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SQM Research Residential Newsletter - Tuesday 24 September 2019
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Property Valuations
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Distressed Properties Report
Funds Research
Boom and Bust 2019 Report

Black Dragon's
Words for the Week

"I’m not interested in whether you’ve stood with the great. I’m interested in whether you’ve sat with the broken."

Sue Fitzmaurice
Real Estate Realities 

Rising inequality in Australia isn’t about incomes: it’s almost all about housing

Compared to the rest of the world, income inequality is not particularly high in Australia, nor is it getting much worse.

The real problem is housing inequality.

Rising house prices have increased wealth inequality. Rising housing costs have dramatically widened the gap between high and low disposable incomes.

The gap between low-income and high-income households in Australia is close to the OECD average. Income inequality – measured by the gini coefficient – has fallen slightly over the past decade.

The Productivity Commission says inequality has increased only slightly in the past three decades. Economists at the Reserve Bank have come to similar conclusions.

But inequality is growing once housing costs are factored in, with the poor being hurt the most.

Incomes for the lowest 20% of households increased by about 27% between 2003-04 and 2015-16. But their incomes after housing costs increased by only about 16%. Low-income Australians are spending much more than they used to keep a roof over their heads.

In contrast, incomes for the highest 20% of households increased by 36%, and their after-housing incomes by 33%.

Leaving the young and poor behind.

Read More...

CHART OF THE WEEK

Capital City Gross Rental Yields

This week’s chart of the week is on capital city gross rental yields.
 
A revealing chart as it tracks how yields have changed in recent years with some cities recording rises such as Hobart, Adelaide, Melbourne and Perth, while Canberra and Sydney have had some yield compression since 2016. If you consider that the average variable home lending rate is just under 5% before discounts and falling, a number of these capital cities potentially could be offering cash-flow positive property e.g Canberra Darwin, Adelaide, Hobart and even Brisbane would be close to offering cash-flow positive investments after tax.
 
Always remember though, yields are meant to fairly reflect risk. The higher the yield, the higher the risk. But as is often the case in property, a fair yield for risk doesn’t always occur…



DISTRESSED PROPERTY OF THE WEEK

2 Crawford St, Redcliffe QLD 4020


click to enlarge


This week’s distressed property, located in the Brisbane suburb of Redcliffe, approximately 35km from Brisbane’s CBD, is a character house that would suit buyers looking to renovate or investors.   

Built in 1991, this 3-bedroom home sits on a spacious 602 sqm corner block with a large front patio, open plan lounge and dining room, spacious kitchen with ample storage and single lock up garage.
 
Current asking price for this house is “offers over $399,000” after an initial advertised price of $410,000 in early September 2019.  The house was last sold for $500,000 in August 2010.
 
Based on current data,
asking prices for houses in postcode 4020, range from $490,000 to $661,000.  This area has had good house price growth over 3 years of 16.5% and 16.7% over 12 months.  Over the month, the growth has been 2.2%.  The unit market has also been improving in this postcode, recording a 2.4% increase over 12 months and 1.8% increase over the month.
 

Asking Rents for houses in this area has also shown good growth, increasing 25.2% over 3 years and 3.4% over the month.  Investors can receive rents of $450 to $500 for houses and a Gross rental yield of 4.7% can be achieved in this area.
 
The home is well-located close to transport, schools, shops and Sutton Beach and various water activities such as swimming, kayaking, boating and fishing.  Redcliffe is a relaxing, laid back suburb with a vibrant history that includes being the childhood home of the Bee Gees.  Its waterfront boasts some good eateries, clubs, local shops and the Redcliffe Jetty Markets on Sundays. 
 
Brisbane’s property market has started its recovery and is now at the rising market stage.  The city’s strong housing affordability compared to Sydney and Melbourne and recent infrastructure projects like Queens Wharf and Howard Smith Wharves, has contributed to its slow and steady property growth.  There has also been strong population growth with Brisbane growing 2.1% in 2017/18 (Melbourne having the highest growth of 2.5%) (
ABS). 

 
The home does have a lot to offer but potential buyers need to look at the cost of renovations. 

It would be worth watching this market. 
 SQM website 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 Property Valuation 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: 24 Sep 2019 Asking Price Chg on
   prev wk
  Rolling month
% chg
  12 month
% chg
Sydney All Houses 1,299.9 -5.0  2.0%  -1.1% 
All Units 695.7 2.3  0.0%  -2.1% 
Melbourne All Houses 955.2 6.8  1.8%  -1.3% 
All Units 546.7 2.3  1.2%  -0.3% 
Brisbane All Houses 625.9 1.8  1.1%  2.1% 
All Units 370.8 0.3  -0.0%  -2.7% 
Perth All Houses 649.8 0.3  0.7%  -1.6% 
All Units 378.8 -0.7  -0.7%  -2.8% 
Adelaide All Houses 515.5 0.3  0.5%  1.9% 
All Units 297.8 -0.7  -0.1%  -1.3% 
Canberra All Houses 814.0 -9.2  -0.3%  0.1% 
All Units 437.6 1.5  0.7%  4.4% 
Darwin All Houses 587.9 -1.5  -0.7%  0.9% 
All Units 349.5 -0.9  -1.2%  -4.9% 
Hobart All Houses 521.5 -1.9  1.9%  5.8% 
All Units 326.2 2.0  3.3%  4.8% 
National All Houses 572.4 -3.2  -0.2%  0.1% 
All Units 380.1 -0.5  -0.2%  2.3% 
Cap City Average All Houses 936.7 -5.5  1.5%  -0.7% 
All Units 567.0 2.5  0.5%  -1.3% 

Next update: 1 Oct 2019

SQM Research Weekly Rents Index
Week ending: 20 Sep 2019        Rent       Chg on
  prev wk
  Rolling month
% chg
  12 month
% chg
Sydney All Houses 677.0 1.0  -0.7%  -4.1% 
All Units 496.5 -1.5  -0.4%  -3.6% 
Melbourne All Houses 525.4 0.6  -0.1%  -0.2% 
All Units 416.2 -2.2  -1.2%  1.6% 
Brisbane All Houses 466.1 -0.1  0.2%  3.2% 
All Units 378.5 0.5  0.7%  1.9% 
Perth All Houses 442.7 2.3  1.7%  4.7% 
All Units 337.8 0.2  -0.1%  4.9% 
Adelaide All Houses 399.2 -0.2  -0.0%  3.0% 
All Units 312.5 0.5  0.3%  5.1% 
Canberra All Houses 604.6 1.4  0.2%  -5.1% 
All Units 458.7 -0.7  0.2%  3.7% 
Darwin All Houses 517.5 4.5  0.9%  0.8% 
All Units 379.1 -1.1  0.5%  -6.3% 
Hobart All Houses 437.9 -4.9  -2.7%  6.9% 
All Units 410.2 -2.2  6.1%  11.0% 
National All Houses 442.0 0.0 0.5%  0.5% 
All Units 368.0 2.0  0.5%  2.2% 
Cap City Average All Houses 546.0 2.0  0.2%  -0.5% 
All Units 436.0 -2.0  -0.7%  -1.1% 

Next update: 28 Sep 2019

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