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SQM Research Residential Newsletter - 
Tuesday 15 December 2020
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Words for the Week

"My idea of Christmas, whether old-fashioned or modern, is very simple: loving others. Come to think of it, why do we have to wait for Christmas to do that?" 

Bob Hope

Real Estate Realities 

Housing affordability worsens in major cities: Biggest price rises at entry-level, new data shows

Despite government assurances that housing affordability was a priority, the market has been left to its own devices. New data shows it's the most affordable properties with the biggest price hikes in many cities.

Entry-level property prices are rising faster than other markets in some of our largest cities, pushing the Great Australian Dream of home ownership further out of reach for first-home buyers.

The top end of town led the price rebound as cities emerged from coronavirus restrictions, but it’s the cheapest homes now driving the market recovery – and in some capitals, entry-level prices are hitting new peaks.

Price rises in the affordable end of the market outpaced the midway point over the past five years in multiple cities, new Domain data modelling shows, climbing at more than double the rate in Melbourne.

The new figures - which break down property value growth over the past five years by price percentile - show Melbourne’s lowest house prices increased almost 45% between the September quarters in 2015 and 2020, and at $465,000, are now more expensive than at the peak of the market, despite the subsequent market downturn and the economic impacts of the pandemic.

By comparison, house prices at the 50th percentile (the midway point of the market) rose less than 19% over the five years to $725,500 and were still $14,500 short of their boom-time price.

Read More...

HOUSING BOOM & BUST REPORT - Out Now!



Want to know the outlook for the Australian property markets in 2021?

Well Louis Christopher's 2021 Housing Boom & Bust Report was released on 3 December 2020.

As the nation works its way out of the worldwide pandemic and out of Australia’s first recession in 30 years, forecasting the property market will be difficult but the 2021 Housing Boom and Bust report will provide an accurate, impartial and detailed guide to the Australian property market in 2021.  

Key features of the 2021 Boom & Bust report will include:

  • Louis Christopher's personal take on the markets 
  • Capital city forecasts 
  • Main drivers of demand and supply at present and going forward 
  • All leading indicators such as stock on market, vacancy rates etc
  • Nearly every city and regional postcode covered re: property stats plus ratings outlook

If you are interested in where the market is heading on a national level, then this is the report for you from one of the most accurate housing market forecaster in the country. 

If you’re a real estate professional, financial planner or a regular mum and dad residential property investor, you will not want to miss this report, still only priced at $59.95.  Click here to purchase your report.

 
 

NATIONAL VACANCY RATES STABLE IN NOVEMBER

by Louis Christopher, CEO


SQM Research today has revealed the national residential rental vacancy rate remained stable at 2.1% over the month of November 2020.  The total number of vacancies Australia-wide is now 72,879 vacant residential properties.  This time last year, the national vacancy rate was higher at 2.2%.

In most capital cities the vacancy rate remained stable over the month except for Sydney which saw a minor decrease from 3.6% in October to 3.5% in November.  Brisbane also recorded a decrease from 2.0% in October to 1.8% in November.  

Melbourne’s vacancy rate remained at 4.4% in November and is the highest vacancy rate in the nation. This time last year, Melbourne’s vacancy rate was low at 2.2%. Hobart’s vacancy rate remains the lowest in the nation at 0.6%. 

The surplus of rental property is most acute in Melbourne and Sydney’s CBDs.  The
Melbourne CBD vacancy rate stands at 9.1% in November, although having declined from a high of 10.8% in September, mostly comprising of units - 2137 vacant units in September falling to 2030 in early December.  Sydney CBD vacancy rate peaked at 16.2% in May 2020 but has declined to 9.5% in November.  Currently there are 705 vacant units as at December 2020, declining from 1214 in May 2020.




Asking Rents

Over the month, Capital City average asking rents increased 0.4% for houses but decreased 0.2% for units for the week ending 12 December 2020 to record asking rents of $540 per week for houses and $408 per week for units. 

Most capital cities recorded increases in both house and unit asking rents, with
Darwin recording the highest increase of 6.7% over the month for houses and 4.3% in unit asking rents, followed closely by Hobart which recorded a 6.4% increase in house rents and 3.3% increase in unit rents.
 

Sydney recorded rental increases in houses of 0.9% but a decline in units rents of 0.6%.  Canberra also recorded increases in house rents of 3.5% and unit rents declined by 1.2%. Brisbane, Adelaide and Perth house and unit rents also increased over the month.  Melbourne however, recorded declines in both house and unit asking rents over the month of 0.1% and 1.4% respectively.

Year on year, Capital City Average asking rents declined for both houses and units - 1.8% and 6.0% respectively.  Sydney in particular recording a high 6.7% decline in houses and 9.6% decline in units in November 2019.  Melbourne’s asking rents also declined year on year, 4.1% for houses and 6.7% for units. 

Darwin’s year on year house rents saw a significant 21.2% growth and Perth house rents increased by 10.5% and units 9.5% growth over 12 months.


Commentary

Louis Christopher, Managing Director of SQM Research said, "Rents for units in our two largest cities are still falling, though I note there appears to be a commencement of a reversal in the abundance of listings in the CBD’s of these two cities. They are still very elevated. But we could be starting to see some of the population moving back to the CBD and inner city locations.”



AUCTION RESULTS for week ending 13 December 2020

Full individual auction results can be found on our website: 



AUCTION LISTINGS* for week ending 20 December 2020


CITY

Saturday

Rest of Week

 

STATE

Saturday

Rest of Week

Link

Sydney 587 194   All NSW 683 330 Auctions in NSW
Melbourne^ 957 290   All VIC 1044 306 Auctions in VIC 
Brisbane 72 56   All QLD 136 128 Auctions in QLD 
Perth 13 7   All WA 16 12 Auctions in WA 
Adelaide 75 64   All SA 75 67 Auctions in SA 
Canberra 50 49   All ACT 50 49 Auctions in ACT 
Darwin 1 4   All NT 1 4 Auctions in NT 
Hobart 0 0   All TAS 0 1 Auctions in TAS

* The above counts of auctions represent most recent known auction dates for the coming week.  ^As at 18-Oct-20, Melbourne outdoor auctions will be allowed (max. 10 people).
 

DISTRESSED PROPERTY OF THE WEEK

270 King Street, Melbourne Vic 3000
 
A 3-bedroom apartment in Melbourne’s CBD is for sale at $579,000.  It was initially selling for $590k to $640k in June 2020 and last sold for $520,000 in April 2019.  The vendor says it must sell and it looks like being the cheapest 3-bedroom apartment in the CBD.
 
With approximately 85sqm floor space, the apartment comprises of a large size master bedroom with ensuite bathroom, another large size bedroom with BIR and a third bedroom/study.  It also has a well-proportioned European gourmet kitchen, a second bathroom with Euro laundry and brand new hardwood timber floors throughout the apartment.
 
The building’s facilities include indoor heated pool, a well-equipped gymnasium, spa bath, live-in building manager and high-tech security. 
 
It is conveniently located in the heart of Melbourne CBD, within walking distance to Coles, DFO, Queen Victoria Market, Flagstaff Garden, Central Shopping Mall, Haileybury private school and trams and Flagstaff train station.
 
The apartment would be suitable to the first home buyers, downsizers and smart investors.
 

Asking prices for units in postcode 3000 have declined by 0.5% over the month after a 3-year increase of 2.0%.  Currently, asking prices in this postcode range from $480k to $550k, with 3-bedders potentially increasing to $900k.  In November there were 849 units listed for sale in this postcode and 2,030 units listed for rent.
 

Asking rents for units in this area have declined by 4.6% over the month and has been a huge decline of 30.7% over 12-months due to Covid-19 lockdown.  Nevertheless, a current Gross rental yield of 4.3% can be achieved for units in this postcode.
 

Vacancy rates were an all time high of 10.8% in September during Victoria’s strict stage 4 lockdown but has been slowly declining to 9.1% in November. 
 
Melbourne’s CBD faced a significant disruption during its Covid-19 second-wave however, now that Victoria has over 45 days in a row without local infections, the property market does seem to be rebounding with the return of city workers and the re-opening of restaurants and businesses.


You can monitor 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 Dec 2020 Asking Price     Chg on
prev wk
   Rolling month
% chg
  12 month
% chg
Sydney  All Houses    1,398.7 16.7  2.8%  4.8% 
All Units 671.5 0.5  0.0%  -6.3% 
Melbourne  All Houses 1,026.5 3.3  0.1%  1.8% 
All Units 575.8 -0.5  0.0%  4.5% 
Brisbane  All Houses 655.2 -0.6  0.2%  2.9% 
All Units 379.0 -0.1  -0.2%  2.2% 
Perth  All Houses 663.6 -0.9  -1.3%  1.5% 
All Units 382.3 1.7  0.7%  1.4% 
Adelaide  All Houses 537.0 0.2  0.8%  3.2% 
All Units 315.1 -1.3  0.1%  4.2% 
Canberra  All Houses 817.6 1.2  0.9%  -0.9% 
All Units 474.6 -0.6  0.4%  9.1% 
Darwin  All Houses 589.1 4.9  1.1%  3.3% 
All Units 355.9 0.1  0.9%  14.6% 
Hobart  All Houses 593.3 5.3  2.6%  10.0% 
All Units 379.6 -10.1  -3.4%  13.5% 
National  All Houses 638.4 1.9  1.0%  8.8% 
All Units 410.3 -0.1  0.5%  6.2% 
Cap City Average   All Houses 1,003.2 10.2  1.8%  2.7% 
All Units 565.4 0.6  0.0%  -1.9% 

Next update: 22 Dec 2020

SQM Research Weekly Rents Index
Week ending: 12 Dec 2020       Rent          Chg on
prev wk
    Rolling month
% chg
  12 month
% chg
Sydney  All Houses     638.4 0.6  0.9%  -6.7% 
All Units 446.5 -0.5  -0.6%  -9.6% 
Melbourne  All Houses 512.5 0.5  -0.1%  -4.1% 
All Units 382.6 -1.6  -1.4%  -6.7% 
Brisbane  All Houses 469.7 2.3  0.5%  0.2% 
All Units 378.9 2.1  0.4%  0.1% 
Perth  All Houses 485.2 -0.2  1.3%  10.5% 
All Units 365.5 0.5  0.9%  9.5% 
Adelaide  All Houses 421.8 1.2  0.7%  4.9% 
All Units 314.8 0.2  1.9%  0.3% 
Canberra  All Houses 655.8 8.2  3.5%  1.1% 
All Units 473.9 -2.9  -1.2%  2.4% 
Darwin  All Houses 585.4 5.6  6.7%  21.2% 
All Units 395.2 4.8  4.3%  3.8% 
Hobart  All Houses 461.1 4.9  6.4%  1.7% 
All Units 401.0 -2.0  3.3%  -5.1% 
National  All Houses 483.0 -1.0  -0.4%  7.8% 
All Units 381.0 -1.0  0.0% 4.7% 
Cap City Average   All Houses 540.0 0.0 0.4%  -1.8% 
All Units 408.0 0.0 -0.2%  -6.0% 

Next update: 20 Dec 2020

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