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SQM Research Residential Newsletter 
Tuesday  11 February 2020
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Black Dragon's
Words for the Week

"Scottish politics, UK politics, is not really like American politics in this respect. Not everybody is absolutely obsessed with image. I'm not saying the United States is obsessed with image."

Nicola Sturgeon, 
First Minister of Scotland

Real Estate Realities 

Construction supply chains at risk from coronavirus

The impact of coronavirus is spreading to global supply chains, with building contractors warning clients of potential delays on projects because factories have closed in China - the source of many building materials used in Australian projects - as a result of the respiratory disease.

The scheduled closure of China’s factories for the Lunar New Year holiday - extended in an effort to halt spread of the virus that has so far killed 909 people and infected 40,235 - was due to end on Monday and Australia’s builders, who source products such as joinery, facade materials and structural steel from China, are watching to see if manufacturing resumes.

“A lot of contractors are notifying clients of potential delays,” said Brett Mason, the chief executive of Sydney-based contractor Built.

“We’re obliged under contract to give notice of any potential delay. We’ve been complying with our contractual obligations.”

The $1.5 billion-revenue Built has a range of projects including various buildings in the Parramatta Square precinct in Sydney’s west and the residential One30 Hyde Park. Mr Mason declined to comment on the exposure of any specific project, saying it was a sensitive topic.

Built, like most contractors, is required to alert clients of any impending risks, whether they eventuate or not. But with Chinese direct and indirect imports accounting for a large share of materials used on Australian building sites - as much as 20% of the total construction costs on a high-rise residential project, according to consultancy RLB - this is a problem for the whole industry.

DISTRESSED PROPERTY OF THE WEEK

 Unit 6, 54 Burlington Road, Homebush NSW 2140

This 2 bedroom, 1 bathroom unit in Sydney’s inner west suburb of Homebush, is for sale at an affordable $560,000 to $590,000.  It has been on sale since January 2020 and was last sold 20 years ago in October 2000 for $216,000.

Built in 1977, the unit is in a small building of 8 units and has a floor space of 84 sqm.  There are 2 spacious bedrooms, an eat-in kitchen, a good size lounge, internal laundry and a lock-up garage.

It is in an ideal location, being close to Homebush Train Station, schools, local shopping village, Homebush DFO and 15 kms from Sydney’s CBD and even closer to Strathfield, Sydney Olympic Park, Parramatta and North Ryde hubs. 

Currently, Homebush offers an affordable option for entry into Sydney’s Inner West market.  Asking Prices for units in postcode 2140 range from $600,000 to $645,000.  Whilst the inner west region shows unit price growth of 4.1% over 12 months, postcode 2140 has shown smaller growth of 0.5% over 12 months.  Over the last month, the unit and house prices in this postcode both declined by 1.3% and 1.2% respectively.

This unit was last listed for rent at $440 per week in December 2019. Currently, asking rents for 2-bedroom units shows a 1.3% increase, after a decrease of 4.8% over the 12 months. Investors can achieve gross rental yields of 4.1% for units. 

The
vacancy rate in the postcode is a very high 6.9% in December 2019, increasing from 5.0% in January 2019.  It is important to consider the impact of forecasts for
new housing supply for 2019-20 to 2023-24 which, for the Inner West area is 2,501 to 7,500 additional homes to be built.

This unit could be a perfect start for the first home buyer or a good investment opportunity with potentially good growth and rental prospects.  This older unit may also appeal to buyers who are still cautious about the new apartment market due to the Opal Tower and Mascot Tower evacuations.
 
For a more indepth look at the property market for 2020, subscribe to 
Christopher’s Boom and Bust Report 2020.

SQM website also features free property data that is now more interactive, easier to navigate and user-friendly, so keep monitoring this market’s growth at SQM Research’s free property data. Also consider the SQM Property Explorer product for more in-depth data and property price estimator.


TOP 5 HIGHEST YIELDING LOCALITIES (Capital Cities Only)





 
Louis Christopher's 2020 Housing Boom & Bust Report has now been released and is available for $59.95!

The Housing Boom and Bust report is accurate, impartial and detailed. Best of all it is priced so that EVERYONE from real estate agents, financial planners to regular mums and dads can access it at just $59.95.
 
Key features of the 2020 Boom & Bust report include:

  • Louis Christopher's personal take on the markets 
  • Capital city forecasts 
  • Main drivers of demand and supply at present and going forward 
  • All leading indicators such as stock on market, vacancy rates etc
  • All the possible scenarios that could play out next year 
  • Nearly every city and regional postcode covered re: property stats plus ratings outlook

If you are interested in where the market is heading on a national level, then this is the report for you from one of the most accurate housing market forecaster in the country. 

If you are a real estate professional or a serious residential property investor, you will not want to miss this report!

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SQM RATINGS NEWSLETTER

Did you know that SQM Research doesn’t only provide residential property data, we also provide research on all asset classes.  We have data and analytics on over 10,000 funds in Australia.  To find out more and to subscribe to our Fund Data tool click here.

If you would like to subscribe to our Ratings Newsletter, click here.  The newsletter provides regular updates on all funds including ratings changes and media releases, and valuable Insights into the point of view of our analysts on a variety of ratings research related topics.  And it’s completely free!
 

SQM RESEARCH HOUSING INDEXES
 
SQM Research Weekly Asking Prices Index
Week ending: 11 Feb 2020   Asking Price Chg on
   prev wk
  Rolling month
% chg
  12 month
% chg
Sydney  All Houses    1,360.6 12.0  3.1%  9.7% 
All Units 714.7 -2.3  -1.0%  1.1% 
Melbourne  All Houses 1,011.5 -10.7  -2.2%  4.9% 
All Units 553.9 1.4  0.9%  0.3% 
Brisbane  All Houses 643.5 0.9  0.9%  3.8% 
All Units 373.4 0.5  0.6%  -0.4% 
Perth  All Houses 650.3 -0.1  -0.6%  -2.3% 
All Units 374.8 -1.1  -0.0%  -3.8% 
Adelaide  All Houses 524.9 -1.2  0.3%  1.8% 
All Units 302.5 -0.2  0.6%  0.5% 
Canberra  All Houses 817.6 -1.7  -0.5%  -1.1% 
All Units 439.6 0.4  1.6%  3.8% 
Darwin  All Houses 568.9 -2.9  0.7%  -2.7% 
All Units 309.6 1.4  0.7%  -23.3% 
Hobart  All Houses 550.6 2.9  0.2%  11.0% 
All Units 358.4 5.4  5.1%  12.7% 
National  All Houses 589.4 0.4  0.8%  4.0% 
All Units 389.0 1.3  1.1%  3.4% 
Cap City Average   All Houses 976.2 -1.2  0.9%  6.6% 
All Units 575.3 -2.5  -0.3%  0.4% 

Next update: 18 Feb 2020

SQM Research Weekly Rents Index
Week ending: 4 Feb 2020    Rent    Chg on
    prev wk
  Rolling month
% chg
   12 month
% chg
Sydney  All Houses      700.4 1.6  2.2%  -1.5% 
All Units 501.5 0.5  1.2%  -1.7% 
Melbourne  All Houses 544.1 1.9  1.2%  0.1% 
All Units 420.6 2.4  1.9%  1.3% 
Brisbane  All Houses 471.8 -1.8  -0.3%  3.0% 
All Units 377.0 0.0  -0.2%  0.7% 
Perth  All Houses 444.6 1.4  1.0%  1.1% 
All Units 338.7 0.3  0.4%  2.9% 
Adelaide  All Houses 405.1 1.9  0.2%  2.9% 
All Units 311.2 -1.2  -1.6%  3.2% 
Canberra  All Houses 638.9 3.1  0.7%  -0.6% 
All Units 460.8 -0.8  -0.6%  -0.9% 
Darwin  All Houses 460.1 -5.1  -2.9%  -9.4% 
All Units 378.6 -1.6  -1.5%  -1.5% 
Hobart  All Houses 448.8 -1.8  -4.1%  6.8% 
All Units 428.0 -9.0  4.6%  14.2% 
National  All Houses 452.0 0.0 0.9%  0.9% 
All Units 372.0 -2.0  2.5%  1.6% 
Cap City Average    All Houses 561.0 -1.0  1.3%  0.4% 
All Units 441.0 0.0 0.9%  -0.2% 

Next update: 12 Feb 2020

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