilised, with some vendors reducing rents marginally to attract and sustain good quality tenants.
Impacting factors which have contributed to these market conditions include the recent flood/cyclone weather instability, tightened lending criteria, insecure employment, along with vendors not being able to sell their properties to become potential purchasers. The recently announced Carbon Tax appears to be having a negative influence on the property market at this stage, with uncertainty and affordability the greatest concerns for prospective buyers.
MACKAY
This month, its all about the ‘Cheap and Tasty’. unfortunately for Mackay there is plenty of ‘tasty’ but the ‘Cheap’ is just a little more difficult to find!! Mackay has one of regional Queensland’s highest median house prices, so ‘cheap’ in Mackay is relative only to our market. entry level for Mackay City housing is in the low to mid-$300,000s. There is still the odd property still available sub-$300,000 however I hope you own a hammer and paint brush!!
The whole Mackay market is fairly flat at present, and this market segment is no exception. Local agents report mixed results when it comes to entry level homes in Mackay. All agents agree that after the reduction in first home owners grants and the tightening credit criteria post GFC that this segment of the market slowed up considerably. Buyers appear to be a mixed bag of first home owners, renovators and investors looking for smaller outlay and to take advantage of the tightening rental market.
.... for Mackay there is plenty of ‘tasty’ but the ‘Cheap’ is just a little more difficult to find
So where do we find the ‘cheap and tasty’? In Mackay City, we recommend the traditional suburbs close to CBD or the beach on the south side, and closer in suburbs north of the Pioneer such as North Mackay in and around the goose ponds. If you are after a bit more bang for your buck, the smaller townships of Marian, Mirani and to a lesser extent Sarina offers cheaper alternatives to Mackay City, although they are further removed from Mackay City CBD and services.
GLADSToNe
The Gladstone residential property market is definitely a seller’s market. Demand has rapidly increased since the first announcements in october 2010 regarding the approval of the first Liquefied Natural Gas (LNG) projects. Since october two further companies have received Federal Government approval for LNG projects. In January 2011, Santos made their final investment decision approving the development of their uS$16 billion LNG project. The project will create 5000 jobs in construction in addition to 1000 permanent jobs in production and there will be 1500 jobs created in the first half of 2011.
ReSI
DeN
TIA
L
��
The month in review
Activity has risen in all market sectors and values are also increasing at a steady pace. In most cases values have risen between 5% and 10% since the first announcement was made in october.
The dwelling market continues to perform strongly in the sub-$500,000 range. The graph below shows the volume of sales that have occurred since the first LNG project was approved in october. There is reportedly limited stock and strong interest for new dwellings in the $450,000 to $550,000 sector on allotments which are generally larger than 500sqm. Although we expect to see new dwellings enter the market in the coming year on smaller allotments. Most of the sub $350,000 stock has been snapped up by investors. our data indicates that the average price of a dwelling in Gladstone since october is approximately $420,000.
The number of new leases is falling as weekly rents increase. Investors are driving this market.
There are presently in excess of 4000 residential allotments that have been approved by council in the Gladstone area, however producing these lots are constrained by gaining operational works approvals and obtaining finance. Sourcing contractors for earthmoving and civil works is also becoming difficult. of the 4000 lots with approval, less than 200 are expected to be issued with titles during 2011.
Available stocks of vacant land have been increasing in value steadily. Lot sizes are also declining with most new stock being under approximately 650sqm. The table below indicates the approximate prices being achieved, based on our market knowledge, for land currently selling within modern/developing residential estates.
Land Size Sale Price Range
400m2 - 500m2 $150,000 - $190,000
500m2 - 600m2 $190,000 - $240,000
600m2 - 800m2 $200,000 - $260,000
800m2 + $220,000 +
The above price ranges are based on Gladstone City only. Prices in Boyne Island and Tannum Sands are historically higher than Gladstone however there land sizes are larger and land stocks are significantly lower. The suburb of Calliope (approximately 20km west of Gladstone and
situated on the Bruce Highway) has seen significant increases in land development projects and site sizes are generally larger than in Gladstone and prices are slightly lower.
In recent times we have seen a significant increase in project related work in the area. experienced and ‘first time’ developers are all trying to get into the market. The number of proposed units/townhouses in the city is increasing and development sites in former secondary locations are now being well accepted.
Cairns
The Cairns residential property market remains at the bottom of the market cycle and is experiencing slow demand. While the continually wet weather has not been kind to the market of late, some agents are reporting glimmers of interest, for example good attendances at open homes. However these seem to be confined mostly to the mid to upper market, and converting interest to an actual sale still remains the real challenge.
Affordable property sales are much slower with perceptions of a large amount of stock on the market and lower sales rates due to the scarcity of first home buyers and investors actively in the market.
We have previously advised that the Cairns property market has split into two parts with reasonably solid demand for well located, quality properties but weaker demand for other properties or secondary locations. This certainly remains the case.
our table below of 2010 developer land sales is symptomatic of the sluggishness at the lower end of the market. It indicates that there was little change in developer land sales between the first and second halves of 2010 in the mid and upper price segments, but that there was a dramatic slowdown in sales in the sub-$150,000 price segment.
Developer Allotment Sales in Cairns
Period Under$1�0,000
$1�0,000-$��0,000
$��0,000 + Total
Jan-Jun ‘10’ 105 100 23 228
Jul-Dec ‘10’ 33 104 22 159
Total 2010 138 204 45 387
Source: HTW Residential Land Survey
The upshot is that for the astute cashed-up buyer, there are likely to be good opportunities for all residential property types at the affordable end of the spectrum in Cairns.
ReSI
DeN
TIA
L
��
The month in review
Townsville
Townsville residential market remains stuck in the ‘start of recovery phase’ of our property clock, where it has now been for over 12 months.
The start of 2011 has been slow; impacted by Cyclone Yasi in addition to ongoing heavy rainfall being experienced across the region which is keeping some potential buyers indoors.
over the past few months it would appear that the most active sectors accounting for about 40% of house sales each have been the $300,000 to $400,000 price bracket and the $400,000 to $600,000 price bracket. Sales in the lower bracket are likely to include a mix of investors, renovators and potential up-graders moving closer to the city with a limited number of first home buyers in the market. The $400,000 to $600,000 price bracket comprises mostly up-graders.
....the rental market has continued its steady trend with our HTW rent roll survey showing the current seasonally adjusted vacancy rate trending at 3.2%....
There is also some evidence creeping into the market that owner occupiers are buying in some of the older established inner city (within 5km to 8km) suburbs. These buyers are looking to areas that offer an affordable entry level allowing them to have enough equity remaining for renovations.
The affordable end of the market has remained quiet during 2011 in particular in the outer lying, traditionally more affordable suburbs. This is due to purchasers currently having better buying power and the potential to acquire a property offering better value for money closer to town.The rental market has continued its steady trend with our HTW rent roll survey showing the current seasonally adjusted vacancy rate trending at 3.2%.
overall the market has been frustratingly slow to react to the generally improving economic conditions during 2010 with an outlook for continued small steps forward for 2011.
Tasmania
HoBART
The residential market throughout Hobart remains somewhat subdued in all price categories. The market is very slow in the top end with extended selling periods becoming more evident.
Traditionally the summer months in Hobart are busier that the winter months and the market generally sees increases in sales volumes. We have noticed however that the market, although seemingly static in price levels, does not have the volumes transacting as per recent years. It appears as if the market has cooled somewhat and even seen some retraction in some areas.
The sub-$300,000 is still ticking away slowly, mainly due to the affordability factor. We are still seeing owner occupier and investor activity in the market place but much more caution before entering. Stock levels appear to be adequate but agents are reporting little activity and interest suggesting that the market is flat. Most of the action in this price category appears in the northern suburbs.
Buyers are also looking for properties that are suitable for re-development. That is, build a second dwelling or unit on the same lot if planning is suitable. This has become popular in the northern suburbs such as Glenorchy and eastern shore suburbs such as Warrane.
The low to middle market in also slow. Properties in the mortgage belt suburbs such as Kingston, old Beach and Howrah priced from $300,000 to $500,000 and taking longer to sell. Although stock levels are adequate, there appears to be plenty of choice in this category and this sort of money can even get you fringe inner city. Agents are reporting that buyers have become very fussy with their purchases. They want quality in their investment and with such a broad range of properties to look at in this price category, it is understandable that this is the case.
The semi regional areas, located approximately 45 minutes from Hobart, seem to be suffering the most at present. Although there are plenty of affordable houses available in the range of $150,000 to $250,000, extended selling periods in the order of six to 12 months are not uncommon, particularly if the property is slightly over priced or presents poorly. This includes the areas of Primrose Sands, Gagebrook and New Norfolk.
Another problem gripping Tasmania is that the Tasmanian budget has blown out. Slumping consumer demand has cost the state hundreds of millions of dollars in GST and state taxes. The new premier is planning to reign in the budget with public sector job cuts. Lara Giddings said recently that she would try to make the savings without forcing redundancies. More than 2000 jobs are on the line and unions are warning that the entire state could fall into recession if the public service is gutted. This may see any future property recovery be a long way off yet.
ReSI
DeN
TIA
L
��
The month in review
overall the residential market is subdued with few positive signs of any recovery happening anytime soon.
LAuNCeSToN
From a holistic point of view on the Tasmanian market as well as the north of the state, things still appear to be remaining steady despite some minor value falls. The impact of Tasmania’s current economic uncertainty and the announcements of forestry and public sector job cuts (both major employers in Tasmania) appear to be dampening confidence. This has resulted into some minor value retractions over the previous six months and extended selling periods, with valuers finding numerous examples of adjusted pricing levels. In line with our comments from the previous month, the properties which appear to be showing the greatest adjustment are those which are in weaker locations and poorly presented. Anecdotal evidence from the past three to four weeks has suggested some increase in buyer enquiry and sales volumes within the major centres. The rental market is still strong with low vacancies and consequently rents continuing at current levels.
The First Home owners Grant (FHoG) and increase in mainland investor activity in the Tasmanian market have both previously been catalysts for capital growth. This has consequently made the ‘entry level’ market for these potential purchasers today less affordable. There still remains the traditionally cheaper suburbs of Mayfield, Rocherlea and Ravenswood, however these are considered the lower socio economic markets and are not attractive to local purchasers. Whether this attitude will change into the future remains to be seen, however if this is the case Ravenswood would be the most likely due to the short distance to the Launceston CBD. The northern suburbs of Newnham and Mowbray still remain a favourite among investors due to the location of the university of Tasmania and Maritime College campus. This obviously provides a guaranteed tenants pool eager to locate within walking distance to the campuses. Affordable housing in both these suburbs is still available. outside of these two areas investors can still find some affordable property in the stronger suburban areas surrounding Launceston. Whilst these areas may not be as affordable, in the current market cashed up investors may be able to make the most of the situation. This is assuming the market does not experience further retractions.
Darwin
The Darwin residential market is currently in a phase of change, with slowing market conditions and correction in overall value. Whilst some market segments remain buoyant, many segments that experienced the highest growth over the past few years have seriously weakened. These prices are still considered to be high compared to the median price of other capital cities in Australia, this therefore indicates an issue of housing affordability.
....it is fair to say that the market will continue to correct itself, while waiting for the next big thing....
The residential housing market in Darwin has enjoyed growth from early in the century until late 2009 and is at a stage of making a correction. This growth has been, in part, due to very high residential constructions costs, a limited supply of available land, strong local economy and low interest rates. In Palmerston, the new subdivisions of Bellamack, Johnston, Zuccoli, Mitchell will provide an additional 3700 new allotments into the market, which has in turn had a detrimental effect on the new neighbouring suburb of Rosebery. Houses in Rosebery which were selling for $650,000 12 months ago, are now selling as low as $600,000. Local agents are reporting that they have witnessed a reduction in turnover of sales. on the other hand, houses on the fringe of Darwin CBD are still considered to be in a sought after locality with limited space available and appears to be still favourable in the market with sales continuing. The market has changed sides to the buyers market, with buyers/vendors generally accepting that the market has peaked, although in some cases buyers are unconvinced (particularly investors) of where the bottom of the market sits at present, and hold the view ‘why buy today when I could possibly buy cheaper tomorrow?’. overall it is fair to say that the market will continue to correct itself, while waiting for the next big thing. Inpex is still looming as one of these big unknowns for the residential market. Japan is a major investor into the Inpex development and with events currently happening in Japan, no one can predict what the final outcome will be.
Affordability is now considered a major limiting factor within the Darwin market. A number of reports have critically labelled Darwin as an unaffordable city due to high rents and house prices. The Northern Territory Government is in the process of tackling this issue and this is apparent within the new subdivision of Bellamack. The NT Government has stated that about 15% of the Bellamack lots, with a mixture of single dwelling and medium density lots, will be retained for affordable and social housing. It is proposed that these lots will be located throughout Bellamack in a ‘salt and pepper mix’. Current affordable house and land packages for a two-bedroom house are marketed for approximately $340,000 and for a three-bedroom dwelling at $400,000. These packages are entry level for first home buyers at a significantly lower value compared to other single dwelling developments in neighbouring suburbs. This gives the low income-earning average Joe a chance of
ReSI
DeN
TIA
L
�0
The month in review
purchasing a property in an expensive market. The flow on affect from a large component of affordable housing within the one subdivision could stagnate the prices of the suburb in time to come and could have a detrimental effect on the suburb overall. Time will tell.
Perth
The Perth residential property market remains sluggish as we head into the autumn, a by-product of prevailing market uncertainties. The Real estate Institute of WA reports a total of 15,260 properties were listed for sale across all suburbs and price brackets within the Perth metropolitan area during the December quarter. Average selling days remain relatively high at 71 days indicating the market remains in oversupply.
Amidst the gloom, the rental market has shown marked resilience with ReIWA statistics revealing unchanged rents throughout the December quarter. This, coupled with vendors realising the true value of their properties have combined to provide solid returns for the savvy investor.
The hot topic throughout our office at the moment is ‘have we reached the bottom yet?’. There are definite indications that we are getting close to the bottom. We are witnessing random spikes in sales activity and more often than not contracts of sale seem to be towards the bottom end of the market value range when compared to settled sales evidence. However, monthly sales activity remains quite stagnant overall with current turnover 30% below the 15-year average, according to ReIWA. We need to see a more consistent level of activity before an accurate judgement can be made.
....the Real Estate Institute of WA reports a total of 15,260 properties were listed for sale across all suburbs and price brackets within the Perth metropolitan area during the December quarter....
First home buyers appear to have left the market for the time being. Government stimulus and low interest rates through 2008/2009 dragged demand forward and created a temporary first home buyer ‘boom’ which led to a surge in construction activity in outer lying suburbs. Subsequent rises in both the price of land and interest rates combined with a withdrawal of government stimulus has created a lack of demand and significant oversupply – particularly in outer lying areas such as Byford, Baldivis, ellenbrook and Butler.
We anticipate that first home buyers will start to look at opportunities closer to the CBD, where older properties can be purchased for similar prices to those being achieved for modern dwellings in outer lying estates. However, it is no small task to change the thought process of Generation Y who appear to desire modern living and size over the old adage of location, location, location.
A good example of this is the exclusive suburb of South Perth versus the developing centre of Success. A 1970s two-bedroom, one-bathroom apartment situated along the South Perth foreshore, within 3km of the Perth CBD can be purchased for between $390,000 to $450,000 – depending on quality of refurbishment and any views that are obtained. Modern two-bedroom, two-bathroom apartments situated in the suburb of Success, some 22km south of the Perth CBD, are currently selling from $390,000 to $425,000. With the impending redevelopment of the Perth foreshore, we would anticipate an increase in demand for inner metro properties within the next 12 to 24 months.
In Byford, some 32km from the CBD and a semi rural setting with small modern estates, a fourbedroom, two-bathroom dwelling will usually sell for $375,000 to $450,000, whilst in the established suburb of Thornlie (15km from the CBD), a dated version will usually sell for $420,000 to $460,000.
Similarly, older style three-bedroom, one-bathroom dwellings on subdivided lots in Balcatta (8km north of the CBD) remain available for around $350,000, a similar price to three-bedroom, two-bathroom villas in Banksia Grove (30km north of the CBD).
For those willing to take on a little more risk, recent zoning changes through the reasonably well located City of Gosnells have opened up opportunities in suburbs such as Beckenham, where a potential duplex site can be purchased for sub-$400,000.
For different reasons investors are also privy to choosing secondary locations, however this is more usually attributed to the depreciation benefits of purchasing a modern property which should not be underestimated. Herron Todd White’s tax depreciation schedules can offset a good portion of income generated by any type of property and are a must for any savvy investor.
Whilst every buyer has differing requirements, we believe that the best opportunities for growth in the short to medium term are currently situated within 15kms of the CBD, with minimal growth anticipated elsewhere for 2011.
South Western WA
Toward the end of 2010 there were a reasonable number of buyers in the market but they appear to be still cautious and not moving to buy unless a clear opportunity presents itself. Discounting by vendors of $20,000 to $30,000 off
ReSI
DeN
TIA
L
�1
The month in review
the asking price is common in order to effect a sale. In short, sales are happening where the vendor is prepared to meet the market. Investors appear to be returning to the market and commentators have speculated on a significant rise in values in 2012 with 2011 figures being flat, and this speculation may influence some purchasers to jump in.
While there is some evidence of sales at lower price levels, there do not appear to be large falls in price but more a ‘sideways’ process at this stage. Yields for the lower end of the market are low and traditionally have always remained low throughout the South West. This sector of the market is considered to be owner occupier driven, but with the increase of interest rates last year, very low confidence in the market place overall and the lack of first home buyers since the demise of the First Home Buyers Scheme, the market appears stagnant. The weak market conditions however, have resulted in the lowest property prices in the South West for the past few years and this has resulted in some movement as values become more affordable and opportunistic buyers take advantage of low prices. Values are expected to increase as confidence returns to the market on the back of a rising stock market, the rekindling of the mining boom and commentators expecting values to rise throughout 2012.
overall the market is seen as being at or near the bottom of the cycle at this time with steady increases in line with wage inflation predicted over the medium term due to the effects of limited supply and increased population driven demand in the south-west of WA.
ReSI
DeN
TIA
L
��
The month in review
CoN
TAC
TS
Office Phone Email
Abu Dhabi, uAe +971 02 4173581 [email protected], SA 08 8231 6818 [email protected]/Wodonga, NSW/VIC 02 6041 1333 [email protected] Bairnsdale, VIC 03 5152 6909 [email protected], NSW 02 6334 4650 [email protected] Bendigo, VIC 03 5480 2601 [email protected] Commercial, QLD 07 3002 0900 [email protected] Brisbane Residential offices, QLD 07 3353 7500 [email protected] Brisbane – Rural Queensland, QLD 0417 753 446 [email protected], WA 08 9791 6204 [email protected]/Wide Bay, QLD 07 4154 3355 [email protected] Busselton, WA 08 9754 2982 [email protected], QLD 07 4057 0200 [email protected] Canberra, ACT 02 6273 9888 [email protected] Darwin, NT 08 8941 4833 [email protected] Deniliquin, NSW 03 5881 4947 [email protected], NSW 02 6884 2999 [email protected] echuca, NSW 03 5480 2601 [email protected], QLD 07 4980 7738 [email protected] Gladstone, QLD 07 4972 3833 [email protected] Gold Coast, QLD 07 5584 1600 [email protected] Goondiwindi, QLD 07 4671 5300 [email protected] Gosford, NSW 1300 489 825 [email protected] Griffith, NSW 02 6964 4222 [email protected] Bay, QLD 07 4124 0047 [email protected], TAS 03 6244 6795 [email protected], QLD 07 3282 9522 [email protected] Launceston, TAS 03 6334 4997 [email protected], NSW 02 6953 8007 [email protected], QLD 07 4957 7348 [email protected] Melbourne, VIC 03 9642 2000 [email protected] Mildura, VIC 03 5021 0455 [email protected] Peninsula 03 9642 2000 [email protected], NSW 02 6372 7733 [email protected] Newcastle, NSW 02 4929 3800 [email protected], NSW 02 8882 7100 [email protected], WA 08 9388 9288 [email protected] Port Macquarie, NSW 1300 489 825 [email protected], QLD 07 4927 4655 [email protected] Roma, QLD 07 4622 6200 [email protected] Sale, VIC 03 5143 1880 [email protected] Highlands 0412 141 100 [email protected] Coast (Mooloolaba), QLD 07 5444 7277 [email protected] Sydney, NSW 02 9221 8911 [email protected] Tamworth, NSW 02 6766 9898 [email protected] Toowoomba, QLD 07 4639 7600 [email protected] Townsville, QLD 07 4724 2000 [email protected] Tralagon, VIC 03 5176 4300 [email protected] Heads, NSW 07 5523 2211 [email protected] Wagga Wagga, NSW 02 6921 9303 [email protected], QLD 07 4948 2157 [email protected], NSW 02 4221 0205 [email protected], NSW 02 6382 5921 [email protected]
Contacts
The information contained in this report is provided in good faith and has been derived from sources believed to be reliable and accurate. However, the report is not intended to be comprehensive or render advice and neither Herron Todd White nor any persons involved in the preparation of this report, accepts any form of liability for its contents.
This report is Copyright, and cannot be reproduced without written permission of Herron Todd White.© Herron Todd White Copyright 2010
��
The month in review
Whilst the outlook is surprising positive, on the down side world affairs such as the Middle east unrest and the impact of the Japan earthquake could subdue commodity demand through 2011. The uncertainty in regard to the Murray Darling Basin Plan and potential entitlement cuts is still having a negative impact on irrigation values in the Basin.
A recent sale in the NT is indicating the increasing value being placed on rural land for conservation purposes and we would expect these types of purchasers to increase in coming years. Interesting to note Queensland government is looking to acquire prime agricultural land to protect it from mining and other activities.
David Sullivan Ph: 0409 823 364
1 April 2011
NoRTHeRN CoAST NSW
Relatively warm to hot autumn conditions have prevailed.
Sugar Cane
Sunshine electricity, the NSW Sugar Milling Co-operative’s joint venture with the NSW State Government electricity utility Delta electricity has been placed into receivership. The two renewable energy electricity plants are located at the Broadwater and Condong Sugar Mills.
This joint venture has a separate legal structure and there is understood to be no recourse to the sugar mills or growers. Nonetheless, the sugar mills require electricity and steam to operate. Growers have been advised that the mills will be crushing in 2011 despite this event. Satisfactory resolution of the issues surrounding the receivership may increase grower confidence in the future of the local sugar industry. Land values remain flat.
Continued warm conditions have ‘pushed’ the crop along.
Significant features of the Australian rural property over the last 12 months have been;
• Vendors’ expectations remain high.
• Availability of finance has softened the lower end family farm market segment.
• Corporate large scale quality properties are still attracting interest particularly from foreign buyers.
• Purchasers are lacking in confidence.
• expectations of short to medium term capital gain have reduced.
• Buyers are now giving greater consideration to return on equity / return on assets. Such analysis is indicting returns not justifying the asking price in many instances.
• Adverse seasonal conditions have impacted on sale volumes.
This has resulted in low sale volumes with suppressed to static value levels. Whilst we would expect this trend to continue over the short term we now expect some good buying opportunities to emerge over the next 12 to 24 months based on the back of sustained strong commodity prices and improved seasonal conditions. In the cropping belt of eastern Australia a full moist profile in the majority of regions should ensure a positive cropping year and water storages across the country will provide irrigations with 2 to 3 years water supply.
Beef, sheep meat, wool, cotton, wheat and other grains prices are all strong with no expectations of major price adjustments in the short to medium term. As producers cashflows benefit from these increased price levels over the next 12 months we anticipate buyer demand to improve, and more importantly increase buyer capacity to acquire new holdings. There are signs already that sale volumes are beginning to increase in South east Australia. Queensland to a degree is still recovering from the horrific flooding.
Rural – Market Directions
RuRA
L
��
The month in review
Poultry
Sunnybrand Chickens Pty Ltd, a local chicken processing company based at Bryon Bay, has been purchased by Inghams.
Assuming grower contracts remain similar, this should provide greater certainty to the local poultry industry.
Cattle
Cattle prices have been relatively strong. Cattle traders, as opposed to breeders, are finding it difficult to replace stock at prices they believe will be profitable.
Macadamias
Market conditions remain soft for macadamia plantations.
Dairying
Whilst seasonal conditions have been favourable, local participants in the dairy industry are very concerned with price direction given the recent Coles supermarket retail milk discounting.
Local dairy farmers believe there is little ‘fat’ in current farm gate prices. Should retail discounts flow through to discounts in farm gate milk prices, declines in dairy farm values and participants would seem inevitable.
Contact:
Dave Sullivan Ph: (02) 6221 8933
SouTHeRN NSW
ALBuRY
There is change in the wind, and the wind is gathering strength. A quiet confidence is returning to the bush, and for the first time in many years farmers are quietly looking forward to a couple of good seasons. Water storages are full, water allocations are likely to be fairly high, soil moisture profiles are full, springs are running, commodity prices are higher than they have been for some years, and farmers have been able to sell feed wheat this year for a similar price to milling wheat last year. Things are looking pretty rosy for the short term future in the bush.
Lamb prices are hitting new record highs nearly every week, wool prices are rising, there are strong cattle prices and cereal prices are looking pretty good - if only harvest could be completed, and trucks were able to access grain to get the cereal grains to the buyers. The inordinate amount of rain over summer has been great for farmers with stock as in many places there has been green feed all though summer. The rain has not been very welcome for grain growers as it has delayed harvest, much of the grain has been downgraded to feed, and in many cases trucks are not able to get to the on farm grain storages to get the grain to the buyers.
There is another looming problem caused by the rain as well. Due to the summer rain the vegetation that has
grown needs to be sprayed to enable sowing to take place in the next few months. If spray rigs can get onto paddocks (which has been a problem due to bogging), then the vegetation is so thick that in many cases it needs to be burnt to enable sowing to take place, but due to the soft soil conditions the fire tucks that are needed to ensure fires remain under control are getting bogged. Many farmers are also concerned that soil conditions are so soft that large areas of crop may not be able to be sown as paddocks will be damaged by bogging of the tractors and air seeders.
....the rain has not been very welcome for grain growers as it has delayed harvest, much of the grain has been downgraded to feed, and in many cases trucks are not able to get to the on farm grain storages to get the grain to the buyers....
To turn back to commodity prices - if commodity prices remain at their current high levels for a couple of seasons and seasonal conditions are good, then it is only a matter of time before farmers are back in the fame of mind to expand their operations and start looking over the fence and wanting to buy the place next door. With a couple of good seasons and strong commodity prices, farmers will recover quickly from the past eight or 10 years of drought, the flooding of 2010 and into 2011, and downgraded cereals, and start wanting to buy additional land. There is then likely to another time lag and prices of rural land will start easing upwards again. Prices of land in southern NSW and north eastern Victoria have been flat lining since about late-2007, and there is now some light at the end of the tunnel as far as land prices are concerned.
Contact:
David Shuter Ph: (02) 6041 1333
LeeToN
The Leeton and Griffith rural markets remain subdued with little change since last month. Good rainfall has reduced the need for irrigation water this season although this was not in short supply with the Murrumbidgee River flooding a number of times over the past few months. Grape harvest is well under way with reports of exceptional yields throughout the region. Rice harvest is on our doorstep with and expected bumper crop of some 800,000 tonnes-plus. This, combined with an increase in employment levels across the rural sector and related industry is only the start of our recovery from long term drought in the region.
RuRA
L
��
The month in review
RuRA
L
There continues uncertainty over the Murray Darling Basin Plan and water cuts and this is affecting buyer confidence in the region in general. There has been renewed interest in rural properties from corporate and private investors and although this is only interest at this time it is an indicator of good things to come on the rural scene. As expected the roll out of mortgagee sales has begun with a number of properties listed for sale by auction in recent weeks.
Contact:
Peter Gunn Ph: (02) 6953 8007
WAGGA WAGGA
The rural market in the Wagga Wagga and the surrounding areas are having a slow start to 2011 with few transactions taking place. The rain has continued to fall and the conditions have felt more like spring than late summer. The rural market in this area continues to be in a holding pattern, with most farmers looking to reduce debt before looking to expand their holdings with more property purchases. The cost of stock has also put a hold on expansion plans as the added cost of stocking any new property is currently very high.
Contact:
David Shuter Ph: (02) 6041 1333
CeNTRAL NSW
The rural property in Central and Western NSW has remained relatively subdue in the early part of 2011. enquiry levels are improving albeit from a very low base however this enquiry has not yet resulted in a significant increase in sales activity.
Seasonal conditions remain good with most areas having a good body of feed and near full soil moisture profiles. Part of the Western region is drying out and would benefit from autumn rainfall to plant the 2011 winter crop.
The recent sale of “Wingadee”, “Netherway”, “oxley”, “Mirrimba” and “Pier Pier” indicate that value levels are holding. upcoming auctions in the Narromine and Coonamble Districts will provide some guidance to the value of smaller rural cultivation land values in these districts.
Alternatively there appear limited demand at present for the smaller rural family farm. The prolonged drought has drained cash reserves of many land holders and current cash flow is going towards debt reduction, financing the 2011 crop, or undating on farm infrastructure. Land capital expansion appears to be low on the current list of many family farm operators. until this buyer segment reenters the market to any significant degree we would expect land values to remain flat, despite positive seasonal conditions and commodity prices.
A recent sale of a Macquarie River Irrigation access licence indicates a value of $1,250 per share. This is an interesting transaction in that it would be purchased by a private irrigator at the level the Government has been buying at.
Contact:
David Sullivan Ph: 0409 823 364
Regional Vic
MuRRAY RIVeRINA
The market for broadacre irrigation holdings remains static, however agents are reporting enquiry is improving. This would be expected with the general rural outlook much more positive on the back of excellent seasonal conditions and generally improved commodity prices. Whilst the harvest has been weather affected, the quality of the grain has been reasonable, allowing farmers to take advantage of good prices.
The market for dry grazing country has been static, however agents are reporting offers well in excess of recent levels of value, as buyers try to take advantage of the large body of feed available and the strong sheep prices.
We believe it is an excellent time to buy rural real estate and water as the market is soft but there could be a significant rise in the near future.
The dark clouds on the horizon at this point in time are the instability in the Middle east, the Japanese tsunami and the continuing debt crisis in europe
The market for general security class water (Murray Valley) has been hovering around $700 per unit (down from a high of $1200 per unit as a result of government buybacks), while the market for Murray Irrigation Limited water and delivery entitlements (general security class water) is around $550 per unit.
Agents have reported that parcels of water have been sold in the latest government tender (January 2011) at levels of around $850 per megalitre for general security water, however due to the ad hoc nature of the buybacks and tender process, these buybacks at this stage have little influence on the general water market, although this may change.
The next government tender is underway and it will be interesting to see how much general security water is purchased within the Murray Valley and at what price. If the government starts consistently buying large
��
The month in review
quantities at a reasonable price this will start influencing the market.
Contact:
John Henderson Ph: (03) 5480 2601
MuRRAY ouTBACK
The extent of damage from the recent extreme weather conditions is becoming more apparent, with a preliminary report by the Mildura Development Corporation suggesting the wine grape industry expects a 50% loss of production in the Sunraysia area. This is likely to equate to a $50 million loss of production and an expected loss of 200 jobs.
on the dried fruit scene, Dried Fruit Australia has downgraded production estimates from 16,000 tonnes to 10,000 tonnes or less – ‘the smallest dried fruit crop in decades’” which will also have an impact on job losses.
The broader concern for the region is the downward effect on the economy of the region with claims that for every one farm-gate dollar generally results in $6 of economic activity.
The citrus and almond industry suffered the least amount of damage, although it is still too early to predict table grape losses. early reports from citrus producers is that it looks like being a very good year with heavy crops evident already at this stage. Another concern for table grape producers is the amount of table grapes expected to be exported from Chile to Australia for the first time under the 2008 signed Australia–Chile Protocol.
Livestock, wool and grain prices continue their record runs, with wool in particular surging past previous record levels set back in January 1989 to close within 1350 cents per kilogram clean. It is noted that the wool price has now risen 47% since March 2010. other sectors to have risen over the past 12 months include lamb prices up 33%, the eastern Young Cattle Indicator up 17% and wheat prices up 50%.
....the broader concern for the region is the downward effect on the economy....
other news of note has been the draft Local environment Plan for the Wentworth Shire Council which has recently been placed on display for consultation and which has certainly caused some debate with rural land holders in particular. It is proposed that a 100m setback from major waterways (Darling and Murray River and the Darling Anabranch) be set in place for the construction of a dwelling, which may result in a significant detrimental effect on affected land values.
There have been no significant sales in the horticultural or pastoral sector over the past month, noting however that some station country within 140km of Mildura is listed for auction in early April and with the country looking the best it has for many years the results will provide for interesting analysis from previous levels.
Contact:
Shane Noonan Ph: (03) 5021 0455
SouTHeRN QLD
There has been continued limited activity within all rural markets within South east Queensland. The majority of farmers and grazers are currently at a point of assessing the actual damage to their individual properties from the December/January floods. It is expected that the full impacts of the flooding event on rural holdings won’t be known until those losses incurred are calculated. Apart from crop losses, considerable expenditure will be required on the farming asset itself, through conditioning of top soil from erosion, laser leveling and repairing contour bank, head ditches and storage tanks. The impacts of the floods will impede any short term recovery that may have been previously occurring within the rural market. There will also be issues concerning those that
have incurred crops losses and where producers are now required to meet forward contracts obligations. In some cases the livestock industry has fared much better, with generally minimal stock losses compared to their farming neighbours.
Although there is a high level of uncertainty and mixed perceptions within the rural market, given the lack of properties traded, attitudes will be critical in what happens from here. It’s not all considered doom and gloom. Going forward there is a strong underlying commodity basis in majority of all rural markets sectors. For instance, at present cotton is in excess of $900 per bale, with 2012 forward contracts in the vicinity of $660 per bale. Grain pricing, livestock and wool all remain strong, which will underpin values and assist the recovery within the rural market. So what is the upside of the recent floods?
• Water storages are full.
• Significant recharge in the ground water aquifers within the Lockyer Valley.
• excellent soil moisture profiles on the Downs.
• excellent feed base for grazers.
All these combined with strong commodity pricing will provide confidence for the rural industries to move forward. We expect the majority of 2011 to remain steady as producers deal with the unexpected costs of the floods but also there will be a period of debt consolidation. Although 2011 has started off tough, the fundamentals of good seasons and strong commodity prices will underpin values going forward this year. 2011 may therefore present real opportunities to those astute buyers within
RuRA
L
��
The month in review
the market on the Downs. Subject to continuing good seasons, we may also see a shift of demand towards broadacre farming properties, as historically the market between 2000 to 2007 was driven by cattle properties.
Contact:
Stephen Cameron Ph: (07) 4639 7600
NoRTHeRN QLD
Horticulture: Some farmers in the Bowen area are starting to spray out their weeds ready for planting beans now that some blocks are dry enough to get onto. The Bowen farmers are optimistic of good returns for their beans, tomatoes, capsicums. Last year was not good for these growers so many are hoping for a good year this year.
Sugar: In the past two weeks there has been a lot of rain in the cane growing areas. Ingham has been cut off and reports are that the bitumen is starting to break down with some roads becoming dangerous for drivers. This does not look too good for growers hoping to harvest their lay over cane. Time will tell though!
Grazing Industry: The Queensland Cattle Market Index (QCMI) is off to a great start for the year at more than 200 points. Last year the QCMI averaged 182 points for the year. The strongest annual average for the QCMI was in 2005 with 190 points.
At this stage only a few northern graziers have been able to capitalise on the strong cattle market with some great prices being paid for cows and calves in recent weeks. Demand from re stockers has been strong.
once the mustering season starts then the QCMI normally start its seasonal softening as weaners and fat cows are sold off. This year there may be some resistance to this trend if the demand for restocking continues.
....nce the mustering season starts then the QCMI normally start its seasonal softening as weaners and fat cows are sold off....
There is an incredible amount of fallen timber through the northern country in the path of Cyclone Yasi. Flying over it recently really brought home the reality that there is an incredible amount of work to be done clearing roads, fence lines etc before things can get back to business. even once these areas are cleaned up, riding through this country over the next couple of years will be challenging with the dead timber in the grass.
It is unfortunate that Japan has endured the recent earthquakes and tsunami events. Japan is one of our high valued beef export market. The recent events in Japan may prove to be a short term challenge for Australia as demand may soften. Alternative beef marketing arrangements may be required this year.
RuRA
L
There are positive reports from the marketing agent of Burlington near Mount Surprise receiving good interest. We look forward to reporting on this and other sales as the season unfolds.
Agribusiness: There is a continued demand for our industry presentations to our Agribusiness clients. We are both happy to keep making ourselves available to attend your premises (or ours) either across North Queensland (or in Brisbane) to provide either a market overview and discuss market dynamics. With some warning - we are both also available to provide researched topic presentations.
Contact:
Roger Hill Ph: (07) 4724 2000
CeNTRAL QLD
The property market in Central Queensland has remained subdued heading into the autumn months of 2011, with the rain continuing to interrupt the operational activities for both the agricultural and mining sectors throughout Central Queensland (CQ). Flood-affected farmers around Theodore and emerald are starting to get back on track and are replanting crops in the hope of salvaging some turnover out of this season.
There have been no prominent sales within CQ to date this year, however there does appear to have been a trickle of properties coming onto the market within the past couple of weeks.
There has also been increased interest in the State Government’s plans to lock up ‘strategic’ prime agricultural to protect it from mining and other activities, so that this valuable farming land is set aside for solely agricultural activities. This would provide landowners with protected areas increased certainty in their operations. Current draft plans indicate significant areas earmarked, particularly in Southern and Central Queensland.
Contact:
Will McLay Ph: (07) 4927 4655
��
The month in review
RuRA
L
NoRTHeRN TeRRIToRY
As the Top end and Kimberley enter the final phase of one of the wettest wet seasons in decades, the impact of much of that rain appears to be playing its part on the Top end rural property market.
In the Alice Springs district, the ‘best season in 20 years’ and high demand for slaughter and re-stocker cattle from the east (mainly Queensland due to the floods) is bringing record top prices and has also probably contributed to two strong pastoral sales from the region (details remain confidential at this stage but we will report on them next month). The Alice Springs district continues to be the most active region in the NT and values are holding up at reasonably high levels.
over in the Kimberley, the first pastoral sales in over three years are underway. A well regarded but remote desert block has contracted to an expanding Kimberley pastoralist for sale at a strong price although the property was never marketed for sale (again, the sale is awaiting Ministerial approval and details remain confidential at this stage – details next month).
....in the Alice Springs district, the ‘best season in 20 years’ and high demand for slaughter and re-stocker cattle from the east (mainly Queensland due to the floods) is bringing record top prices....
We can report on the sale of ‘Charnley River’ a remote 2979sqkm pastoral lease 500km north east of Broome and on the edge of the world renowned Buccaneer Archipelago which has sold to a supporter of the Australian Wildlife Conservancy (AWC) for a strong price. This reflects the reported high conservation values imbedded in this hard and remote but very scenic cattle station. The new owner will reportedly run the cattle operation, but they have delegated responsibility to the AWC for the protection of a 139,000ha management zone comprising remote mountain range and plateau country which is a stronghold for rare animal species whose numbers are in sharp decline. Rather than fully funding the purchase of these special cattle stations as they had done in the past, in the future AWC report that a purchase structure similar to the ‘Charnley River’ deal will be the likely way forward for acquiring more property – i.e. AWC ‘supporter’ buys the station and AWC manage the part with all the rare animals!
Nothing to report for the four Victoria River District cattle stations for sale (Killarney, Bunda-Inverway-Riveren) at this stage. Another three pastoral leases (smaller scale leases less than 600sqkm) have recently been listed in the Katherine/Daly Waters region to add to the existing supply bringing the number of pastoral leases for sale in the NT to around 28.
In other news, on the live cattle export front, the Indonesians are now more certain to want 500,000 head (from Australia) which means that NT/Kimberley
cattlemen will have to supply the market all year round to service that demand (125,000 head per quarter) which will be a challenge given stronger demand from the domestic market and wet season access issues. Several cattlemen are already readjusting their enterprises to meet the 350kg weigh limit by more accurate control of the herd to lessen the chance of going over the weight – although this is very difficult for many large leases further from port.
on the horticulture front, the office of the Gene Technology Regulator has approved an application from the Queensland university of Technology to grow genetically modified bananas in the Darwin Rural area. QuT has reportedly modified banana plants to be resistant to fusarium wilt (Panama disease) which has devastated the NT banana industry over the course of the past decade. While there is currently only one commercial scale banana plantation in the NT, there had been a significant banana industry prior to Panama. However, this single large banana farm exists is an insurance policy for their Innisfail parent company who sees Darwin as the perfect region to grow bananas to maintain supply if cyclones hit north Queensland, which is reportedly three times more likely than the banana growing region which is about 50km inland from the coast and Darwin city. This farm is likely to be the beneficiary of the massive undersupply of bananas from the main growing regions of Australia due to cyclone Yasi which wiped out 80% of the Queensland crop.
Contact:
Frank Peacocke Ph: (08) 8941 4833
��
The month in review
MA
RKeT
IND
ICAT
oRS
Comparative Property Market Indicators -March 2011
Comparative Analysis of Capital City Property Markets
To discuss the applicability of the Capital City indicators to individual properties or situations, contact your local Herron Todd White office:
Sydney (02) 9221 8911Melbourne (03) 9642 2000Brisbane Commercial (07) 3002 0900Brisbane Residential (07) 3353 7500Adelaide (08) 8231 6818Perth (08) 9388 9288Hobart (03) 6244 6795Darwin (08) 8941 4833Canberra (02) 6273 9888
Comparative Analysis of New South Wales/ACT Property Markets
To discuss the applicability of the NSW/ACT indicators to individual proper-ties or situations, contact your local Herron Todd White office:
Albury (02) 6041 1333Bathurst (02) 6334 4650Canberra/Queanbeyan (02) 6273 9888Dubbo (02) 6884 2999Gosford 1300 489 825Griffith (02) 6964 4222Leeton (02) 6953 8007Mudgee (02) 6372 7733Newcastle/Central Coast (02) 4929 3800Norwest (02) 8882 7100Sydney (02) 9221 8911Port Macquarie 1300 489 825Tamworth (02) 6766 9898Tweed Coast (02) 5523 2211Wagga Wagga (02) 6921 9303Wollongong (02) 4221 0205Young (02) 6382 5921
Comparative Analysis of Victorian/Tasmanian Markets
To discuss the applicability of the Victorian/Tasmanian indicators to individual properties or situations, contact your local Herron Todd White office:
Gippsland (Sale/Traralgon/Bairnsdale) (03) 5143 1880/ 03 5176 4300/ (03) 5152 6909Bendigo (03) 5480 2601Melbourne (03) 9642 2000Murray Mallee (Swan Hill) (03) 5032 1620Murray outback (Mildura) (03) 5021 0455Murray Riverina (echuca/Deniliquin) (03) 5480 2601/ (03) 5881 4947Wodonga (02) 6041 1333Hobart (03) 6244 6795Launceston (03) 6334 4997
The following pages present a generalised overview of the state of property markets in Capital City, New South Wales/ACT, Victoria/Tasmania, Queensland, South Australia/Northern Territory/Western Australia & MeNA locations using financing risk-rating scales. They are not a guide to individual property assessments.
For further information contact Richard Jenkins, Research Director, Herron Todd White, on (03) 9642 2000, or by email on [email protected]
�0
The month in review
MA
RKeT
IND
ICAT
oRS
Comparative Analysis of Queensland Property Markets
To discuss the applicability of the Queensland indicators to individual properties or situations, contact your local Herron Todd White office:
Brisbane Commercial (07) 3002 0900Brisbane Residential (07) 3353 7500Bundaberg/Wide Bay (07) 4154 3355Cairns (07) 4057 0200emerald (07) 4980 7738Gladstone (07) 4972 3833Gold Coast (07) 5584 1600Hervey Bay (07) 4124 0047Ipswich (07) 3282 9522Mackay (07) 4957 7348Rockhampton (07) 4927 4655Sunshine Coast (Mooloolaba) (07) 5444 7277Toowoomba (07) 4639 7600Townsville (07) 4724 2000Whitsunday (07) 4948 2157
Comparative Property Market Indicators - March 2011
Comparative Analysis of South Australia/Northern Territory/Western Australian Property Markets
To discuss the applicability of the South Australian/Northern Territory and Western Australian indicators to individual properties or situations, contact your local Herron Todd White office:
Adelaide (08) 8231 6818South West WA (Bunbury/Busselton) (08) 9791 6204/ (08) 9754 2982Perth (08) 9388 9288Darwin (08) 8941 4833
The following pages present a generalised overview of the state of property markets in Capital City, New South Wales/ACT, Victoria/Tasmania, Queensland, South Australia/Northern Territory/Western Australia & MeNA locations using financing risk-rating scales. They are not a guide to individual property assessments.
For further information contact Rick Carr, Research Director, Herron Todd White, on (07) 4057 0200, or by email on [email protected]
© Herron Todd White Copyright 2009No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.
markeT iNdiCaTors
The month in review
Capital City Property Market Indicators as at March 2011 – Houses
41
Capital City Property Market Indicators as at March 2011 – Houses Factor Sydney Melbourne Brisbane Adelaide Perth Hobart Darwin Canberra
Rental Vacancy Situation Shortage of available property relative to demand
Shortage of available property relative to demand - Balanced market
Balanced market Shortage of available property relative to demand
Balanced market Shortage of available property relative to demand
Balanced market Shortage of available property relative to demand
Rental Vacancy Trend Steady Steady Steady Steady Tightening Steady Steady Tightening
Demand for New Houses Fair Fair Fair Fair Fair Soft Fair Fair
Trend in New House Construction Steady Declining Steady Steady Steady Declining Steady Steady
Volume of House Sales Steady Steady - Declining Steady Steady Declining Steady Steady Declining
Stage of Property Cycle Bottom of market Peak of market - Declining market
Bottom of market Peak of market Declining market Declining market Peak of market - Declining market
Declining market
Are New Properties Sold at Prices Exceeding Their Potential Resale Value
Occasionally Occasionally Occasionally Occasionally Occasionally Occasionally Occasionally Almost never
Red entries indicate change from previous month to a higher risk-rating Blue entries indicate change from previous month to a lower risk-rating
Rental Vacancy Trend
0
1
2
3
4
5
6
Sydney
Melbourne
Brisbane
AdelaidePerth
Hobart
Darwin
Canberra
Increasing Sharply
Increasing
Steady
Tightening
Tightening Sharply
Stage of Property Cycle
0
1
2
3
4
5
6
Sydney
Melbourne
Brisbane
Ade laidePerth
Hobart
Darwin
Canberra
Declining M arket
Peak of M arket
Rising M arket
Bottom of M arket
Start o f Recovery
Demand for New Houses
0
1
2
3
4
5
6
Sydney
Melbourne
Brisbane
Ade laidePerth
Hobart
Darwin
Canberra
Very Soft
Soft
Fair
Strong
Very Strong
© Herron Todd White Copyright 2009No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.
markeT iNdiCaTors
The month in review
Capital City Property Market Indicators as at March 2011 – Units
42
Capital City Property Market Indicators as at March 2011 – Units Factor Sydney Melbourne Brisbane Adelaide Perth Hobart Darwin Canberra
Rental Vacancy Situation Shortage of available property relative to demand
Balanced market Balanced market Shortage of available property relative to demand
Balanced market Shortage of available property relative to demand
Over-supply of available property relative to demand
Shortage of available property relative to demand
Rental Vacancy Trend Steady Steady Steady Steady Tightening Steady Steady Tightening
Demand for New Units Fair Soft - Fair Fair Fair Fair Soft Fair Fair
Trend in New Unit Construction Increasing Declining - Steady Steady Steady Steady Declining Steady Steady
Volume of Unit Sales Steady Steady - Declining Steady Steady Declining Steady Steady Declining
Stage of Property Cycle Bottom of market Peak of market - Declining market
Bottom of market Peak of market Declining market Declining market Declining market Declining market
Are New Properties Sold at Prices Exceeding Their Potential Resale Value
Frequently Occasionally Occasionally Occasionally Occasionally Occasionally Occasionally Almost never
Red entries indicate change from previous month to a higher risk-rating Blue entries indicate change from previous month to a lower risk-rating
Rental Vacancy Trend
0
1
2
3
4
5
6
Sydne
y
Melbou
rne
Brisba
ne
Adelai
dePert
hHob
art
Darwin
Canbe
rra
Increasing Sharply
Increasing
Steady
Tightening
Tightening Sharply
Stage of Property Cycle
0
1
2
3
4
5
6
Sydne
y
Melbou
rne
Brisba
ne
Adelaid
ePert
hHob
art
Darwin
Canbe
rra
Declining M arket
Peak o f M arket
Rising M arket
Bottom of M arket
Start of Recovery
Demand for New Units
0
1
2
3
4
5
6
Sydney
Melbourne
Brisbane
Ade laidePerth
Hobart
Darwin
Canberra
Very Soft
Soft
Fair
Strong
Very Strong
© Herron Todd White Copyright 2009No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.
markeT iNdiCaTors
The month in review
1
Capital City Property Market Indicators as at March 2011– Industrial
43
Capital City Property Market Indicators as at March 2011 – Industrial Factor Sydney Melbourne Brisbane Adelaide Perth Hobart Darwin Canberra
Rental Vacancy Situation Over-supply of available property relative to demand
Balanced market - Over-supply of available property relative to demand
Balanced market Balanced market Over-supply of available property relative to demand
Balanced market Over-supply of available property relative to demand
Balanced market
Rental Vacancy Trend Steady Steady Tightening Steady Steady Steady Increasing Increasing
Rental Rate Trend Stable Stable Stable Stable Stable Stable Stable Declining
Volume of Property Sales Declining Increasing - Steady Increasing Declining Steady Declining Declining Steady
Stage of Property Cycle Bottom of market - Rising market
Bottom of market - Rising market
Start of recovery Peak of market Start of recovery Declining market Declining market Rising market
Local Economic Situation Flat Steady growth Steady growth Flat Steady growth Contraction Steady growth Contraction
Value Difference between Quality Properties with National Tenants, and Comparable Properties with Local Tenants
Significant Significant - Large Significant Significant Significant Small Significant Large
Red entries indicate change from 3 months ago to a higher risk-rating Blue entries indicate change from 3 months ago to a lower risk-rating
Rental Vacancy Trend
0
1
2
3
4
5
6
Sydney
Melbourne
Brisbane
AdelaidePerth
Hobart
Darwin
Canberra
Increasing
Sharply
Increasing
Steady
Tightening
Tightening
Sharply
Stage of Property Cycle
0
1
2
3
4
5
6
Sydney
Melbourne
Brisbane
Ade laidePerth
Hobart
Darwin
Canberra
Declining M arket
Peak of M arket
Rising M arket
Bottom of
M arket
Start o f Recovery
Local Economic Situation
0
1
2
3
4
5
6
Sydney
Melbourne
Brisbane
AdelaidePerth
Hobart
Darwin
Canberra
Severe Contraction
Contraction
Flat
Steady Growth
High Growth
© Herron Todd White Copyright 2009No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.
markeT iNdiCaTors
The month in review
New South Wales Property Market Indicators as at March 2011 – Houses
44
New South Wales Property Market Indicators as at March 2011 – Houses
Factor Albury BathurstCan-berra/ Q’beyan
Central Coast Dubbo Griffith Mudge
e New-castle Orange Sydney Tam-
worth NSW Far Nth Coast
Wagga Wagga
Wollon-gong
Rental Vacancy Situation Shortage of available property relative to demand - Balanced market
Severe shortage of available property relative to demand
Shortage of available property relative to demand
Shortage of available property relative to demand - Balanced market
Shortage of available property relative to demand
Shortage of available property relative to demand
Shortage of available property relative to demand
Severe shortage of available property relative to demand
Severe shortage of available property relative to demand
Shortage of available property relative to demand
Shortage of available property relative to demand
Balanced market
Balanced market
Shortage of available property relative to demand - Balanced market
Rental Vacancy Trend Tightening - Steady
Tightening Tightening Steady Tightening Tightening Steady Steady Tightening Steady Tightening Steady Steady Tightening - Steady
Demand for New Houses Fair Strong Fair Soft Fair Soft Fair Soft Strong Fair Fair Fair Strong Fair
Trend in New House Construction Steady Increasing Steady Declining Declining significantly
Steady Steady Declining Increasing Steady Declining - Steady
Declining - Steady
Steady Steady
Volume of House Sales Declining Increasing Declining Steady Steady Steady Steady Declining Increasing Steady Increasing Steady - Declining
Steady Steady
Stage of Property Cycle Bottom of market
Rising market
Declining market
Bottom of market
Rising market
Bottom of market
Rising market
Peak of market
Rising market
Bottom of market
Rising market - Peak of market
Bottom of market - Rising market
Declining market
Rising market - Peak of market
Are New Properties Sold at Prices Exceeding Their Potential Resale Value
Occasion-ally
Occasion-ally
Almost never
Occasion-ally
Almost never
Occasionally Almost never
Occasion-ally
Occasion-ally
Occasion-ally
Occasion-ally
Occasion-ally - Frequently
Occasion-ally
Occasion-ally
Red entries indicate change from previous month to a higher risk-rating Blue entries indicate change from previous month to a lower risk-rating
Rental Vacancy Trend
0
1
2
3
4
5
6
Albury
Bathurst
C'berra
/ Q'be
yan
Centra
l Coast
DubboGriff
ith
Mudgee
NewcastleOrange
Sydney
Tamworth
NSWFa
r Nth
Coast
Wagga Wag
ga
Illawarra
Increasing Sharply
Increasing
Steady
Tightening
Tightening Sharply
Stage of Property Cycle
0
1
2
3
4
5
6
Albury
Bathurst
C'berra/ Q
'beyan
Central C
oastDubbo
Griffith
Mudgee
NewcastleOrange
Sydney
Tamworth
NSW Far Nth Coast
Wagga Wagga
Illawarra
Declining M arket
Peak of M arket
Rising M arket
Bottom of M arket
Start o f Recovery
Demand for New Houses
0
1
2
3
4
5
6
Albury
Bathurst
C'berra/ Q
'beyan
Central C
oastDubbo
Griffith
Mudgee
NewcastleOrange
Sydney
Tamworth
NSW Far Nth Coast
Wagga Wagga
Illawarra
Very Soft
Soft
Fair
Strong
Very Strong
© Herron Todd White Copyright 2009No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.
markeT iNdiCaTors
The month in review
New South Wales Property Market Indicators as at March 2011 – Units
45
New South Wales Property Market Indicators as at March 2011 – Units
Factor Albury BathurstCan-berra/ Q’beyan
Central Coast Dubbo Griffith Mudgee New-
castle Orange Sydney Tam-worth
NSW Far Nth Coast
Wagga Wagga
Wollon-gong
Rental Vacancy Situation Shortage of available property relative to demand - Balanced market
Severe shortage of available property relative to demand
Shortage of available property relative to demand
Shortage of available property relative to demand - Balanced market
Shortage of available property relative to demand - Balanced market
Balanced market
Shortage of available property relative to demand
Balanced market
Severe shortage of available property relative to demand
Shortage of available property relative to demand
Shortage of available property relative to demand
Balanced market
Balanced market
Shortage of available property relative to demand - Balanced market
Rental Vacancy Trend Tightening - Steady
Tightening Tightening Steady Steady Steady Steady Steady Tightening Steady Tightening Steady Steady Tightening - Steady
Demand for New Units Fair Fair Fair Soft Soft Soft Fair Soft Fair Fair Fair Soft - Fair Soft Fair
Trend in New Unit Construction Steady Steady Steady Declining Declining Declining Steady Declining Steady Increasing Declining Declining - Steady
Steady Declining - Steady
Volume of Unit Sales Declining Increasing Declining Steady Steady Declining Steady Declining Increasing Steady Increasing Steady - Declining
Steady Steady
Stage of Property Cycle Bottom of market
Start of recovery
Declining market
Bottom of market
Bottom of market
Bottom of market
Rising market
Declining market
Rising market
Bottom of market
Rising market - Peak of market
Bottom of market - Rising market
Declining market
Rising market - Peak of market
Are New Properties Sold at Prices Exceeding Their Potential Resale Value
Occasion-ally
Occasion-ally
Almost never
Occasion-ally
Occasion-ally
Occasion-ally
Almost never
Almost never
Occasion-ally
Frequently Occasion-ally
Occasion-ally - Frequently
Occasionally
Occasion-ally
Red entries indicate change from previous month to a higher risk-rating Blue entries indicate change from previous month to a lower risk-rating
Rental Vacancy Trend
0
1
2
3
4
5
6
Albury
Bathurs
t
C'berra
/ Q'be
yan
Centra
l Coa
st
Dubbo
Griffith
Mudgee
Newca
stle
Orange
Sydne
y
Tamwort
h
NSW Fa
r Nth
Coast
Wagga Wag
ga
Illawarr
a
Increasing Sharply
Increasing
Steady
Tightening
Tightening Sharply
Stage of Property Cycle
0
1
2
3
4
5
6
Albury
Bathurst
C'berra/ Q
'beyan
Central C
oast
DubboGriff
ith
Mudgee
Newcastle
Orange
Sydney
Tamworth
NSW Far Nth
Coast
Wagga W
agga
Illawarra
Declining M arket
Peak of M arket
Rising M arket
Bottom of M arket
Start o f Recovery
Demand for New Units
0
1
2
3
4
5
6
Albury
Bathurst
C'berra/ Q'beya
n
Central C
oast
DubboGriff
ith
Mudgee
Newcastle
Orange
Sydney
Tamworth
NSW Far Nth
Coast
Wagga Wagga
Illawarra
Very Soft
Soft
Fair
Strong
Very Strong
© Herron Todd White Copyright 2009No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.
markeT iNdiCaTors
The month in review
New South Wales Property Market Indicators as at March 2011 – Industrial
46
New South Wales Property Market Indicators as at March 2011 – Industrial
Factor Albury BathurstCan-berra/ Q’beyan
Central Coast Dubbo Griffith Mudgee New-
castle Orange Sydney Tam-worth
NSW Far Nth Coast
Wagga Wagga
Wollon-gong
Rental Vacancy Situation Balanced market
Over-supply of available property relative to demand
Balanced market
Over-supply of available property relative to demand - Large over-supply of available property relative to demand
Over-supply of available property relative to demand
Over-supply of available property relative to demand
Over-supply of available property relative to demand
Over-supply of available property relative to demand
Balanced market
Over-supply of available property relative to demand
Balanced market - Over-supply of available property relative to demand
Balanced market
Over-supply of available property relative to demand
Over-supply of available property relative to demand
Rental Vacancy Trend Steady Steady Increasing Steady Increasing Steady Steady Steady Tightening Steady Steady - Increasing
Steady Increasing Steady
Rental Rate Trend Stable Stable Declining Stable Declining Stable Stable Declining Stable Stable Declining - Stable
Stable Stable Stable
Volume of Property Sales Declining Steady Steady Steady Steady Declining Steady Steady Increasing Declining Declining Declining Increasing Declining
Stage of Property Cycle Bottom of market
Peak of market
Rising market
Bottom of market
Start of recovery
Bottom of market
Bottom of market
Bottom of market
Rising market
Bottom of market - Rising market
Rising market - Peak of market
Bottom of market - Rising market
Bottom of market
Bottom of market
Local Economic Situation Flat Flat Contrac-tion
Flat Flat Flat Flat Flat Steady growth
Flat Steady growth
Flat Flat Flat
Value Difference between Quality Properties with National Tenants, and Comparable Properties with Local Tenants
Significant Significant Large Small Significant Large Significant
Significant Small - Significant
Significant Significant Small - Significant
Significant Significant
Red entries indicate change from 3 months ago to a higher risk-rating Blue entries indicate change from 3 months ago to a lower risk-rating
Rental Vacancy Trend
0
1
2
3
4
5
6
Albury
Bathurst
C'berra/Q'beyan
Central C
oastDubbo
Leeton
Mudgee
NewcastleOrange
Sydney
Tamworth
NSW Far Nth Coast
Wagga Wagga
Illawarra
Increasing Sharply
Increasing
Steady
Tightening
Tightening Sharply
Stage of Property Cycle
0
1
2
3
4
5
6
Albury
Bathurst
C'berra/Q'beyan
Central C
oastDubbo
Leeton
Mudgee
NewcastleOrange
Sydney
Tamworth
NSW Far Nth Coast
Wagga Wagga
Illawarra
Declining M arket
Peak o f M arket
Rising M arket
Bottom o f M arket
vStart o f Recovery
Local Economic Situation
0
1
2
3
4
5
6
Albury
Bathurst
C'berra/Q'beyan
Central C
oastDubbo
Leeton
Mudgee
NewcastleOrange
Sydney
Tamworth
NSW Far Nth Coast
Wagga Wagga
Illawarra
Severe Contractiont
Contraction
Flat
Steady Growth
High Growth
The month in review
© Herron Todd White Copyright 2009No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.
markeT iNdiCaTors
Victoria/Tasmania Property Market Indicators as at March 2011 – Houses
47
Victorian and Tasmanian Property Market Indicators as at March 2011 – Houses
Factor Bendigo Echuca Gippsland Melbourne Mildura Wangaratta Warrnam-bool
Wodonga Burnie -Devonport Hobart Launceston
Rental Vacancy Situation Severe shortage of available property relative to demand
Severe shortage of available property relative to demand
Shortage of available property relative to demand
Shortage of available property relative to demand - Balanced market
Shortage of available property relative to demand
Balanced market
Shortage of available property relative to demand - Balanced market
Shortage of available property relative to demand - Balanced market
Shortage of available property relative to demand
Shortage of available property relative to demand
Shortage of available property relative to demand
Rental Vacancy Trend Tightening sharply
Tightening sharply
Steady Steady Tightening Steady Tightening Tightening - Steady
Steady Steady Steady
Demand for New Houses Fair Fair Strong Fair Fair Fair Fair - Strong Fair - Strong Soft Soft Soft
Trend in New House Construction Steady Steady Steady Declining Steady Steady Steady Declining - Steady
Declining Declining Declining
Volume of House Sales Steady Steady Steady Steady - Declining
Steady Declining Steady Steady Steady Steady Steady
Stage of Property Cycle Rising market Rising market Peak of market Peak of market - Declining market
Bottom of market
Bottom of market
Rising market Bottom of market
Declining market
Declining market
Declining market
Are New Properties Sold at Prices Exceeding Their Potential Resale Value
Almost never Almost never Occasionally Occasionally Almost never Occasionally Almost never Occasionally Occasionally Occasionally Occasionally
Red entries indicate change from previous month to a higher risk-rating Blue entries indicate change from previous month to a lower risk-rating
Rental Vacancy Trend
0
1
2
3
4
5
6
Bendig
o
Echuc
a
Gippsla
nd
Melbou
rne
Mildura
Wangara
tta
Warrnam
bool
Wodong
a
Burnie-
Devonp
ort
Hobart
Laun
cesto
n
Increasing Sharply
Increasing
Steady
Tightening
Tightening Sharply
Stage of Property Cycle
0
1
2
3
4
5
6
Bendig
o
Echuc
a
Gippsla
nd
Melbou
rne
Mildura
Wangara
tta
Warrnam
bool
Wodong
a
Burnie-
Devonp
ort
Hobart
Laun
cesto
n
Declining M arket
Peak o f M arket
Rising M arket
Bottom o f M arket
Start o f Recovery
Demand for New Houses
0
1
2
3
4
5
6
Bendig
o
Echuc
a
Gippsla
nd
Melbou
rne
Mildura
Wangara
tta
Warrnam
bool
Wodong
a
Burnie-
Devonp
ort
Hobart
Laun
cesto
n
Very Soft
Soft
Fair
Strong
Very Strong
© Herron Todd White Copyright 2009No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.
markeT iNdiCaTors
The month in review
Victoria/Tasmania Property Market Indicators as at March 2011 – Units
48
Victorian and Tasmanian Property Market Indicators as at March 2011 – Units
Factor Bendigo Echuca Gippsland Melbourne Mildura Wangaratta Warrnam-bool
Wodonga Burnie -Devon-port Hobart Laun-
ceston Rental Vacancy Situation Severe
shortage of available property relative to demand
Severe shortage of available property relative to demand
Shortage of available property relative to demand
Balanced market
Shortage of available property relative to demand
Balanced market
Shortage of available property relative to demand - Balanced market
Balanced market
Shortage of available property relative to demand
Shortage of available property relative to demand
Shortage of available property relative to demand
Rental Vacancy Trend Tightening sharply
Tightening sharply
Steady Steady Tightening Steady Tightening Tightening - Steady
Steady Steady Steady
Demand for New Units Fair Fair Strong Soft - Fair Fair Fair Fair - Strong Fair - Strong Soft Soft Soft
Trend in New Unit Construction Steady Steady Steady Declining - Steady
Steady Steady Steady Declining - Steady
Declining Declining Declining
Volume of Unit Sales Steady Steady Steady Steady -Declining
Steady Declining Steady Steady Steady Steady Steady
Stage of Property Cycle Rising market Rising market Peak of market
Peak of market - Declining market
Bottom of market
Bottom of market
Rising market Bottom of market
Declining market
Declining market
Declining market
Are New Properties Sold at Prices Exceeding Their Potential Resale Value
Almost never Almost never Occasionally Occasionally Almost never Occasionally Almost never Occasionally Occasionally Occasionally Occasionally
Red entries indicate change from previous month to a higher risk-rating Blue entries indicate change from previous month to a lower risk-rating
Rental Vacancy Trend
0
1
2
3
4
5
6
Bendig
o
Echuc
a
Gippsla
nd
Melbou
rne
Mildura
Wangara
tta
Warrnam
bool
Wodong
a
Burni
e-Devo
nport
Hobart
Laun
cesto
n
Increasing Sharply
Increasing
Steady
Tightening
Tightening Sharply
Stage of Property Cycle
0
1
2
3
4
5
6
Bendig
o
Echuc
a
Gippsla
nd
Melbou
rne
Mildura
Wangara
tta
Warrnam
bool
Wodong
a
Burnie-
Devonp
ort
Hobart
Laun
cesto
n
Declining M arket
Peak of M arket
Rising M arket
Bottom of M arket
Start of Recovery
Demand for New Units
0
1
2
3
4
5
6
Bendig
o
Echuc
a
Gippsla
nd
Melbou
rne
Mildura
Wangara
tta
Warrnam
bool
Wodong
a
Burnie-
Devonpo
rt
Hobart
Laun
ceston
Very Soft
Soft
Fair
Strong
Very Strong
© Herron Todd White Copyright 2009No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.
markeT iNdiCaTors
The month in review
Victoria/Tasmania Property Market Indicators as at March 2011 – Industrial
49
Victorian and Tasmanian Property Market Indicators as at March 2011 – Industrial
Factor Bendigo Echuca Gippsland Melbourne Mildura Wangaratta Warrnam-bool
Wodonga Burnie -Devon-port Hobart Laun-
ceston Rental Vacancy Situation Balanced
market Balanced market
Balanced market
Balanced market - Over-supply of available property relative to demand
Over-supply of available property relative to demand
Balanced market
Shortage of available property relative to demand
Balanced market
Balanced market
Balanced market
Balanced market
Rental Vacancy Trend Steady Steady Steady Steady Steady Steady Steady Steady Steady Steady Steady
Rental Rate Trend Stable Stable Stable Stable Stable Stable Stable Stable Stable Stable Stable
Volume of Property Sales Steady Steady Declining Increasing - Steady
Declining Declining Declining Declining Declining Declining Declining
Stage of Property Cycle Rising market Rising market Start of recovery
Bottom of market - Rising market
Bottom of market
Bottom of market
Bottom of market
Bottom of market
Declining market
Declining market
Declining market
Local Economic Situation Flat Flat Contraction Steady growth Contraction Flat Flat Flat Contraction Contraction Contraction
Value Difference between Quality Properties with National Tenants, and Comparable Properties with Local Tenants
Small Small Nil Significant - Large
Significant Significant Significant Significant Small Small Small
Red entries indicate change from 3 months ago to a higher risk-rating Blue entries indicate change from 3 months ago to a lower risk-rating
Rental Vacancy Trend
0
1
2
3
4
5
6
Albury
Bathurst
C'berra/Q'beyan
Central C
oast
DubboLeeton
Mudgee
Newcastle
Orange
Sydney
Tamworth
NSWFar N
th Coast
Wagga Wagga
Illawarra
Increasing Sharply
Increasing
Steady
Tightening
Tightening Sharply
Stage of Property Cycle
0
1
2
3
4
5
6
Albury
Bathurst
C'berra/Q'beyan
Central C
oastDubbo
Leeton
Mudgee
NewcastleOrange
Sydney
Tamworth
NSW Far Nth Coast
Wagga Wagga
Illawarra
Declining M arket
Peak of M arket
Rising M arket
Bottom of M arket
vStart of Recovery
Local Economic Situation
0
1
2
3
4
5
6
Albury
Bathurst
C'berra/Q'beyan
Central C
oastDubbo
Leeton
Mudgee
NewcastleOrange
Sydney
Tamworth
NSW Far Nth Coast
Wagga Wagga
Illawarra
Severe Contractiont
Contraction
Flat
Steady Growth
High Growth
© Herron Todd White Copyright 2009No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.
markeT iNdiCaTors
The month in review
Queensland Property Market Indicators as at March 2011 – Houses
50
Queensland Property Market Indicators as at March 2011 – Houses
Factor Cairns Towns-ville
Whit-sunday Mackay Rock-
hampton Emerald Glad–stone
Bunda-berg
Hervey Bay
Sun-shine Coast
Brisbane Gold Coast Ipswich Too-
woombaRental Vacancy Situation Balanced
market Balanced market
Shortage of available property relative to demand
Shortage of available property relative to demand
Balanced market
Severe shortage of available property relative to demand
Shortage of available property relative to demand
Balanced market
Shortage of available property relative to demand
Over-supply of available property relative to demand
Balanced market
Over-supply of available property relative to demand
Shortage of available property relative to demand
Shortage of available property relative to demand
Rental Vacancy Trend Tightening Steady Tightening Tightening Steady Tightening sharply
Tightening Steady Tightening Steady Steady Increasing Tightening Tightening
Demand for New Houses Soft Fair Fair Fair Fair Fair Very strong Soft - Fair Fair Soft Fair Soft Soft Soft
Trend in New House Construction
Declining Steady - Increasing
Increasing Steady Declining Steady Increasing Steady Declining Declining Steady Declining Declining Declining
Volume of House Sales Steady Steady Steady Steady Declining Steady Increasing Steady - Declining
Steady - Declining
Declining Steady Declining Declining Steady
Stage of Property Cycle Bottom of market
Start of recovery
Bottom of market
Rising market
Bottom of market
Rising market
Rising market
Bottom of market
Declining market
Bottom of market
Bottom of market
Declining market
Bottom of market
Rising market
Are New Properties Sold at Prices Exceeding Their Potential Resale Value
Occasion-ally
Occasion-ally
Almost never
Occasion-ally
Occasion-ally
Occasion-ally
Occasion-ally
Occasion-ally
Occasion-ally
Occasion-ally
Occasion-ally
Occasion-ally
Frequently Occasion-ally
Red entries indicate change from previous month to a higher risk-rating Blue entries indicate change from previous month to a lower risk-rating
Rental Vacancy Trend
0
1
2
3
4
5
6
Cairns
Townsville
Whitsunday
Mackay
Rockhampton
Emerald
Gladstone
Bundaberg
Hervey Bay
Sunshine Coast
Brisbane
Gold Coast
Ipswich
Toowoomba
Increasing Sharply
Increasing
Steady
Tightening
Tightening Sharply
Stage of Property Cycle
0
1
2
3
4
5
6
Cairns
Townsv il le
Wh itsundayMackay
Rockham ptonEmerald
Gladstone
Bundaberg
Hervey Bay
Sunshine Coast
Brisbane
Gold Coast
Ipswich
Toowoomba
Declining M arket
Peak of M arket
Rising M arket
Bottom of M arket
Start o f Recovery
Demand for New Houses
0
1
2
3
4
5
6
Cairns
Townsv ille
Wh itsundayMackay
Rockham ptonEm erald
G ladstone
Bundaberg
Hervey Bay
Sunshine CoastBrisbane
Gold CoastIpswich
Toowoomba
Very SoftSoft
Fair
Strong
Very Strong
© Herron Todd White Copyright 2009No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.
markeT iNdiCaTors
The month in review
Queensland Property Market Indicators as at March 2011 – Units
51
Queensland Property Market Indicators as at March 2011 – Units
Factor Cairns Towns-ville
Whit-sunday Mackay Rock-
hampton Emerald Glad-stone
Bunda-berg
Hervey Bay
Sun-shine Coast
Brisbane Gold Coast Ipswich Too-
woombaRental Vacancy Situation Balanced
market Balanced market
Over-supply of available property relative to demand
Shortage of available property relative to demand
Shortage of available property relative to demand
Severe shortage of available property relative to demand
Shortage of available property relative to demand
Balanced market
Balanced market
Over-supply of available property relative to demand
Balanced market
Over-supply of available property relative to demand
Shortage of available property relative to demand
Shortage of available property relative to demand
Rental Vacancy Trend Tightening Steady Steady Tightening Steady Tightening sharply
Tightening Steady Steady Steady Steady Increasing Tightening Tightening
Demand for New Units Soft Fair Soft Fair Fair Fair Strong Very soft Very soft Soft Fair Very soft Soft Fair
Trend in New Unit Construction
Declining Steady - Increasing
Declining significantly
Steady Steady Steady Increasing Declining significantly
Declining significantly
Declining significantly
Steady Declining Declining Declining
Volume of Unit Sales Steady Steady Steady Steady Steady Steady Increasing Increasing - Steady
Steady Declining Steady Declining Declining Steady
Stage of Property Cycle Bottom of market
Start of recovery
Bottom of market
Rising market
Bottom of market
Bottom of market
Rising market
Bottom of market
Declining market
Bottom of market
Bottom of market
Declining market
Bottom of market
Rising market
Are New Properties Sold at Prices Exceeding Their Potential Resale Value
Occasion-ally
Occasion-ally
Almost never
Occasion-ally
Almost never
Occasion-ally
Occasion-ally
Occasion-ally
Occasion-ally
Occasion-ally
Occasion-ally
Frequently Frequently Occasion-ally
Red entries indicate change from previous month to a higher risk-rating Blue entries indicate change from previous month to a lower risk-rating
Rental Vacancy Trend
0
1
2
3
4
5
6
Cairns
Townsvi
lle
Whitsunda
y
Mackay
Rockha
mpton
Emerald
Gladston
e
Bunda
berg
Hervey B
ay
Sunshi
ne Coa
st
Brisba
ne
Gold Coast
Ipswich
Toowoo
mba
Increasing Sharply
Increasing
Steady
Tightening
Tightening Sharply
Stage of Property Cycle
0
1
2
3
4
5
6
Cairns
Townsville
Wh itsunday
Mackay
Rockhampton
Emerald
Gladstone
Bundaberg
Hervey Bay
Sunshine Coast
Brisbane
Gold Coast
Ipswich
Toowoomba
Declining M arket
Peak o f M arket
Rising M arket
Bottom o f M arket
Start of Recovery
Demand for New Units
0
1
2
3
4
5
6
Cairns
Townsville
Wh itsundayMackay
Rockhampton
Emerald
Gladstone
Bundaberg
Hervey Bay
Sunshine Coast
Brisbane
Gold Coast
Ipswich
Toowoomba
Very Soft
Soft
Fair
Strong
Very Strong v
© Herron Todd White Copyright 2009No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.
markeT iNdiCaTors
The month in review
Queensland Property Market Indicators as at March 2011 – Industrial
52
Queensland Property Market Indicators as at March 2010 – Industrial Factor Cairns Townsville Mackay Rock-
hampton Gladstone Bundaberg Hervey Bay
Sunshine Coast Brisbane Gold Coast Too-
woomba Rental Vacancy Situation Balanced
market - Over-supply of available property relative to demand
Over-supply of available property relative to demand
Balanced market
Balanced market
Balanced market
Balanced market - Over-supply of available property relative to demand
Over-supply of available property relative to demand
Balanced market - Over-supply of available property relative to demand
Balanced market
Over-supply of available property relative to demand
Balanced market
Rental Vacancy Trend Steady Steady Steady Steady Steady Increasing Steady - Increasing
Increasing Tightening Steady - Increasing
Steady
Rental Rate Trend 63.5 Stable Stable Stable Stable Declining - Stable
Declining - Stable
Declining Stable Stable Stable
Volume of Property Sales Steady Steady Steady Steady Steady Declining Steady Steady Increasing Steady Steady
Stage of Property Cycle Bottom of market
Bottom of market
Stable Rising market Bottom of market
Declining market
Declining market
Declining market
Start of recovery
Bottom of market
Declining market
Local Economic Situation Flat Flat Steady growth Flat Steady growth Steady growth - Flat
Flat - Contrac-tion
Contraction Steady growth Contraction Flat
Value Difference between Quality Properties with National Tenants, and Comparable Properties with Local Tenants
Small Small Small Small Significant 0 Significant Significant Significant Significant - Large
Small - Significant
Red entries indicate change from 3 months ago to a higher risk-rating Blue entries indicate change from 3 months ago to a lower risk-rating
Rental Vacancy Trend
0
1
2
3
4
5
6
Cairns
TownsvilleMackay
Rockhampton
Gladstone
Bundaberg
Hervey Bay
Sunshine Coast
Brisbane
Gold Coast
Toowoomba
Increasing Sharply
Increasing
Steady
Tightening
Tightening Sharply
Stage of Property Cycle
0
1
2
3
4
5
6
Cairns
Townsvil leMackay
Rockhampton
Gladstone
Bundaberg
Hervey Bay
Sunshine Coast
Brisbane
Gold Coast
Toowoomba
Declining M arket
Peak of M arket
Rising M arket
Bottom of M arket
Start of Recovery
Local Economic Situation
0
1
2
3
4
5
6
Cairns
Townsville
Mackay
Rockhampton
Gladstone
Bundaberg
Hervey Bay
Sunshine Coast
Brisbane
Gold Coast
Toowoomba
Severe Contraction
Contraction
Flat
Steady Growth
High Growth
The month in review
© Herron Todd White Copyright 2009No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.
markeT iNdiCaTors
Northern Territory, South Australia & Western Australia Property Market Indicators as at March 2011 – Houses
53
SA, NT and WA Property Market Indicators as at March 2011 – Houses Factor Adelaide Adelaide
Hills Barossa Valley Iron Triangle Alice Springs Darwin South West
WA Perth
Rental Vacancy Situation Shortage of available property relative to demand
Shortage of available property relative to demand
Shortage of available property relative to demand
Over-supply of available property relative to demand
Balanced market Balanced market Shortage of available property relative to demand
Balanced market
Rental Vacancy Trend Steady Tightening Tightening Increasing sharply
Steady Steady Tightening Tightening
Demand for New Houses Fair Fair Strong Soft Fair Fair Soft Fair
Trend in New House Construction Steady Steady Increasing Increasing Steady Steady Declining Steady
Volume of House Sales Steady Steady Declining Declining Steady Steady Steady Declining
Stage of Property Cycle Peak of market Peak of market Peak of market Peak of market Peak of market - Declining market
Peak of market - Declining market
Bottom of market Declining market
Are New Properties Sold at Prices Exceeding Their Potential Resale Value
Occasionally Occasionally Occasionally Almost never Occasionally Occasionally Almost never Occasionally
Red entries indicate change from 3 months ago to a higher risk-rating Blue entries indicate change from 3 months ago to a lower risk-rating
Rental Vacancy Trend
0
1
2
3
4
5
6
Ade laide
Ade laide Hills
Barossa Valley
Iron Triangle
Alice Springs
Darwin
Sou th West W
APerth
Increasing Sharply
Increasing
Steady
Tightening
Tightening Sharply
Stage of Property Cycle
0
1
2
3
4
5
6
Ade laide
Ade laide Hills
Barossa Valley
Iron Triangle
Alice Springs
Darwin
Sou th West W
APerth
Declining M arket
Peak of M arket
Rising M arket
Bottom of M arket
Start o f Recovery
Demand for New Houses
0
1
2
3
4
5
6
Ade laide
Ade laide Hills
Barossa Valley
Iron Triangle
Alice Springs
Darwin
Sou th West W
A Perth
Very Soft
Soft
Fair
Strong
Very Strong
© Herron Todd White Copyright 2009No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.
markeT iNdiCaTors
The month in review
Northern Territory, South Australia & Western Australia Property Market Indicators as at March 2011 – Units
54
SA, NT and WA Property Market Indicators as at March 2011 – Units Factor Adelaide Adelaide
Hills Barossa Valley Iron Triangle Alice Springs Darwin South West
WA Perth
Rental Vacancy Situation Shortage of available property relative to demand
Shortage of available property relative to demand
Shortage of available property relative to demand
Over-supply of available property relative to demand
Over-supply of available property relative to demand
Over-supply of available property relative to demand
Shortage of available property relative to demand
Balanced market
Rental Vacancy Trend Steady Tightening Tightening Increasing sharply
Steady Steady Tightening Tightening
Demand for New Units Fair Fair Strong Soft Fair Fair Soft Fair
Trend in New Unit Construction Steady Steady Increasing Increasing Steady Steady Declining Steady
Volume of Unit Sales Steady Steady Declining Declining Steady Steady Steady Declining
Stage of Property Cycle Peak of market Peak of market Peak of market Peak of market Declining market Declining market Bottom of market Declining market
Are New Properties Sold at Prices Exceeding Their Potential Resale Value
Occasionally Occasionally Occasionally Almost never Occasionally Occasionally Almost never Occasionally
Red entries indicate change from 3 months ago to a higher risk-rating Blue entries indicate change from 3 months ago to a lower risk-rating
Rental Vacancy Trend
0
1
2
3
4
5
6
Ade laide
Adelaide Hil ls
Barossa Valley
Iron Tria
ngle
Alice Springs
Darwin
SouthWest W
APerth
Increasing SharplyIncreasing
SteadyTightening
Tightening Sharply
Stage of Property Cycle
0
1
2
3
4
5
6
Ade laide
Ade laide Hills
BarossaValley
Iron Triangle
Alice Springs
Darwin
Sou th West WA Perth
Declining M arketPeak of M arket
Rising M arketBottom of M arketStart o f Recovery
Demand for New Units
0
1
2
3
4
5
6
Ade laide
Ade laide Hil ls
Barossa Valley
Iron Triangle
Alice Sprin gsDarwin
Sou th West WA Perth
Very SoftSoftFair
StrongVery
Strong
© Herron Todd White Copyright 2009No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.
markeT iNdiCaTors
The month in review
Northern Territory, South Australia & Western Australia Property Market Indicators as at March 2011 – Industrial
55
SA, NT and WA Property Market Indicators as at March 2011 – Industrial Factor Adelaide Adelaide Hills Barossa
Valley Iron Triangle Alice Springs Darwin South West WA Perth
Rental Vacancy Situation Balanced market Balanced market Over-supply of available property relative to demand
Over-supply of available property relative to demand
Over-supply of available property relative to demand
Over-supply of available property relative to demand
Balanced market Over-supply of available property relative to demand
Rental Vacancy Trend Steady Steady Steady Increasing Increasing Increasing Steady Steady
Rental Rate Trend Stable Stable Stable Stable Stable Stable Stable Stable
Volume of Property Sales Declining Steady Steady Declining Declining Declining Declining Steady
Stage of Property Cycle Peak of market Peak of market Peak of market Peak of market Declining market Declining market Bottom of market Start of recovery
Local Economic Situation Flat Flat Flat Flat Steady growth Steady growth Contraction Steady growth
Value Difference between Quality Properties with National Tenants, and Comparable Properties with Local Tenants
Significant Small Small Small Significant Significant Small Significant
Red entries indicate change from 3 months ago to a higher risk-rating Blue entries indicate change from 3 months ago to a lower risk-rating
Rental Vacancy Trend
0
1
2
3
4
5
6
Ade laide
Ade laide Hills
Barossa Valley
Iron Triangle
Alice Springs
Darwin
Sou th West W
APerth
Increasing SharplyIncreasing
SteadyTightening
Tightening Sharply
Stage of Property Cycle
0
1
2
3
4
5
6
Ade laide
Ade laide Hills
Barossa Valley
Iron Triangle
Alice Springs
Darwin
Sou th West W
APerth
Declining M arketPeak o f M arket
Rising M arketBottom o f M arketStart of Recovery
Local Economic Situation
0
1
2
3
4
5
6
Ade laide
Ade laide Hil ls
Barossa Valley
Iron Triangle
Alice Springs
Darwin
Sou th West W
APerth
Severe ContractionContraction
FlatSteady Growth
High Growth