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SQM Research Newsletter - Tuesday 13 August 2019
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Black Dragon's
Words for the Week

Wise men speak because they have something to say; Fools because they have to say something."

Plato
Real Estate Realities 

If we want liveable cities in 2060 we’ll have to work together to transform urban systems

“Not everyone wants to live in the inner city and it’s insulting to describe the outer suburbs as the fringe.”

This was just one view from a recent workshop where a vision for Australia’s future cities was mapped out. It highlights that liveability means different things to different people.

But what will the liveability of our cities be like in 40 years’ time? For the CSIRO report, 2019 Australian National Outlook, the authors used scenario analysis to explore prospects for Australia in 2060. This demonstrates that business as usual will mean Australia’s economy and society sleepwalk into the future, a future made worse by failing to tackle major environmental threats.

The National Outlook report set out “five key shifts” - industry, urban, energy, land and culture - to prepare us for a better future.

Our research supports the need for these changes. These shifts are related and co-dependent. And, critically, they will all involve cities.

We argue, though, that we need more than “shifts” - we need transformation supported by a systems approach.

Read More...

Vacancy Rates Steady in July
by Louis Christopher, CEO

Data released by SQM Research today has revealed the National residential rental vacancy rate remained steady in July 2019 at 2.3% from June.  The total number of vacancies Australia-wide is now at 76,346 vacant residential properties, a decrease of 2,344 over the month but up 3,888 dwellings over the past 12 months.
 

Brisbane and Adelaide recorded minor decreases of 0.1% in vacancy rates, whilst Perth, Canberra and Darwin recorded a 0.2% decrease over the month.
 

Sydney, Melbourne and Hobart's vacancy rate remained steady over the month.
 
Sydney continues to have the highest vacancy rate in the country at 3.5%, this time last year the rate was lower at 2.8%.  Melbourne remained at 2.0% in July, increasing from 1.6% 12 months ago.  Hobart’s vacancy rate was also steady in July and continues to be the lowest in the country at 0.5%.




While rental vacancy rate held steady in Sydney and Melbourne, they fell in most other cities over July. Perth continues to record a recovery in its rental market which should eventually feed through into a rise in dwelling prices.  After a false dawn, Darwin also appears to be recording tentative signs of a rental recovery.
 
Going forward, the expectation remains that Sydney and Melbourne will record higher rental vacancy rates in the 2nd half of this year driven by ongoing high levels of dwelling completions from the tail of the last property boom.


Asking Rents

Capital city asking rents declined 0.5% for houses and 0.7% for units for the week ending 12 August 2019 to record asking rents of $546 per week for houses and $438 per week for units. 

In comparison, over the 12 months, asking rents for houses declined 0.4% for houses and a 0.5% decline for units.
 
Sydney asking rents for houses declined in July by 0.6%, however houses increased by 0.2%.  Canberra and Melbourne saw a decline in both houses and units to 12 August, with  Melbourne rents dropping 1.9% for houses and 0.3% for units, whilst Canberra rents dropped 2.5% for houses and 0.4% for units. 

Brisbane was the only capital city to record increases in weekly rents over the month for both houses and units at 0.1% for both.

 
SQM Research Weekly Rents Index
Week ending: 12 Aug 2019    Rent  Chg on
prev wk
Rolling month
% chg
 12 month
% chg
Sydney All Houses 685.2 -2.2  0.2%  -3.0% 
All Units 499.1 -1.1  -0.6%  -3.1% 
Melbourne All Houses 525.7 -1.7  -1.9%  0.6% 
All Units 421.4 -0.4  -0.3%  2.4% 
Brisbane All Houses 463.6 1.4  0.1%  2.5% 
All Units 374.4 0.6  0.1%  1.1% 
Perth All Houses 435.7 3.3  -0.9%  2.9% 
All Units 338.4 -1.4  0.2%  4.5% 
Adelaide All Houses 398.7 0.3  -0.3%  4.1% 
All Units 312.5 0.5  1.0%  4.4% 
Canberra All Houses 610.5 -3.5  -2.5%  -2.4% 
All Units 459.2 -1.2  -0.4%  5.0% 
Darwin All Houses 513.3 -5.3  -2.9%  -0.9% 
All Units 374.2 2.8  1.8%  -7.6% 
Hobart All Houses 445.1 -3.1  0.9%  11.2% 
All Units 393.5 -4.5  -2.5%  9.2% 
National All Houses 440.0 0.0 -0.2%  1.6% 
All Units 368.0 1.0  0.5%  3.7% 
Cap City Average All Houses 546.0 -1.0  -0.5%  -0.4% 
All Units 438.0 -1.0  -0.7%  -0.5% 

 
DISTRESSED PROPERTY OF THE WEEK

Unit 14 / 170-172 The Entrance Road, The Entrance NSW 2261

Unit 14/170-172 The Entrance Road is a great opportunity to purchase an affordable apartment at The Entrance, in NSW’s scenic Central Coast. The Entrance is centrally located between Sydney and Newcastle, approximately one hour’s drive from either city and is a well-known seaside holiday destination with a population of approx. 4,000 (ABS 2016).
 
Built in 2003, this spacious 120 sqm apartment boasts fantastic sunlight throughout and perfectly positioned to capture the welcomed north easterly summer breezes.  It has an open plan living and dining area that leads out to an undercover balcony and an elevated outlook towards the ocean.  The kitchen offers stone benches, modern cabinetry and appliances. The large bedrooms have built-ins and a private ensuite to the main bedroom. There is also a full size laundry and underground secure 16sqm parking space in a full brick residential complex of only 14 apartments.
 
The apartment is conveniently located close to the heart of The Entrance town centre, within easy walking distance to cafe's, shops and transport and minutes to Central Coast beaches such as Shelley Beach and national parks.  The property is ideally suited to those wishing to downsize, a first home buyer or investor.
 
The apartment was initially on sale for $397,500 in December 2018 and is now selling for $359,000.  It last sold for $405,000 in January 2017.  The listing states that the vendor is realistic and motivated and understands the market and the property is priced to sell accordingly.
 
Currently
Asking Prices for apartments in postcode 2261 range from $400k to $435k and has declined by 4.2% over the month after a large decline of 19.3% over 12 months.  House prices in the area however, have been increasing 1.9% over the month and 4.6% over the quarter.  In comparison asking prices in the overall Central Coast region in NSW has shown a minor decrease of 0.9% over the month, after a 12 month decline of 11.9% for apartments.
 
As is in most areas of Sydney,
Asking Rents in postcode 2261 have been declining - 3.3% over the month, after a 3 year increase of 4.1%.  Investors can expect rents of $360 to $368 per week and a healthy Gross Rental Yield of 4.4%Vacancy Rates are low at 2.5% and has increased from 2.0% in August 2018.  The postcode 2261 seems to be lagging behind the overall Central Coast region which had experienced smaller rental decreases of 0.2% over the month.

Properties 
listed for sale in this area are also declining.  As at July 2019 there were 139 units and 320 houses listed for sale (total 459), in March 2019 there was 178 units and 434 houses (total 612). 
 
The Central Coast is a popular sea-change area for Sydneysiders probably due to its affordability and also being under 2 hours by car from Sydney CBD. With growing buyer demand and shortage of stock, this market could improve.  
Keep monitoring this market’s growth at SQM Research’s free property data at SQM’s website. 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: 13 Aug 2019 Asking Price Chg on
prev wk
Rolling month
% chg
12 month
% chg
Sydney All Houses 1,275.4 17.0  3.3%  -5.1% 
All Units 698.8 -2.6  0.3%  -2.7% 
Melbourne All Houses 938.3 -0.6  0.4%  -4.6% 
All Units 538.3 -0.1  -0.1%  -1.9% 
Brisbane All Houses 617.3 0.9  -0.0%  0.2% 
All Units 371.4 -0.3  -0.2%  -2.3% 
Perth All Houses 647.4 -1.7  -1.3%  -2.5% 
All Units 381.7 -0.4  -0.7%  -2.7% 
Adelaide All Houses 513.5 0.2  -0.2%  2.3% 
All Units 299.1 -0.6  -0.2%  -0.9% 
Canberra All Houses 803.9 -3.0  1.2%  -1.3% 
All Units 431.4 -1.3  -0.1%  5.0% 
Darwin All Houses 591.6 -1.1  1.3%  0.3% 
All Units 353.4 -1.2  -0.7%  -3.7% 
Hobart All Houses 509.5 -5.1  -1.5%  4.8% 
All Units 306.5 0.5  0.3%  2.0% 
National All Houses 568.6 2.7  -0.2%  -8.3% 
All Units 377.2 -0.1  0.2%  -4.5% 
Cap City Average All Houses 926.6 6.6  1.8%  -3.1% 
All Units 563.3 -3.2  -0.4%  -2.5% 
Next update: 20 Aug 2019
 
SQM Research Weekly Rents Index
Week ending: 12 Aug 2019    Rent  Chg on
prev wk
Rolling month
% chg
 12 month
% chg
Sydney All Houses 685.2 -2.2  0.2%  -3.0% 
All Units 499.1 -1.1  -0.6%  -3.1% 
Melbourne All Houses 525.7 -1.7  -1.9%  0.6% 
All Units 421.4 -0.4  -0.3%  2.4% 
Brisbane All Houses 463.6 1.4  0.1%  2.5% 
All Units 374.4 0.6  0.1%  1.1% 
Perth All Houses 435.7 3.3  -0.9%  2.9% 
All Units 338.4 -1.4  0.2%  4.5% 
Adelaide All Houses 398.7 0.3  -0.3%  4.1% 
All Units 312.5 0.5  1.0%  4.4% 
Canberra All Houses 610.5 -3.5  -2.5%  -2.4% 
All Units 459.2 -1.2  -0.4%  5.0% 
Darwin All Houses 513.3 -5.3  -2.9%  -0.9% 
All Units 374.2 2.8  1.8%  -7.6% 
Hobart All Houses 445.1 -3.1  0.9%  11.2% 
All Units 393.5 -4.5  -2.5%  9.2% 
National All Houses 440.0 0.0 -0.2%  1.6% 
All Units 368.0 1.0  0.5%  3.7% 
Cap City Average All Houses 546.0 -1.0  -0.5%  -0.4% 
All Units 438.0 -1.0  -0.7%  -0.5% 
Next update: 20 Aug 2019
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