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SQM Research Residential Newsletter - 
Tuesday 1 September 2020
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Words for the Week

“A weapon does not decide whether or not to kill. A weapon is a manifestation of a decision that has already been made.”  

Steven Galloway, Novelist

Real Estate Realities 

How the Aussie property market has turned from smashed avo to scrambled eggs

First there was talk of first-home buyers and their smashed avocado on toast, now another breakfast analogy has been cooked up to explain the current state of the property market.

“If smashed avocado had anything to do with housing affordability over the last decade, scrambled eggs will be the dish of the 20s,” said Propertyology head of research, Simon Pressley.

The buyers’ agent and researcher said the traditional “fried egg” town planning model – where CBDs are filled with office towers, retail and high-density apartments (the yolk) surrounded by an urban sprawl (the egg white) – is about to be “scrambled”.

The era of the smashed avocado, and its influence on property affordability appears to be over.

After six months of observing how COVID-19 has hit the real estate market, Propertyology came up with a number of property predictions.

“We’ll continue to live in a world of disruption until such time as a vaccine is available. But the disruption from this germ has been big enough and already lasted long enough for Australian real estate to have changed forever,” Mr Pressley said.

 

PROPERTY LISTINGS DECREASE IN AUGUST

by Louis Christopher, CEO

Figures released today by SQM Research reveal national residential property listings decreased in August by 6.3% from 312,680 listings in July 2020 to 293,053. Compared to 12 months ago listings were also down by 10.0%.

All capital cities recorded decreases in property listings over the month with Melbourne recording the highest decrease at 13.2%.

Hobart recorded the second largest decrease at 9.4% followed by Canberra with 6.3% decrease. Sydney recorded a 4.0% monthly decrease and Brisbane recorded a 5.1% decrease. Perth and Darwin experienced smaller decreases of 2.0% and 3.7% respectively.

National year-on-year listings reveal a decrease of 10.0% with significant decreases in Darwin (26.9%) and Hobart (21.4%), however Sydney recorded a minor 1.2% increase.  Melbourne’s decrease was smaller at 1.8%.  All other capital cities recorded declines over the 12 months.



There was quiet a large drop in new listings for the month, predominantly driven by the shortfall in Melbourne. The Melbourne numbers are quite revealing actually. It is reflective of the near entire freeze-up of the Melbourne housing market. As the Victorian State Government is heavily reliant on property stamp duty revenues, there must be a significant State revenue collapse occurring. Elsewhere we continue to record falling supply in Australia’s regional areas. Our take on that phenomenon is that demand has boomed for regional real estate as more of our populations looks to remote living.

Asking Prices
Capital City average asking prices decreased by 0.3% for both houses and units over the month to 1st September.  Average unit asking prices are now at $564,300 and houses $980,500.  

Compared to a year ago, the capital city asking prices posted an increase of 6.3% for houses and remained steady for units.

Over the month, Sydney and Brisbane recorded marginal asking price decreases in both houses and units, with Sydney recording the largest decline in house asking prices of 1.2% and Melbourne recording the largest decline in unit prices of 0.8%.  However, Melbourne’s house asking price increased by 0.4%.

 Adelaide was the only capital city to record increases in both unit and house asking prices - 0.2% and 0.4% respectively. 

Hobart’s unit asking prices increased by 5.3% over the month but its house asking prices declined by 0.5%.
Year on year, most capital cities recorded increases in house and unit asking prices with a significant increase of 24.3% in Hobart’s unit asking price and 11.5% in house asking prices.  Darwin however, experienced declines in house and unit prices of 2.9% and 2.2% respectively.

 

AUCTION LISTINGS* for week ending 6 September 2020


CITY

Saturday

Rest of Week

 

STATE

Saturday

Rest of Week

Link

Sydney 578 87   All NSW 655 127 Auctions in NSW 
Melbourne* 28 8   All VIC 39 14 Auctions in VIC 
Brisbane 58 11   All QLD 102 40 Auctions in QLD 
Perth 8 9   All WA 9 10 Auctions in WA 
Adelaide 46 23   All SA 48 25 Auctions in SA 
Canberra 54 18   All ACT 54 18 Auctions in ACT 
Darwin 0 6   All NT 0 7 Auctions in NT 
Hobart 0 0   All TAS 5 0 Auctions in TAS

*Note: The above counts of auctions represent most recent known auction dates for the coming week.  As at 8 July, Melbourne auctions are back on-line.
 

AUCTION RESULTS for week ending 30 August 2020

Full individual auction results can be found on our website: 


 

DISTRESSED PROPERTY OF THE WEEK

  1/47 Andrew Road, St Albans Vic 3021
 
Listed for sale with a price range of "$430,000 to $460,000" is this 3 bedroom, 1 bathroom townhouse with 2 parking spaces in the suburb of St Albans, approximately 17 km north-west of Melbourne’s CBD.  It was initially on sale from 20 March 2020 and last sold 5 years ago (Feb 2015) for $262,500.   
 
Sitting on a 299 sqm block (approx.) this brick home is light and bright and would make the ideal first home, great retirement alternative or an investment opportunity.
 
The 122.9 sqm (approx.) floor-plan comprises a large living area, a spacious kitchen with lots of cupboard and bench space and 3 generous sized robed bedrooms serviced by a family bathroom. The backyard offers privacy and low maintenance. Highlights include off-street parking, evaporative cooling, garden shed and roller shutters.
 
St Albans is an all-round, affordable suburb that has grown to be popular for growing families.  Since 2017 there has been government spending on infrastructure and development and the suburb now offers good infrastructure, transport, schools and local amenities. 
 
The home is only a short walk to Stevensville Primary School, Victoria University Secondary College, cafes/restaurants and a short drive to Delahey Village Shops, freeways, bus services and Keilor Plains train station.
 
Please note: during Victoria’s Stage 4 Covid-19 lockdown, you can only inspect a property virtually, as a result transactions have slowed down in Melbourne. 
Property listings have declined in this postcode with new listings dropping by 65.67% over the month.  In comparison, same time last year there was a 21.0% increase in property listings in this area.
 
Stage 4 lockdowns however has not affected
Asking prices in this area with 3 bedroom houses showing growth of 0.9% over the last month and units increased by 2.9%.  Over the last 3 years growth has been 2.1% and the last 12 months shows a 3.7% growth for 3-bedroom houses in this postcode.
 

Asking Rents however have declined by 0.2% over the month for 3 bedroom houses in this postcode. For units, the decline has been greater at 5.7%.  Implied gross rental yield for houses in this postcode is 3.1%.  The Vacancy rate in January 2020 was relatively low at 1.6%, then dropping to 1.1% in March.  However, this has now climbed back to 1.6% in July 2020. 
 
Whilst the Victorian market is in hibernation due to Stage 4 Covid-19 restrictions, you can use this opportunity to prepare for a Spring revival of the property market.  Do your research and when the market resumes you will be ready - a quick recovery could occur.  
Keep monitoring this market with SQM Research’s free property data. Also consider the SQM Property Explorer product for more in-depth data and property price estimator.


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: 1 Sep 2020  Asking Price    Chg on
prev wk
  Rolling month
% chg
  12 month
% chg
Sydney All Houses    1,354.2 -0.4  -1.2%  6.3% 
All Units 678.8 0.7  -0.7%  -2.4% 
Melbourne  All Houses 1,027.4 1.5  0.4%  9.5% 
All Units 562.3 0.4  -0.8%  4.1% 
Brisbane  All Houses 641.8 0.1  -0.7%  3.7% 
All Units 376.3 0.2  -0.1%  1.4% 
Perth  All Houses 666.7 -0.1  -0.8%  3.3% 
All Units 380.3 0.7  0.0%  -0.3% 
Adelaide  All Houses 527.5 -0.2  0.4%  2.8% 
All Units 307.9 0.0  0.2%  3.2% 
Canberra  All Houses 803.9 -3.9  -1.0%  -1.6% 
All Units 453.4 1.3  1.9%  4.3% 
Darwin  All Houses 574.7 1.7  0.1%  -2.9% 
All Units 345.9 0.1  -0.3%  -2.2% 
Hobart  All Houses 570.7 1.1  -0.5%  11.5% 
All Units 392.4 4.9  5.3%  24.3% 
National  All Houses 597.4 -0.4  -1.1%  4.2% 
All Units 393.4 -1.8  -0.2%  3.3% 
Cap City Average     All Houses 980.5 0.8  -0.3%  6.3% 
All Units 564.3 2.6  -0.3%  0.0% 

Next update: 8 Sep 2020

SQM Research Weekly Rents Index
Week ending: 28 Aug 2020      Rent        Chg on
   prev wk
  Rolling month
% chg
   12 month
% chg
Sydney  All Houses    629.3 -0.3  -1.4%  -7.4% 
All Units 460.9 -1.9  -1.4%  -7.4% 
Melbourne  All Houses 521.8 0.2  -0.4%  -0.8% 
All Units 393.9 0.1  -1.2%  -6.1% 
Brisbane  All Houses 462.3 -2.3  -1.1%  -0.7% 
All Units 378.1 -0.1  -0.5%  0.6% 
Perth  All Houses 470.7 3.3  0.4%  7.5% 
All Units 356.2 -0.2  1.3%  5.2% 
Adelaide  All Houses 408.3 -0.3  -1.0%  2.1% 
All Units 315.4 -1.4  -0.7%  1.6% 
Canberra  All Houses 639.6 -3.6  3.3%  5.6% 
All Units 470.8 0.2  -0.5%  2.8% 
Darwin  All Houses 498.8 9.2  2.8%  -1.7% 
All Units 360.2 2.8  -0.9%  -4.2% 
Hobart  All Houses 441.4 3.6  0.8%  -0.5% 
All Units 375.7 -5.7  -1.7%  -5.2% 
National  All Houses 459.0 0.0 0.9%  4.8% 
All Units 372.0 -3.0  1.4%  1.9% 
Cap City Average    All Houses 534.0 2.0  -0.7%  -2.0% 
All Units 415.0 -1.0  -1.2%  -5.0% 

Next update: 4 Sep 2020

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