SQM Research Weekly Newsletter
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SQM Research Newsletter - Tuesday 9th April 2014
Property Valuations
Research Reports
Discounted/Distressed Properties
Funds Research
Black Dragon's
Words for the Week

"There is only one way to avoid criticism: do nothing, say nothing, and be nothing."

- Aristotle

Rude Real Estate Realities 

Have a look at the quaint little house below -

Quite the pretty picture, right? RIGHT?!

Well then it will come as a surprise to know that his home was pretty much eaten away by rats from the inside!

Click on the article link below to see pics of the interior or what is left of it.

Rats eat a Melbourne home from the inside

Australia's Stock Levels Rise

The number of Australian residential property listings rose slightly during March, with national stock on market coming to a total of 352,369 – a monthly increase of 1.8%.

All capital cities except for Canberra experienced monthly increases, with Melbourne, Perth and Sydney recording the most substantial rises – 5.0%, 5.2% and 6.8% respectively.

That being said, year-on-year the nation’s stock is down by -5.2%, with Sydney still recording significant falls: -17.0% since March 2013. Contrastingly, Darwin’s stock levels have soared since this time last year, revealing a 12.8% yearly increase in sales listings.

Stock on market levels tend to have a strong seasonal influence month on month, hence why SQM Research focuses on the year on year change. In April SQM Research does expect a fall in listings due to the Easter holiday period.

Managing Director of SQM Research, Louis Christopher says, “There are no new trends that have come out of the data this month other than we note that Melbourne still has an elevated amount of listings in the market and so this has made us sceptical of recently reported large increases in dwelling prices for that city. There is also further evidence that Melbourne vendors, overall have struggled to lift their asking prices.”

Some Words from Managing Director, Louis Christopher 
Is Negative Gearing Being “Looked At”?
There was an SBS report in recent days suggested the Federal government is "looking at" this tax benefit. Macrobusiness were the first to republish it, and now so am I.

According to the story 
Government sources say one of the changes being considered by Treasury is the grandfathering of arrangements for existing investors, but limiting future access to negative gearing so only new properties will be eligible.”
I can confirm from a recent event I attended that this is a possibility indeed.

Of course, while “looking at” negative gearing is one thing, making real change is another. Making such change takes character and strong support from the cabinet.
Now I am rather surprised the media has not picked up on this news story as it would be a serious game changer for the property market and all those who participate in it, presuming the details of the SBS scoop are correct.
In terms of timing, it would almost be perfect. In my opinion, if you were to time such a repeal, you would do it while the market was in recovery and not while it was having a downturn. Implementing such a change may also hold off interest rate rises. But in all this, I am also aware that they don’t want to kill the goose that lays the golden egg in terms of a construction recovery. Off memory it was also mentioned at this event, that the government didn't want to kill the economy in attempting to put the budget back into the black.
For a period of time, I think it could be safely said that if negative gearing was repealed or altered, investors would back off buying into the housing market, which is what those who are demanding lower dwelling prices want to see. But if the story above is correct i.e. keeping negative gearing on new dwellings, then we may well keep the dwelling construction side of the economy going.
If there was some type of grandfathering provision, then, I would expect a massive rush of investors jumping in before the date, then afterwards - a slump. Possibly similar to the intro than wind back of the First Home Buyer boost of 2009-2010.
Obviously the devil will be in the detail, which presumably will come out closer to or at the budget in May.
Interesting days. 

Distressed Property of the Week

This week's distressed property comes from the Melbourne CBD in Victoria  - 2304/8 Exploration Lane, Melbourne 3000. SQM Research has recently been drawing attention to this capital city's rising CBD vacancy rates (currently at 6.2% - 3.2% higher than what SQM considers to be equlibrium), so it comes as no surprise that there are a few desperate vendors in the area, trying to flog investment properties they have been unable to lease.

 As can be read from the screenshot above (taken from SQM Research's Distressed Properties Report) the property is "priced to sell" by an "anxious seller!". Our records show the the property was once priced at $560,000 back in 2010, showing that over four years, this two bedroom unit's asking price has dropped by just over $100,000.

To get your hands on other distressed properties for sale - check our our Distressed Properties Report HERE.

Top Ten Most Discounted Properties

Another week of the most discounted properties around the nation and it is hard to believe that only months ago we had 60% of this list occupied with homes from Queensland, when today there stands only one! 

Further to this, the one property left (4 Edgewater Pl Lamb Island) is not even from mainland Queensland - making the dwindling presence of this state even more apparent. 

This result comes after long standing property: 22 White Street Bundamba 4304, disappeared from our top ten due to a swap in agents, whereby the new agency has listed the property with an asking price of $325,000. We aren't exactly sure how a property which couldn't sell at $250,000 is going to sell at $325,000 but time will tell.... 

Although we say time and again that this list is not a meant to be interpreted as an accurate representation of the market place, we do note the trends and have definitely observed the decrease in listings from Queensland and the upsurge of listings from other localities such as Perth, Adelaide, Tasmania and NSW's Central Coast.
Rank Address Suburb Postcode   Initial price Now asking Reduction Days on Mkt     Link
1 4 Edgewater Pl Lamb Island 4184   $425,000 $249,000 41% 1336     link
2 4/45 South Perth Esplanade South Perth 6151   $2,950,000 $1,750,000 41% 315     link
3 747 White Kangaroo Road Campania 7026   $1,600,000 $1,000,000 38% 732     link
4 24d Southbourne Street Scarborough 6019   $1,500,000 $949,000 37% 124     link
5 32 Virginia Court Cranbourne 3977   $390,000 $250,000 36% 279     link
6 116 Perseverance Road Vista 5091   $565,000 $365,000 35% 938     link
7 22/138 Coachwood Road Matcham 2250   $1,750,000 $1,150,000 34% 308     link
8 21 Cotton Court Strathalbyn 5255   $498,000 $339,000 32% 966     link
9 1/23 Albuera Street Battery Point 7004   $2,200,000 $1,500,000 32% 894     link
10 99 Green Point Drive Green Point 2251   $1,150,000 $795,000 31% 1281     link

Want to see where potential bargains could be hiding in your neighbourhood? SQM Research lists all the houses for sale in your chosen postcode that have spent over 60 days on the market, with all the information given above in one report - our Home Discounts Report. To find out more info and get a free sample, click HERE!
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