Copy
SQM Research Weekly Newsletter
View this email in your browser

SQM Research Residential Newsletter - Tuesday 27 August 2019
Facebook
Twitter
LinkedIn
Website
Property Valuations
Research Reports
Distressed Properties Report
Funds Research
Boom and Bust 2019 Report

Black Dragon's
Words for the Week

"A lie gets halfway around the world before the truth has a chance to put its pants on."

Winston Churchill
Real Estate Realities 

Beverly Hills mountain once listed for $1 billion sells for just $100,000

A 63-hectare patch of land dubbed the ‘mountain” in Beverly Hills hit the market last year with an eye-watering asking price of $1 billion.

But now, after much confusion over who actually owns the property, it has now sold at auction for the remarkably paltry sum of $100,000.

That’s a whopping 10,000% discount.

The property in the famed 90210 area was last asking $650 million, according to the NY Post.

The lucky buyer at a sparsely attended foreclosure auction on Tuesday was the estate of late Herbalife founder Mark Hughes, which previously owned the distressed yet nonetheless mouth-watering luxury development opportunity, according to the Los Angeles Times.

Roughly twice the size of Disneyland, the property’s prime location northeast of the UCLA campus and Holmby Hills boasts 360-degree views from downtown Los Angeles to Catalina Island.

With 13ha of flat buildable land, it has long been a dream site to develop real estate for billionaires, royalty and celebrities.

Read More...

CHART OF THE WEEK

Sydney House Prices to Nominal GDP

The Sydney housing market has bottomed out. Many leading indicators now suggest the current September quarter will record about a 2% rise in Sydney dwelling prices and we are expecting a rise of another 4% for the December Quarter. That should take the full year to about a 1% gain compared to 2018.
 
But let it be known Sydney has bottomed out at an overvalued point. The data suggests the Sydney housing market remains 21% overvalued despite the two year correction. For reference, the average overvaluation (since 1986) in Sydney is 19% with a low point of 5.9% ‘undervalued’ in June 1987 and a high point of 55.5% overvalued in December 2003.  The most recent overvalued point was 51.6% in the June Quarter 2017. The most recent undervalued point was 1.6% undervalued in September 2012.
 
This is all based on our view that there is a relationship between nominal GDP and house prices. And when you read this chart we think the evidence is there. Logically there should be a relationship. Housing price rises cannot outpace income growth forever. And the more the gap between the two, the more housing prices have to be supported by cheaper and easier access to credit.
 
Historically, the Sydney housing market has rarely been undervalued. There has nearly always been some sort of premium attached.

Effectively the current point suggests, that, left unchecked, we could soon be heading towards yet another historic overvaluation point similar to levels recorded in 2003 and 2017. The key word though in this is “unchecked”. How will the regulators respond when they read newspaper headlines of  a new booming Sydney housing market recording annualised double digit percentage price growth?  
 
Our initial thinking is they are unlikely to respond well and may introduce more lending restrictions once again. Then again, if the powers that be feel cornered due to perhaps rising unemployment pressure or the need to hit inflation targets, etc., they may well let the market run.
 
And then finally consider what happens if we have another rate cut?
 
Next week we will run the chart for Melbourne.



 
DISTRESSED PROPERTY OF THE WEEK

3B Aberfeldy Avenue, Woodville SA 5011

Built in 1993, this 3 bedroom, 2 bathroom courtyard home is located only minutes away from the Queen Elizabeth Hospital, Woodville Train Station and the conveniences of Port Road in Woodville SA, approximately 9 kms north from Adelaide CBD.
 
Initially on sale in November 2018 (over 180
days on market), the asking price has been reduced from $415,000-$435,000 to $369,000-$389,000.  Based on statistics, you would expect to pay between $520,000 to $525,000 for houses in this area.
 
This area is starting to show some good growth with 
Asking Prices for houses in postcode 5011 increasing 5.8% over the 12 months and a 2.2% increase over the month, after a 3 year increase of 10.3%.  This is a better performance than the Adelaide region which has shown 1.1% asking price growth over 12 months and 0.4% over the month for 3 bedroom houses.

 
The home is approximately 207 sqm in size, and comprises a separate sitting room, kitchen with stainless steel European appliances overlooking the open plan dining/living area, all bedrooms have built in wardrobes plus main bedroom with ensuite. There is also a 2-car carport with an automatic door leading to the fully paved all weather outdoor entertaining area providing lots of room to entertain family and friends.
 
Although, peacefully tucked away at the rear of the property, the home is in a locality that is mixed with residential properties and commercial and industrial land uses located along Port Road.  Nearby is McDonalds restaurant and an electricity substation on Port Road near Aberfeldy Avenue.
 
It is an affordable property that's ideal for 1st home buyers, investors, couples and downsizers.  Investors will be excited to know that the current
Vacancy Rate for the area is a low 0.9% indicating low supply and higher demand.  Data shows you can expect rents of $400 per week for this 3 bedder.  However, rents have declined 1.8% over the month, after an increase of 5.2% over the quarter and 11.5% over 12 months.  The gross rental yield is 4.0% for 3 bedroom houses in this area.


Adelaide is still the most affordable capital city in the nation, it might be worth monitoring this region.  The 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: 27 Aug 2019     Asking Price Chg on 
   prev wk
 Rolling month
% chg
  12 month
% chg
Sydney All Houses 1,285.8 14.8  2.9%  -3.2% 
All Units 693.1 -1.9  -0.9%  -3.8% 
Melbourne All Houses 938.8 0.0  0.3%  -3.6% 
All Units 543.0 4.0  0.8%  -0.7% 
Brisbane All Houses 617.9 0.0  0.2%  0.4% 
All Units 369.7 -1.5  -0.6%  -2.8% 
Perth All Houses 653.9 6.5  0.5%  -0.7% 
All Units 379.8 -1.8  -0.9%  -2.9% 
Adelaide All Houses 512.7 -0.5  -0.4%  2.2% 
All Units 298.2 -0.0  -0.5%  -1.2% 
Canberra All Houses 816.7 4.7  1.6%  2.4% 
All Units 427.6 -3.5  -1.5%  4.2% 
Darwin All Houses 590.3 -1.0  0.0%  0.5% 
All Units 353.3 -0.0  -0.5%  -3.6% 
Hobart All Houses 513.7 5.6  -0.2%  6.1% 
All Units 316.4 10.6  3.6%  6.8% 
National All Houses 575.0 6.3  1.9%  -6.7% 
All Units 385.5 9.3  1.9%  -2.3% 
Cap City Average All Houses 932.1 12.7  1.5%  -1.3% 
All Units 562.8 1.4  -0.5%  -2.5% 

Next update: 3 Sep 2019

SQM Research Weekly Rents Index
Week ending: 20 Aug 2019       Rent             Chg on
 prev wk
   Rolling month
% chg
   12 month
% chg
Sydney All Houses 681.6 -3.6  -0.6%  -3.3% 
All Units 498.5 -0.5  -0.6%  -2.9% 
Melbourne All Houses 525.9 0.1  -1.7%  0.4% 
All Units 421.2 -0.2  -0.5%  2.7% 
Brisbane All Houses 465.3 1.7  0.2%  3.1% 
All Units 375.7 1.3  0.3%  1.1% 
Perth All Houses 435.4 -0.4  -0.1%  2.6% 
All Units 338.2 -0.2  -0.3%  4.6% 
Adelaide All Houses 399.4 0.6  -0.1%  4.1% 
All Units 311.7 -0.7  0.7%  4.7% 
Canberra All Houses 603.3 -7.3  -3.3%  -3.5% 
All Units 457.6 -1.6  -0.9%  4.6% 
Darwin All Houses 512.7 -0.7  -2.9%  -0.4% 
All Units 377.1 2.9  2.1%  -6.9% 
Hobart All Houses 450.0 5.0  -0.1%  12.6% 
All Units 386.7 -6.7  -5.2%  6.4% 
National All Houses 440.0 0.0 -0.5%  0.9% 
All Units 366.0 -2.0  -0.5%  1.9% 
Cap City Average All Houses 545.0 -1.0  -1.1%  -0.5% 
All Units 439.0 1.0  -0.5%  0.0%

Next update: 28 Aug 2019

Facebook
Twitter
LinkedIn
Website
Copyright © 2019 SQM Research, All rights reserved.

Our mailing address is: Level 16, 275 Alfred Street, North Sydney, NSW 2060, Australia

unsubscribe from this list