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SQM Research Residential Newsletter - 
Tuesday 15 September 2020
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Black Dragon's
Words for the Week

“You can't keep snakes in your backyard and expect them only to bite your neighbours. You know, eventually those snakes are going to turn on whoever has them in the backyard.” 

Hillary Rodham Clinton

Real Estate Realities 

Australian house price growth outpaced wage growth in the last financial year, data shows

Australian house prices have outperformed wages over the past financial year, pushing home ownership further out of reach for some, new analysis shows.

In every capital city but two, house price growth was stronger in the year to June than wages growth, even despite the COVID-19 pandemic that has seen dwelling prices tumble and pushed the nation into recession.

Sydney house prices finished the financial year 10.5% higher than the previous year, Domain data shows. But wages for NSW workers inched up just 1.8% over the same period, ABS figures show, leaving housing outperforming wages by 8.7 percentage points.

Melbourne house prices were 6.9%  higher in June than a year ago, but Victorian workers’ wages only grew 1.8%, meaning housing again outpaced income by 5.1 percentage points. 

The wages data measures hourly earnings and does not take into account widespread cuts to hours made during the coronavirus crisis, JobKeeper payments and job losses, suggesting the outlook for many home-buying hopefuls could be even worse.

Yet the figures are a tale of two markets, with other workers who managed to keep their jobs through the pandemic in pole position to take advantage of a rapid turnaround in housing sentiment in March that has since pushed house prices lower.

 

VACANCY RATES DECREASE IN AUGUST

Melbourne continues to record an increase while regional locations become a landlord’s market.

by Louis Christopher, CEO

SQM Research today has revealed the national residential rental vacancy rate recorded a decrease over the month from 2.1% in July to 2.0% in August 2020.  The total number of vacancies Australia-wide is now at 69,971 vacant residential properties.  This time last year, the national vacancy rate was slightly higher at 2.2%.

All capital cities recorded declines in vacancy rates over the month except for Melbourne which again recorded an increase from 3.1% in July to 3.4% for August. There are now an extra 2,145 vacant properties in Melbourne as the stage 4 Covid-19 lockdown continues.

Sydney currently still has the highest vacancy rate in the nation of 3.5%, having declined by 0.1% from July.  Hobart’s vacancy rate is the lowest in the nation at 0.7%, with Canberra and Adelaide also recording low vacancy rates of 0.8% and 0.9% respectively. 




Some Capital City CBD locations have recorded vacancy rate declines over the month, with Sydney CBD dropping to 12.9%, down from its all-time high of 16.2% in May.  Brisbane CBD’s vacancy rate decreased to 11.4% down from its high of 14.0% in June.

However
Melbourne’s CBD has increased to a new all-time high of 10.0%, up from 8.8% in July. Adelaide CBD has also increased from 7.6% in July to 8.4%.  Perth CBD has remained stable over the month at 5.5%.

Most regional locations recorded falls in rental vacancy rates, highlighting the ongoing shift away from inner suburban living into areas offering more room and distancing for occupiers. Sydney’s
Blue Mountains fell to a record low rental vacancy rate of just 0.7%, as did Victoria’s Mornington Peninsula.  While Queensland’s Ipswich fell to just 0.9%.


Asking Rents

Over the month, Capital City average asking rents decreased 1.1% for houses and 0.7% for units for the week ending 12 September 2020 to record asking rents of $529 per week for houses and $414 per week for units. 
 
Most capital cities recorded declines in both house and unit rents except for
Perth and Darwin Darwin recorded the highest rental increases in the country - up 6.0% for house rents and 1.0% for unit rents.
Hobart recorded the highest decline in unit rents of 4.3% and Sydney recorded the highest decline in house rents of 1.7%.

Adelaide recorded a 0.4% increase in house rents but a 0.4% decline in unit rents.
 
Year on year, Sydney, Melbourne, Brisbane and Hobart also recorded declines in asking rents for both houses and units, Sydney in particular recording a high 8.0% decline for houses and 8.1% decline for units in August 2019.


Commentary

The shift towards regional living continues at pace, largely at the expense of higher inner city rental vacancy rates. I suspect there will have to be a high point in this move soon. However, I also suspect there will be a degree of permanency with the massive population shift. Meanwhile Sydney and Melbourne rents continue to fall providing leasing opportunities for tenants who have chosen to stay in town.


AUCTION RESULTS for week ending 13 September 2020

Full individual auction results can be found on our website: 




AUCTION LISTINGS* for week ending 20 September 2020

CITY

Saturday

Rest of Week

 

STATE

Saturday

Rest of Week

Link

Sydney 613 111   All NSW 683 167 Auctions in NSW 
Melbourne* 14 2   All VIC 22 9 Auctions in VIC 
Brisbane 47 25   All QLD 102 73 Auctions in QLD 
Perth 7 4   All WA 8 7 Auctions in WA 
Adelaide 49 30   All SA 50 35 Auctions in SA 
Canberra 58 17   All ACT 58 17 Auctions in ACT 
Darwin 1 2   All NT 1 2 Auctions in NT 
Hobart 0 0   All TAS 2 0 Auctions in TAS

*Note: The above counts of auctions represent most recent known auction dates for the coming week.  As at 8 July, Melbourne auctions are back on-line.
 

DISTRESSED PROPERTY OF THE WEEK

 Unit 5 / 94 First Avenue Railway Estate QLD 4810
 
An inner city townhouse in the Townsville suburb of Railway Estate, Queensland, is for sale at a reduced price of $165,000 having last been sold in 1999 for $82,000.
 
This 2-level townhouse in a small complex of 6, has approx. 118 sqm floor space and features 2 bedrooms with built-in robes, main bathroom with laundry, a second toilet, large kitchen with pantry, a private courtyard, front deck, a covered car space and a storage room.  The complex also has an in-ground pool.
 
The townhouse is located only 8 minutes from the city centre and The Strand, Townsville’s thriving beach foreshore with its restaurants, BBQ and picnic areas and Strand Water Park.  It is also close to Townsville train station, Lavarack Barracks, James Cook University, hospital, schools and major shopping precincts.  The area is ideal for families with kids, retirees and professionals.
 
This property was not affected by the unprecedented Jan-Feb 2019 Townsville monsoon weather event.
 

Asking prices in this postcode have had a price decline of 2.1% for 2-bedroom units over the last month.  House prices have also declined by 0.7% over the last month.  Current asking prices for 2-bedroom units range from $170k to $265k.
 
This area is currently experiencing rental growth and is ideal for investors. 
Asking rents for 2 bedroom units in this area has seen significant growth of 34.9% over the last 3 years and steady increases of 13.1% over 12 months and 5.6% growth over the last month.  However house rental growth has declined over the last month by 4.9%, after a 7.8% increase over 12 months.   A high gross rental yield of 7.6% can be achieved for units in this area.  As for vacancy rates in this area, this has dropped to 1.5% in August from 3.2% in April.
 
The volume of
properties listed for sale has been steadily falling each month this year, with this area now having 371 properties available compared to 404 properties listed in January 2020.
 
During Covid-19 there has been increased demand for regional properties. This area may benefit due to its affordability, liveability and the lifestyle on offer. 


Keep researching  this market with SQM Research’s free property data. Also consider the SQM Property Explorer 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: 15 Sep 2020 Asking Price     Chg on
prev wk
   Rolling month
% chg
  12 month
% chg
Sydney  All Houses    1,364.3 12.7  0.5%  4.5% 
All Units 678.3 -0.4  -0.3%  -2.2% 
Melbourne  All Houses 1,028.2 0.8  0.5%  8.4% 
All Units 563.7 1.3  0.1%  3.5% 
Brisbane  All Houses 644.6 2.7  0.3%  3.3% 
All Units 376.7 0.5  0.2%  1.7% 
Perth  All Houses 661.8 -0.4  -1.0%  1.9% 
All Units 380.5 0.1  0.1%  0.3% 
Adelaide  All Houses 526.2 0.4  0.0%  2.1% 
All Units 308.1 0.0  0.2%  3.2% 
Canberra  All Houses 799.9 -0.5  -1.5%  -2.8% 
All Units 455.0 -0.1  0.9%  4.3% 
Darwin  All Houses 576.4 1.6  0.5%  -2.2% 
All Units 345.2 -0.2  -0.1%  -1.5% 
Hobart  All Houses 574.4 1.4  0.4%  9.8% 
All Units 401.2 3.7  3.2%  23.8% 
National  All Houses 597.2 1.7  0.0%  3.7% 
All Units 398.7 3.3  1.0%  4.8% 
Cap City Average   All Houses 987.9 11.0  0.9%  4.9% 
All Units 564.2 0.5  0.2%  0.0% 

Next update: 22 Sep 2020

SQM Research Weekly Rents Index
Week ending: 12 Sep 2020     Rent        Chg on
prev wk
   Rolling month
% chg
   12 month
% chg
Sydney  All Houses    622.1 -5.1  -1.7%  -8.0% 
All Units 457.5 -1.5  -1.5%  -8.1% 
Melbourne  All Houses 519.4 -1.4  -0.5%  -1.0% 
All Units 393.5 -0.5  -0.5%  -6.0% 
Brisbane  All Houses 464.1 1.9  -0.1%  -0.4% 
All Units 377.3 -0.3  -0.3%  -0.2% 
Perth  All Houses 471.2 -3.2  0.5%  7.0% 
All Units 357.3 0.7  0.7%  5.8% 
Adelaide  All Houses 411.8 1.2  0.4%  3.1% 
All Units 316.4 0.6  -0.4%  1.4% 
Canberra  All Houses 631.9 -2.9  -0.9%  4.8% 
All Units 472.7 3.3  -0.7%  2.9% 
Darwin  All Houses 516.7 15.3  6.0%  0.7% 
All Units 362.3 0.7  1.0%  -4.7% 
Hobart  All Houses 440.4 0.6  -0.3%  -0.6% 
All Units 370.2 -3.2  -4.3%  -10.2% 
National  All Houses 462.0 2.0  0.7%  4.5% 
All Units 371.0 0.0 -0.8%  1.4% 
Cap City Average   All Houses 529.0 -4.0  -1.1%  -2.8% 
All Units 414.0 0.0 -0.7%  -5.5% 

Next update: 20 Sep 2020

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