Here are positive signs from out there in real estate land.
Sellers don’t need to discount as much as they once were. According to APM, discounting peaked in late 2011 across most urban centres. Today, vendors on average need to discount between 5% and 8%, depending on location. Remember, these discounts are from the first advertised price, which for mine, is usually inflated and more often than not by at least 5%. But keep in mind it is still a buyer’s market and vendors still need to be strategic (and even surgical) in their approach if they are going to get a result.
Residential listings are also starting to decline. Across the country they are down 4% over the last month. All major cities experienced a monthly decline. But when looking at the annual change, the slow-down nationally has been less impressive, with some areas seeing a rise in resale stock and others large drops. SEQ has seen a 10% drop in the amount of property for resale since April 2011; Perth, too, has seen a big drop in new listings (down 14%) and Sydney now has fewer resale properties for sale (dropping by 8%). Hobart(up 29%); Melbourne(up 11%); Canberra(up 9%) and Adelaide(up 6%) – all are seeing more resale property on the market this April compared to a year ago. A good clockis rarely wrong.
The Queensland property market has recorded its third consecutive quarter of positive growth in confidence, according the latest PCA-ANZ index. Nationally, Queensland recorded the second highest increase in confidence – just behind Western Australia. For the first time this survey has shown a firming of residential growth expectations – a sign that the Queensland residential market – by and large – has begun a recovery.
Budget impact
This week’s Federal Budget detailed a range of changes to superannuation including a significant hike in the tax on super contributions for allegedly wealthy Australians. Many in the industry are concerned that the move could take the shine off super as a sound investment for building wealth in retirement. The shine is also being knocked off by government’s constant tinkering (tampering really) with the superannuation system.
The usual suspects rallied saying that the budget did little for the housing industry. I disagree. The messing around with super combined with the fall in interest rates, rising rents and an erratic stock market must make investment property more attractive.
Let’s do some quick maths. A three-year investment loan now costs under 6% per annum. Gross rental yields for well-positioned/designed investment stock often now exceed 5%. If you buy a new property, the ATO(via depreciation) will give most investors something like $10,000 back each year and over ten years, sometimes longer. We are starting to approach positive return territory again and this doesn’t take into account future rental increases or potential long-term capital growth.
Thanks Wayne, a lot of superannuation monies will now find its way into a more transparent investment class – investment property.
I have a lot of respect for Matusik, but I can see some flaws in his points.
If vendors have lowered their sometimes unrealistic expectations, then clearly the discounts will reduce, as will the time on market. So although it's a positive sign, it just may not be as positive as Michael suggests.
The lower number of listings in some capitals is certainly positive, but even that may be because vendors have chosen to rent the houses instead. With reasonable rental returns and lower interest rates, vendors have the option to wait and see. If rates fall further and returns become positive, they will be happy with that strategy, and fewer homes will come onto the market. Then he will be correct.
Any expressed market opinion is my own and is not to be taken as financial advice
It's a bit unclear whether Michael is talking about QLD (his area of 'expertise') or Australia in general. Cameron Kusher (RP Data) writes a column in Sunday's CM (rarely available on line, sorry). for the past year Kusher has been calling the bottom, and about to rise in Brisbane in every second article. Here's a contrast to MM's article...
Quote:
Sellers don’t need to discount as much as they once were. According to APM, discounting peaked in late 2011 across most urban centres. Today, vendors on average need to discount between 5% and 8%, depending on location. Remember, these discounts are from the first advertised price, which for mine, is usually inflated and more often than not by at least 5%. But keep in mind it is still a buyer’s market and vendors still need to be strategic (and even surgical) in their approach if they are going to get a result.
Vendor discounting has risen from 8.9% to 9.5% for houses in the last year (7.8 to 7.5 for units) in Brisbane, according to Kusher.
Quote:
Residential listings are also starting to decline. Across the country they are down 4% over the last month. All major cities experienced a monthly decline. But when looking at the annual change, the slow-down nationally has been less impressive, with some areas seeing a rise in resale stock and others large drops. SEQ has seen a 10% drop in the amount of property for resale since April 2011; Perth, too, has seen a big drop in new listings (down 14%) and Sydney now has fewer resale properties for sale (dropping by 8%). Hobart(up 29%); Melbourne(up 11%); Canberra(up 9%) and Adelaide(up 6%) – all are seeing more resale property on the market this April compared to a year ago. A good clockis rarely wrong.
Kusher says that advertised properties have risen 12.7% across the combined cap cities for the year. SEQ listings have dropped 10% over the year according to MM, while Brisbane properties advertised have risen 2.3% from the same time next year.
Quote:
The Queensland property market has recorded its third consecutive quarter of positive growth in confidence, according the latest PCA-ANZ index. Nationally, Queensland recorded the second highest increase in confidence – just behind Western Australia. For the first time this survey has shown a firming of residential growth expectations – a sign that the Queensland residential market – by and large – has begun a recovery.
three consecutive quarters of positive growth in confidence, but far more than three consecutive quarters of price falls in Brisbane.
i don't see any evidence of recovery in qld.
edit - not worthy of it's own thread. usually bad weather is blamed for poor turn outs at property auctions/opens. this weekends CM spruiker, Michelle claims that good weather caused a poor turn out. Good weather equals bad results, bad weather equals bad results. I know when i was shopping i would only inspect properties if the temperature was between 24.8c and 27.7c, with 10-30mm of rain.
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