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SQM Research Residential Newsletter - 
Tuesday 22 September 2020
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Words for the Week

"Be Kind to others, because the world is dealing with 3 Pandemics at the same time - Greed, Corruption and Coronavirus.”  

De philosopher DJ Kyos

Real Estate Realities 

Health Crisis to alter Residential Supply & Design, Knight Frank reports

A survey conducted by Knight Frank of 160 global developers from across 22 nations, including Australia, has concluded that the near-term supply and long-term design of housing is set to impacted by the current health crisis.

The survey found almost 6 in 10 global developers have delayed projects in response to the spread of the virus and that of those with delays, more than four in 10 are now making changes to designs that were once considered complete.

Developers are now showing a tendency to provide homes that can better accommodate working from home. Some COVID-19 inspired changes include space for home offices, healthier and greener living, urban appeal, mixed-use schemes, closer to home and virtual viewings.

While adjusting designs and sales processes have been flexibly managed, it appears that funding remains the biggest barrier. In Sydney, completion of high-density schemes this year is forecast to be almost 60% lower than delivery in 2019, which itself was 6% below the 2018 level. Knight Frank have highlighted however that branded residences, such as Crown Residences at One Barangaroo, have seen a surge in popularity over the last 20 years and the pandemic has highlighted some of the advantages of such developments.

Knight Frank’s Head of Residential Research Australia, Michelle Ciesielski has cautioned against any radical changes that look to solve the issue of social distancing as if it were an integral part of the world’s collective future.

“While it is still too early to confirm the lasting impact of the pandemic on the development landscape, it is clear that it has accelerated emerging trends and prompted new ideas for current and future developments.” Ms Ciesielski said.

“While developers will likely temper their urge to radically reshape development designs initially, what cuts through the findings of the research is the importance of not overreacting to the immediate fallout from the crisis.

“There is little evidence pointing to the need to design for future lockdowns or specified meterage for social distancing.”


With housing delivery a high priority in many markets, the research also examined some of the biggest constraints that developers are facing.

“According to our survey respondents, funding is the biggest barrier to global development, with just under a third citing it as their biggest concern, followed by market regulation via taxation, then the hurdles that come with planning,” Ms Ciesielski continued.

 

AUCTION RESULTS for week ending 20 September 2020

Full individual auction results can be found on our website: 




AUCTION LISTINGS* for week ending 27 September 2020

CITY

Saturday

Rest of Week

 

STATE

Saturday

Rest of Week

Link

Sydney 760 122   All NSW 869 185 Auctions in NSW 
Melbourne* 47 18   All VIC 62 20 Auctions in VIC 
Brisbane 61 27   All QLD 111 85 Auctions in QLD 
Perth 2 6   All WA 4 8 Auctions in WA 
Adelaide 61 17   All SA 61 23 Auctions in SA 
Canberra 50 9   All ACT 50 9 Auctions in ACT 
Darwin 2 4   All NT 2 4 Auctions in NT 
Hobart 0 0   All TAS 0 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.
 

DISTRESSED PROPERTY OF THE WEEK

 112 / 122 Brown Street, East Perth WA 6004
 
Having last been sold for $489,000 in Oct-2015, this 2 bedroom, light-filled apartment located in East Perth now has an asking price of $390,000.  Its initial asking price was $429,000 in January 2019. 
 
The apartment is immaculately maintained and features an open plan living/dining space with a well-appointed kitchen, 2 bedrooms, 1 bathroom and a secured undercover car bay.  Additional features include Split System air-conditioner, lockable storeroom, high ceilings and downlights throughout. The building is a secure complex of 56 apartments, with intercom access, lift and a communal entertaining rooftop terrace.
 
Well-located, the apartment is walking distance to Claisebrook train station, the free bus (CAT) service into the city and to vibrant Claisebrook Cove's cafes and restaurants and minutes from all the excitement of Perth's inner city.
 
The apartment would suit professionals, downsizers and investors looking for a low maintenance lifestyle in a vibrant inner city area.
 
Year-on-year, 2-bedroom unit
asking prices have decreased by 3.1% in this postcode however, over the last month there has been a 1.5% increase in 2-bedroom unit asking prices. Like most inner city areas, this postcode has been affected by the Covid-19 crisis but to a much lesser extent than other capital cities and seems to be re-bounding at a faster pace.
 
The 3-year
Asking rents for this postcode showed good growth of 12.7% for unit rents and 17.8% increase for house rents.  However, over the last month there has been a decrease of 1.3% for unit rents and 19.1% for house rents in this postcode.  A healthy Gross rental yield of 5.3% can still be achieved for units and 4.2% for houses.
 

Vacancy rate in this postcode has declined to 4.6% in August. Overall, this postcode’s vacancy rate has been much lower than its 15 year high of 8.6% reached in August 2009.

No doubt, Perth’s inner-city rental properties have also been hit during the pandemic but there are some signs of recoveries including enquiries and interest from interstate people and expats returning to Australia. 
 
Perth currently is still one of the most affordable capital cities in the nation and it might be a good time to investigate this market.  To
keep researching  this market visit 
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: 22 Sep 2020   Asking Price    Chg on
prev wk
  Rolling month
% chg
  12 month
% chg
Sydney  All Houses    1,368.2 3.9  1.0%  5.3% 
All Units 676.8 -1.5  -0.2%  -2.7% 
Melbourne  All Houses 1,027.1 -1.1  0.1%  7.5% 
All Units 563.3 -0.4  0.2%  3.0% 
Brisbane  All Houses 645.7 1.2  0.6%  3.2% 
All Units 375.9 -0.7  0.0%  1.4% 
Perth  All Houses 664.2 2.5  -0.4%  2.2% 
All Units 381.2 0.7  0.4%  0.6% 
Adelaide  All Houses 526.1 -0.1  -0.3%  2.1% 
All Units 308.6 0.6  0.3%  3.6% 
Canberra  All Houses 800.9 1.0  -0.9%  -1.6% 
All Units 455.6 0.6  0.8%  4.1% 
Darwin  All Houses 574.7 -1.7  0.3%  -2.2% 
All Units 345.1 -0.1  -0.2%  -1.3% 
Hobart  All Houses 571.2 -3.2  0.3%  9.5% 
All Units 401.4 0.1  3.6%  23.1% 
National  All Houses 596.4 -0.8  -0.2%  4.2% 
All Units 395.6 -3.1  0.1%  4.1% 
Cap City Average   All Houses 986.1 -1.8  0.7%  5.3% 
All Units 562.5 -1.7  0.1%  -0.8% 

Next update: 29 Sep 2020

SQM Research Weekly Rents Index
Week ending: 20 Sep 2020     Rent         Chg on
prev wk
   Rolling month
% chg
   12 month
% chg
Sydney  All Houses      620.5 -1.5  -1.4%  -8.3% 
All Units 455.7 -1.7  -1.5%  -8.2% 
Melbourne  All Houses 517.7 -1.7  -0.7%  -1.5% 
All Units 393.2 -0.2  -0.1%  -5.5% 
Brisbane  All Houses 464.5 0.5  0.0%  -0.3% 
All Units 376.6 -0.6  -0.4%  -0.5% 
Perth  All Houses 470.1 -1.1  0.6%  6.2% 
All Units 357.7 0.3  0.3%  5.9% 
Adelaide  All Houses 411.4 -0.4  0.7%  3.1% 
All Units 316.7 0.3  -0.1%  1.3% 
Canberra  All Houses 623.4 -8.4  -3.1%  3.1% 
All Units 474.3 1.7  0.8%  3.4% 
Darwin  All Houses 536.9 20.1  9.6%  3.7% 
All Units 367.7 5.3  2.9%  -3.0% 
Hobart  All Houses 448.2 7.8  2.4%  2.3% 
All Units 369.1 -1.1  -3.2%  -10.0% 
National  All Houses 466.0 4.0  1.5%  5.4% 
All Units 371.0 0.0 -1.1%  0.8% 
Cap City Average    All Houses 529.0 0.0 -0.6%  -3.1% 
All Units 413.0 -1.0  -0.7%  -5.3% 

Next update: 28 Sep 2020

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