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SQM Research Newsletter - Tuesday 6 August 2019
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Black Dragon's
Words for the Week

“I disapprove of what you say, but I will defend to the death your right to say it.” 
Evelyn Beatrice Hall  
(author who wrote under the pseudonym S.G. Tallentyre)

“I may not agree with you, but I will defend to the death your right to make an ass of yourself.” 
Oscar Wilde 
Real Estate Realities 

What can our cities do about sprawl, congestion and pollution?
Tip: scrap car parking

While car parking was a non-negotiable amenity for baby boomers, it is an eyesore to millennials and the up-and-coming iGen. Newer generations want more city and fewer cars. Globally, scrapping car parking is the latest trend in urban planning.

Between 2010 and 2015, Philadelphia removed 3,000 off-street parking spaces from its city centre. Copenhagen is following the same path. Zurich has implemented a city-wide cap to llimit parking spaces to 1990s levels.

Amsterdam has announced it will remove parking spaces at a rate of 1,500 a year. The city’s 2025 goal is to eliminate more than 11,000 parking spaces from its streets to make space for cycling.

San Francisco and New York have adopted the concept of “parklets”. These are mini parks or outdoor café seating areas that temporarily replace a few parking spots during low-demand periods.

The theory is that as the amount of parking decreases, the appeal of driving gives way to more environmentally friendly transport modes such as walking, cycling, ride-hailing, car pooling and public transport.

Some evidence suggests reducing or capping parking pays off. In cities that have implemented these measures, driving has declined and public transport use has increased.

What’s happening in Australia?

Among the largest Australian cities, Brisbane seems to be going backwards. The Courier Mail recently published a story stating that:

Read More...

Property Listings Decline in July
by Louis Christopher, CEO

Figures released today by SQM Research reveal national residential property listings continued to decline in July by 2.8%, to 316,391 from 325,404 in June 2019. Compared to 12 months ago, listings were up by 0.7%.

All states experienced a decline in property sales listings over the month, with Sydney experiencing the highest decline at 7.6% followed by Perth with a 4.0% decline. Brisbane recorded the lowest decline at 1.9%

Year-on-year Sydney’s listings declined by 10.5%, Darwin declined by 4.8% and Perth by 2.6%. All other states recorded increases in their year-on-year listings.  Canberra’s increase was 17.1%, the highest increase in the nation, followed by Hobart with an increase of 11.5%.



July’s result was no doubt affected by seasonality with the winter months historically a low time for new listings. However we note there was also a large decline in older stock, which may indicate that sales rates did rise in July or more vendors opted out of their sales campaigns.

The rise in asking prices in Sydney of 2.6% for houses (+1.2% for units) indicates increased confidence by vendors of a turnaround in the market. Vendors in Sydney would be well advised though to not get ahead of themselves in what is still a cautious market.


Asking Prices

Capital City asking prices increased marginally by 1.7% for houses and 0.6% for units, over the month to 6 August 2019. Unit asking prices are now $566,500 and houses $919,900.  

Compared to a year ago, the capital city asking prices posted declines of 4.3% for houses and declines of 1.8% for units.

Sydney and Canberra’s property prices continue to post increases and were the only capital cities to record increases over the month for both houses and units. Sydney increased by 2.6% for houses and 1.2% for units, whilst Canberra increased 1.6% for houses and 0.5% for units.

Melbourne managed minor increase in house prices of 0.1% but recorded a 0.1% decrease for units over the month.  Darwin also recorded increases of 1.5% for houses and decrease of 0.3% for units.  Hobart prices decreased 0.8% for houses and remained steady in the unit market.

Brisbane, Perth and Adelaide all recorded decreases in house and units prices over the month.  Perth recording a decrease of 1.3% for houses and 1.1% for units; Brisbane recorded a decrease of 0.1% for both houses and units and Adelaide’s decrease was 0.3% for both houses and units.



 
DISTRESSED PROPERTY OF THE WEEK

Unit 220, 70 River Road, Ermington NSW 2115 

The desperate vendor of 220/70 River Road, initially advertised this apartment in May 2019 for $675,000 and has now reduced the price to $665,000 after having purchased it off-the-plan for $725,000 during the boom period.  The advert also states that the unit is being sold for $50,000 less than other units with similar floor plans in the complex.
 
Completed in 2016, this 91 sqm apartment is within the new urban water front community known as the Royal Shores which offers resort style living.  Perched on the water’s edge of the Parramatta River, it offers easy access to the river boardwalk, cycle way, parks and the new ferry wharf that connects Parramatta to Sydney.  The complex is also close to Rhodes Shopping Centre, Homebush DFO, restaurants and a selection of schools.  Sydney CBD is approx. 19km.
 
The apartment has a bright, open plan living and dining area with engineered timber tiles, a Kitchen with Caesar Stone bench tops and SMEG stainless steel appliances, 2 spacious bedrooms with built-in robes, 2 bathrooms, a large open balcony, Reverse cycle air conditioning and a video intercom security system.
 
The Royal Shores complex has a total of 632 apartments over 9 separate buildings.   Apartment 220/70 River Road is one of over 12 apartments currently being sold in the Royal Shores complex. These include
Unit 610 (approx. 128sqm), currently on sale for “offers around $650,000 - priced to urgently sell”; 229/68-72 River Road also has a reduced asking price; 225/68-72 River Road (approx. 90sqm) has an asking price of $760,000.  Unit 612/70 River Road sold for $650,000 in May 2018 and 330/68-72 River Road sold for $670,000 in March 2019.
 
SQM data shows current
asking price for apartments in postcode 2115 range from $750k to $760k and have increased 3.0% over the last month, after a 12 month decline of 4.1%. In comparison, Sydney region’s asking prices for apartments has increased 1.2% over the month after a 12 month decline of 2.5%.
 

Weekly rents in the area have decreased marginally by 0.9% over the last month after an 11.3% decline over 3 years.  The decline is slightly higher than the Sydney region where rents for apartments have declined 0.5% over the month after a 0.9% decline over 3 years.
 
Investors can expect rents of approx. $500 to $515 per week – similar to the Sydney region.  A
gross rental yield of 3.54% can be achieved for apartments in this area, compared to 3.71% in the Sydney region.  The vacancy rate in this area is currently 2.9%.
 
Why the lower asking price for this Ermington apartment?  Ermington along with the Parramatta area experienced the most new apartment developments in Sydney over the past financial year, so reports are that there is still an oversupply.
 
In 2018, Ermington was named one of
17 Sydney suburbs declared ‘danger’ markets for buying property due to the risk of prices falling long after a home is purchased. 
 
Buyers are also being cautious and are extra vigilant following building and safety issues with new Sydney apartment buildings such as the Opal Tower in Olympic Park, Mascot Towers , ‘Sugarcube’ in Erskineville, and the Zetland development.  New apartment blocks built in the last 5-10 years in Sydney are coming under scrutiny which could be further impacting prices in this area. 
 
SQM Research CEO Louis Christopher said these incidents had a lot of buyers on high alert.
“Right now they’re far more wary than 12 months ago. There has been an element of caution with off-the-plan developments, the recent Sydney case studies that have received a lot of headlines will aggravate that caution for sure.  However, we need to continue to supply to that market – in part that has to be multi-storey apartments to meet the underlying demand for each city.”


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: 6 Aug 2019 Asking Price Chg on
prev wk
Rolling month
% chg
12 month
% chg
Sydney All Houses 1,258.4 8.8  2.6%  -6.8% 
All Units 701.4 1.6  1.2%  -2.5% 
Melbourne All Houses 938.8 3.0  0.1%  -4.6% 
All Units 538.4 -0.5  -0.1%  -1.7% 
Brisbane All Houses 616.4 -0.1  -0.1%  -0.1% 
All Units 371.7 -0.1  -0.1%  -2.3% 
Perth All Houses 649.1 -1.7  -1.3%  -2.2% 
All Units 382.1 -1.0  -1.1%  -2.8% 
Adelaide All Houses 513.4 -1.1  -0.3%  2.3% 
All Units 299.7 -0.1  -0.3%  -0.8% 
Canberra All Houses 806.9 2.8  1.6%  -0.8% 
All Units 432.7 -1.2  0.5%  5.3% 
Darwin All Houses 592.7 2.5  1.5%  0.3% 
All Units 354.6 -0.4  -0.3%  -4.0% 
Hobart All Houses 514.5 -0.4  -0.8%  5.4% 
All Units 306.0 0.5  0.0%  0.8% 
National All Houses 565.9 1.4  0.0%  -9.0% 
All Units 377.2 -1.0  0.6%  -4.8% 
Cap City Average All Houses 919.9 1.4  1.7%  -4.3% 
All Units 566.5 0.7  0.6%  -1.8% 
Next update: 13 Aug 2019
 
SQM Research Weekly Rents Index
Week ending: 4 Aug 2019 Rent Chg on
prev wk
Rolling month
% chg
12 month
% chg
Sydney All Houses 687.5 2.5  0.2%  -3.0% 
All Units 500.2 -1.2  -0.5%  -3.3% 
Melbourne All Houses 527.5 -2.5  -1.9%  0.9% 
All Units 421.8 -0.8  -0.3%  2.7% 
Brisbane All Houses 462.1 -1.1  0.0%  1.8% 
All Units 373.9 -0.9  -0.1%  1.1% 
Perth All Houses 432.4 1.6  -2.2%  2.2% 
All Units 339.8 -0.8  0.8%  4.6% 
Adelaide All Houses 398.5 -0.5  -0.0%  3.7% 
All Units 311.9 1.1  1.0%  4.1% 
Canberra All Houses 614.0 -5.0  -1.6%  -3.3% 
All Units 460.4 -0.4  0.1%  6.0% 
Darwin All Houses 518.7 -6.7  -1.2%  -0.3% 
All Units 371.3 0.7  0.8%  -8.4% 
Hobart All Houses 448.1 -5.1  2.0%  12.8% 
All Units 397.9 -5.9  2.0%  11.0% 
National All Houses 440.0 2.0  0.0% 1.9% 
All Units 367.0 -3.0  -0.3%  3.7% 
Cap City Average All Houses 547.0 2.0  -0.5%  -0.4% 
All Units 439.0 -2.0  -0.5%  -0.5% 
Next update: 12 Aug 2019
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