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SQM Research Newsletter - Tuesday 16 July 2019
Property Valuations
Research Reports
Distressed Properties Report
Funds Research
Boom and Bust 2019 Report

Black Dragon's
Words for the Week

"The more often a stupidity is repeated, the more it gets the appearance of wisdom."

Real Estate Realities 

IKEA affordable homes: furniture giant branching out into building houses in the UK – and they’re definitely not ‘flat-pack'

When many of us look to redecorate or kit out a new home, we often head straight to IKEA.

Their low-cost and flat-pack furniture can be found in many homes and there’s a store in many cities, but now the furniture giant is going one step further, branching out to building homes.

The idea is to offer an affordable option for people trying to get on the housing ladder, which will be both sustainable and low cost.

The model has already been rolled out in Finland, Norway and Sweden but now the concept is coming to the UK.

BoKlok, a company jointly owned by IKEA and construction group Skanska, has been building blocks of flats and terraced houses for over 20 years.

They are now looking for land to build homes on in the UK and it’s understood that Worthing, in West Sussex will be the first UK site.

At a recent council meeting, Worthing Borough Councillors voted in favour of a collaboration with BoKlok, which would see 162 flats built on council-owned land.

Just under a third of these homes (30%) would be provided to Worthing Borough Council to be used as social and affordable housing.

The remaining 70% would be 'genuinely affordable' housing based on BoKlok’s “left to live” model, which takes into account the average salary of a full-time worker and how much money they can realistically afford to pay out on a mortgage.


Vacancy Rates Increased in June 2019
by Louis Christopher, CEO

Data released by SQM Research today has revealed the national residential rental vacancy rate increased in June 2019 to 2.3%, an increase from 2.2% in May.  The total number of vacancies Australia-wide is now at 78,690 vacant residential properties, an increase of 3,597 over the month and up 2,933 dwellings over the past 12 months.
Nearly all capital cities recorded minor increases ranging from 0.1% to 0.2% over the month, Darwin was the only capital city to record a decrease of 0.2% to 3.1% in vacancy rates.
Sydney continues to have the highest vacancy rates in the country at 3.5%, an increase of 0.2%. This is the highest for Sydney since 2005.  Perth’s vacancy rate is not far behind at 3.2%, having increased 0.1%.
Melbourne’s vacancy rate increased to 2.0%.  Hobart’s vacancy rate remains steady at 0.5% and continues to record the lowest vacancy rate in the country.

The increase in rental vacancies in June tends to be a seasonal rise for the start of winter however Sydney’s increases goes beyond seasonal factors and so our expectation remains that Sydney will reach a 4% vacancy rate before 2019 is completed.
Melbourne is also likely to record more rises in rental vacancies as newly completed dwellings purchased as ‘off-the-plan’ in the last boom, enter the rental market now.
In spite of the rise in vacancies this month, Brisbane, Adelaide and Hobart’s rental market is in favour for landlords as in these cities have also recorded moderate increases in asking rents for the month and continue to record muted dwelling completions.

Asking Rents

Capital city asking rents declined 0.4% for houses but remained steady for units for the week ending 12 July 2019 to record asking rents of $551 per week for houses and $441 per week for units. 

In comparison, over the 12 months, asking rents for houses increased 0.4% but declined 0.7% for units.
Sydney and Melbourne’s asking rents for houses and units both declined in July. Sydney rents dropped 0.5% for houses and 0.2% for units to 12 July and Melbourne’s drop was 0.9% for houses and 0.2% for units. 

Brisbane, Adelaide and Hobart were the only states to experience increases in weekly rents for both houses and units. Adelaide’s house rents increased 1.1% and units by 0.4%, Brisbane’s house rents increased by 1.0% units increased by 0.7%. Hobart’s house rents increased 3.6% and units increased by 4.9% (the highest among all states).


438 Cross Road, Clarence Park SA 5034 

This large 780 sqm allotment in Clarence Park, South Australia, approx. 7 km from Adelaide’s CBD has long been held within the same family and is now for sale to finalise a Deceased Estate.  It was passed in at auction in May 2019 and is now selling at $495,000 to $540,000.
It is a 3 bedroom, 1 bath home with a carport and large backyard and should attract a savvy buyer who wants to renovate and further develop this traditional home.  It is zoned Residential B200 within the Unley Council Zone, and there are opportunities for developers to utilise the land for higher density living (STCA).

The property is well located close to Emerson railway station, Cumberland Park shopping precinct, schools and cafes.  The area has experienced capital growth of 35.5% over 3 years for 3 bedroom houses and has increased 1.9% over the last month.  You would expect to pay from $785,000 to $855,000 for houses in postcode 5034.  Keep in mind this property needs further renovation.
Unit asking prices have also experienced good growth of 16.4% over 12 months and 10.4% over the month.  Investors would be pleased with the 21.1% increase in
asking rents over 3 years and 6.1% increase over the month for units. Houses have had more modest rental growth at 1.3% increase over the month after a 19.6% increase over 12 months.

Gross rental yield sits at 3.22% for houses and 5.76% for units for postcode 5034 and vacancy rates are tight at 1.7%.  As at June 2019 there were 37 houses and 18 units listed for sale in this area.
This property offers potential for buyers looking for capital growth and good rental returns.  Recently the Adelaide market has seen an increase in infrastructure projects, low house stock levels and a modest 1.0%
population growth in 2016 which has resulted in steady growth and could continue to drive up prices.  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.


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.

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SQM Research Weekly Asking Prices Index
Week ending: 16 Jul 2019 Asking Price Chg on
prev wk
Rolling month
% chg
12 month
% chg
Sydney All Houses 1,234.1 7.1  0.4%  -8.2% 
All Units 697.0 3.7  1.2%  -3.8% 
Melbourne All Houses 934.9 -2.7  -0.4%  -5.1% 
All Units 538.7 -0.3  -0.5%  -1.6% 
Brisbane All Houses 617.5 0.4  -0.1%  -0.0% 
All Units 372.3 0.1  0.2%  -2.2% 
Perth All Houses 656.2 -1.1  0.2%  -1.8% 
All Units 384.4 -1.7  -0.2%  -2.8% 
Adelaide All Houses 514.6 -0.4  0.2%  1.8% 
All Units 299.8 -0.8  -0.7%  -0.3% 
Canberra All Houses 794.3 -0.0  -0.9%  -2.4% 
All Units 431.9 1.2  0.0%  6.6% 
Darwin All Houses 584.2 0.3  -1.0%  -1.3% 
All Units 355.8 0.2  0.4%  -5.4% 
Hobart All Houses 517.4 -1.0  -0.4%  5.4% 
All Units 305.7 -0.2  0.1%  2.8% 
National All Houses 569.6 3.9  0.2%  0.2% 
All Units 376.4 1.5  0.7%  0.3% 
Cap City Average All Houses 909.8 4.8  0.0%  -5.0% 
All Units 565.8 2.9  0.4%  -2.5% 
Next update: 23 Jul 2019
SQM Research Weekly Rents Index
Week ending: 12 Jul 2019   Rent   Chg on
prev wk
Rolling month
% chg
12 month
% chg
Sydney All Houses 685.9 2.1  -0.5%  -3.3% 
All Units 501.7 -0.7  -0.2%  -3.8% 
Melbourne All Houses 534.9 -0.9  -0.9%  2.4% 
All Units 423.2 0.8  -0.2%  2.8% 
Brisbane All Houses 464.5 1.5  1.0%  2.8% 
All Units 374.6 0.4  0.7%  1.1% 
Perth All Houses 435.7 -3.7  -2.9%  2.6% 
All Units 339.3 1.7  0.9%  4.1% 
Adelaide All Houses 399.9 0.1  1.1%  4.4% 
All Units 309.7 0.3  0.4%  3.4% 
Canberra All Houses 624.0 -2.0  0.9%  -1.1% 
All Units 461.5 0.5  -0.2%  5.0% 
Darwin All Houses 527.8 -0.8  3.0%  -2.4% 
All Units 369.3 1.7  -0.4%  -8.8% 
Hobart All Houses 450.6 9.4  3.6%  13.0% 
All Units 407.8 4.2  4.9%  17.4% 
National All Houses 442.0 1.0  0.2%  2.3% 
All Units 368.0 2.0  -0.5%  3.7% 
Cap City Average All Houses 551.0 2.0  -0.4%  0.4% 
All Units 441.0 0.0    0.0% -0.7% 
Next update: 20 Jul 2019
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