Property market

The Brisbane unit market is showing consistent growth,&nbsp;according to CoreLogic&#39;s Monthly Hedonic Home Value Index.

Values jumped 1.4%, following the 1.6% gains in March and 1.5%&nbsp;over February. Values are now 6% up over 2022 already, well on their way to matching the 14.4% growth over 2021.

The quarterly performance, up 4.6%, is the highest in the country for the unit market.

The median apartment value in Brisbane is now $488,393. At the start of 2021, it was just over $390,000.

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Following the RBA&#39;s first interest rate rise in nearly 12 years at the May meeting,&nbsp;the Real Estate Institute of Queensland (REIQ) said the&nbsp;resilient Queensland market the higher rate forecasts.

REIQ CEO Antonia Mercorella said given the level of inflation, this may not be the last interest rate rise we see, but it was important to recognise that many market conditions and external factors remain favourable in Queensland.

&ldquo;We know that consumer confidence is key, and this move by the RBA will certainly make people stop and think more carefully about how much they are prepared to borrow, because it&rsquo;s a timely reminder that interest rates can and do go up,&rdquo; she said.

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&ldquo;While on the face of it, it&rsquo;s not an insignificant rise, in the grand scheme of things interest rates have been at historic lows for some time and are still very low.

&ldquo;This is also where our relative affordability is an advantage, as our average home loan rate is much lower than in capital cities like Sydney and Melbourne, and so the impact will be felt less here.

&ldquo;We remain confident in the resilience of the Queensland market because the need and demand for housing is irrespective, and an interest rate rise simply causes people to rethink what they are prepared to spend and how big of a loan they are prepared to enter into.&quot;

Total advertised inventory of both houses and apartments&nbsp;is more than 20 per cent below levels from a year ago in Brisbane, and around 40 per cent lower than the previous five-year average.

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The median apartment value in Brisbane is now $488,393. At the start of 2021, it was just over $390,000

Joel Robinson

Brisbane apartment market insights: What happened over April

Melbourne&#39;s unit market has continued to hold firm despite a cooling off in the house market.

CoreLogic&rsquo;s national Home Value Index pegged the Melbourne-wide apartment growth at 0.4% over April, the third consecutive month growth in the unit market has outstripped growth in the house market.

The Melbourne unit market (which incorporates both units and townhouses), is now 0.2% since the start of 2022, after posting 0.2% growth across March and 0.1% in Feb. Values started the year poorly, going backwards -0.4% in January.

The median apartment value in Melbourne is now $630,671.

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The growth in unit values is a stark contrast to the house market, which is sliding due to the affordability factors brought to more of a head following the RBA&#39;s interest rate hike in May, and expectation of further rate hikes.

Houses Melbourne-wide, on average, have remained flat since the start of 2022, but that was mainly due to a strong start in January. The rolling quarterly growth is now -0.5% after a 0.2% decline across April, CoreLogic data found.&nbsp;

CoreLogic&rsquo;s Research Director Tim Lawless&nbsp;says the weakening state of the market has taken the rolling quarterly trend into negative territory across Melbourne for the first time since these cities were in the midst of extended lockdowns in mid-to-late 2020.

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Advertised inventory, at a national level, is tracking almost 30 per cent below the previous five-year average however, in weaker markets like Melbourne, advertised supply levels have normalised, with listings in Melbourne 8.2%&nbsp;higher.

Higher stock levels across these markets can be explained by an above average flow of new listings coming on the market in combination with a drop in buyer demand

&ldquo;With higher inventory levels and less competition, buyers are gradually moving back into the driver&rsquo;s seat. That means more time to deliberate on their purchase decisions and negotiate on price,&rdquo; Lawless says.

Rental markets are also showing multi-speed conditions, with most of the capital cities experiencing an upward trend in rental growth in 2022. Nationally, rents were up 2.7% over the three months to April, taking the annual change in national rents to 9.0%. A year ago, the annual change in national rents was 4.9 per cent. Based on the annual change, house rents (+9.1 per cent) are rising faster than unit rents (+8.7 per cent), however this trend is changing sharply as demand for unit rentals increases.

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&ldquo;On a rolling quarterly basis, we are now seeing unit rents rising faster than house rents especially in Melbourne where rental conditions across the unit sector were previously much softer,&rdquo; Lawless says.

&ldquo;The shift in rental demand towards units reflects both rental affordability pressures, which are deflecting more demand towards the &lsquo;cheaper&rsquo; unit sector, and the return of overseas migrants and visitors. Rental demand from overseas arrivals tends to skew towards inner city and higher density precincts.&rdquo;

In Melbourne, unit rents are 3.6 per cent higher over the past three months compared with a 1.2 per cent rise in house rents. Higher yields and long-term prospects for capital growth could see investors comprising a larger portion of housing market activity.

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With the cash rate set to move through a rapid tightening cycle, CoreLogic expect this trend towards a gradual softening in the growth rate will become more pronounced over the coming months, before the national index starts to trend lower.

&ldquo;Although we are expecting the housing market to move into a downturn through the second half of the year, it is important to remember the context of the recent growth phase,&rdquo; he says.

Melbourne's unit market has continued to hold firm despite a cooling off in the house market


alisonwarters@gmail.com

Melbourne apartment market insights: What happened over April

As Brisbane&rsquo;s median house price skyrockets, the gap to the median apartment price widens, but it&rsquo;s set to be short-lived with Colliers research showing the apartment market tipped is for a dramatic price increase.

Brisbane&rsquo;s median house price increased by 10.7 per cent to $890,000 in the March quarter, according to research by Colliers.

The gap between the median house price and the median apartment price is at 49 per cent, the greatest differential Brisbane has seen in two decades.

However, Colliers Director Residential Queensland Andrew Roubicek believes the city is in for a significant price increase in the apartment market as we move into the second half of 2022, with compounding pressures on the construction sector forcing developers of new stock to lift prices.

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&ldquo;Working closely with developers, builders and architects as part of the project marketing arm of Colliers, and selling more than 5,000 apartments annually, we have seen first-hand the impact of labour and material shortages,&rdquo; Roubicek said.

&ldquo;Costs are rising by up to 30 per cent, and recent floods and COVID-induced issues are intensifying the problem and causing significant delays on construction timeframes.&rdquo;

The impact of cost increases as a result of compounding environmental factors has had a dramatic impact on the construction sector, with several builders entering voluntary administration of falling into receivership.

However, Roubicek said the impacts of the cost increases and external pressures had a far wider reaching implications than the construction sector alone.

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&ldquo;There have been several examples of new developments achieving presale requirements of around 80 per cent, only to have developers refund deposits and tear up contracts because building costs have escalated to a point that the development is financially unviable,&rdquo; he said.

&ldquo;It&rsquo;s left homebuyers utterly upset and disgruntled, particularly in what has become such a competitive market.

&ldquo;As a consequence, developers who are looking to acquire new development sites are forced to increase their projected sale prices by around 20 per cent in their feasibilities. Just 18 months ago a two-bedroom apartment in Brisbane might have sold off the plan for $9,000 per square metre.

&ldquo;But, to build that apartment today the developer would need to achieve a sale price of $11,000 per square metre for the project to stack up. That&rsquo;s a 20 per cent price increase passed directly onto buyers,&rdquo; he added.

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Roubicek said the economic impact of interest rate increases would further impact on housing affordability, forcing buyers back into the apartment market.

&ldquo;Buyers may see better value in the established apartment market in the short-term, as opposed to buying new off the plan. However, this will be a short-lived alternative as supply dries up and investors stake advantage of rental vacancy rates.

&ldquo;We expect surge in demand from investors as the rental vacancy rates continue to fall to less than one per cent and rental yields approach five per cent. This increase in demand will have a significant impact on the second hand apartment pushing up prices reflecting the price of a new apartment.&rdquo;

The gap between the median house price and the median apartment price is a staggering 49 per cent, the greatest differential Brisbane has seen in two decades.



Why Brisbane apartments are set to see significant price growth: Colliers International Australia

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Channel 9 sports commentator and former World Surfing Champion legend Mark Warren and his wife Helen have secured $2,435,000 for their northern beaches home.

Their renovated North Avalon home with vaulted bamboo ceilings sold through LJ Hooker Palm Beach’s David Edwards who was suggesting $2 million plus for the home in North Avalon's so-called golden triangle.

Set two minutes walk to the beach and rockpool, the home sits on a <a href="https://palmbeach.ljhooker.com.au/35AF6Z/15-harley-rd-avalon-beach" target="_blank">level 930-square-metre Harley Road block</a> with tropical gardens. Its kitchen was designed by Brian Boaler.

The empty nest couple, who will downsize locally, bought it for $365,000 in 1995.

This article was first published in the Saturday Daily Telegraph. 

<h2>NSW properties now selling:</h2>

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jchancellor-FAypfDUnLy

Surfing champion Mark Warren sells on northern beaches

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GUEST OBSERVER
With the recent introduction of tightened lending rules for investors, bidder numbers at auctions have lowered for most properties giving others a chance to purchase. Overall, looking at the average number of bidders at our auctions, we are currently at six per property which is down from the eight buyers or so we were seeing just four or five weeks ago. 
You would think that buyers would take the opportunity to put their best foot forward and bid strong to finally have a chance at buying a property but we are noticing buyers are reluctant to bid, but rather wait for others to do so first which is quite rare in a great market. This is an opportunity to pounce and secure something before investors realise the the restraints aren't so bad and interest rates are still at their lowest point making it easier to pay down their loans.
Owner occupiers should get amongst it and bid strongly. They should take the opportunity while their are less active buyers and everyone is uncertain. Remember also that interest rates are the biggest influencer for market fluctuation.
Investors need to understand that if interest rates start going up then so do rents normally, so take advantage of the low interest rates for as long as possible and position yourself as a long term investor. Look to retain for 10+years. 
First home buyers are always too scared to commit as they haven't done it before. I remember when I bought my first property it all seemed very hard but you learn to budget and once you get ahead things get much easier. There is now way I could've saved the money that my properties are worth if I hadn't got my first property.
Remember interest rates are very low and even if they go up to 8% that's still ok, just budget and enjoy the low rates for as long as possible.
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<div>Rocky Bartolotto is director of Property Auction Services and can be contacted <a href="https://auctionservices.net.au/rocky-bartolotto/" target="_blank">here</a>.</div>
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Get amongst it and bid strongly this Spring: Rocky Bartolotto

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A crackdown on speculative investor lending can only be good for the property market.
The pressure placed on banks by Australian Prudential Regulation Authority (APRA), to curb lending to investors, will ultimately create a more stable market and lessen any risk poised by speculative buyers.
It is hoped that the changes will also take some heat out of section of the Sydney and Melbourne property prices. 
We are not expecting it will create a big difference as population growth and an undersupply of homes should keep buyer demand in both markets strong.
Property remains a much more stable and secure investment than other assets.
And because of this investors have come to residential real estate significantly in the past couple of years, probably to the detriment of the equities market. 
Many are sophisticated and more in tune with the market than in the past because they are now able to undertake research or reengage real estate agents who are now` better informed on valuation and yields.
As long as they stay wary of speculative markets and stick with more stable markets where they can buy with a degree of confidence.
While nothing is without risks, Sydney, Melbourne, Perth, Brisbane and Adelaide are unlikely to see a dramatic increase in rental vacancies.
The reality is that people have to live somewhere and there remains a fundamental shortage in the major markets of properties versus population growth.
Investing in property offers a lower risk in comparison to other asset classes.
In the background, however, banks are beginning to lower their valuations to avoid excessive speculation with demand for property being strong. 
Investors are typically unemotional when buying assets; while owner-occupiers are buying a lifestyle.
You have to be very careful when creating a property portfolio that you are in line with the value of the asset as determined by market and the banks.
Typically investors will retract if there is talk around prices coming back or valuations being different to the market. They are rationale investors focused on yields and capital growth. 
The good news is most are well covered.
Even significant movement wouldn’t be enough to cause the sudden flow of distressed properties coming into the market.
Most property are not excessively geared and as long as they have income, investors will ride out any lows. 
 
Grant Harrod is chief executive office of JL Hooker.
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Property investors will ride out any market lows: Grant Harrod

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GUEST OBSERVER
Inter-generational arguments over affordability have again become salient in the media. Characterisations of moaning millennials were made by economist Stephen Koukoulas, prompting a response from young writer Osman Faruqi that baby boomers should choke on my soy flat white.
Confusion around the severity of housing affordability arises because dwelling prices change daily, yet the institutional papers and ABS data we look to are retrospective.
The Submission to the Inquiry into Home Ownership by the Reserve Bank of Australia in June 2015 explored ownership rates as a possible proxy for understanding the severity of housing affordability, and whether expensive housing was keeping young people out of the market. However, the home ownership rates referenced are only measured to 2012 – before the enormous housing boom of 2013 – and therefore the submission paper does not take into account the largest and longest housing boom we have seen in over 30 years.
Graph 2 shows the House Price Index for Australia’s eastern metropolitan markets over time. The increase in the HPI from 2013 (particularly in Sydney and other east coast markets) marks an unprecedented rate of growth in dwelling values.
Graph 2: House Price Index
<a href="/images/2016/04/28/Graph_2_HPI.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/04/28/Graph_2_HPI.jpg" alt="">
Source: Residex
Housing affordability is an undeniable problem in Australia today. It is measured using the ‘median multiple’, which is a measure employed by the World Bank. It is found by dividing median dwelling prices by gross annual median household income. An indicator of 5.1 or more is considered to be highly unaffordable.
We only have median household income data at a capital city level, up to 2012. To get a more accurate figure, I have indexed income by changes in average weekly earnings so I could work out the median multiples for each capital city. With the exception of Canberra, the median multiple is well above 5.1. In Sydney it is currently about 13.
<h1>The Interest Rate Debate</h1>
One of Koukoulas’ main arguments was that low interest rates have made it easier for young people to take out money to afford a home. He argues that baby boomers struggled with interest rates of over 17% in the 1980s.
While I don’t deny Koukoulas’ latter statement, it is important to get a better understanding of what low interest rates actually do to affordability.
Economics literature shows Australian’s have a high elasticity of demand for houses. This means that the more money people have access to, the more likely they are to buy houses. Low interest rates make the cost of borrowing money cheaper and access to money easier.
When interest rates are low, the cost of housing is bid up higher because more people are competing for housing. Graph 3 demonstrates the inverse relationship between interest rates and Australian median house values.
Graph 3: Interest Rates and Median House Values in Australia
<a href="/images/2016/04/28/Graph_3_Interest_Rates_Median_House_Values.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/04/28/Graph_3_Interest_Rates_Median_House_Values.jpg" alt="">
Source: Onthehouse.com.au &amp; ABS
Low interest rates have not worked in the favour of first home buyers. In fact, in 2014, for the first time in recorded history and while the cash rate was at historic lows, more money was lent to people who were buying investment housing compared to people who were buying something to live in (see Graph 4). This unusual phenomenon eased shortly after APRA placed higher risk weights and investment lending restrictions on banks, however it does show that owner occupiers, some of which are first home buyers, do not necessarily benefit from low interest rates.
Graph 4: Loans to Investors vs. Owner Occupiers
<a href="/images/2016/04/28/Graph_4_Investors_v_Owner_Occupiers-1.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/04/28/Graph_4_Investors_v_Owner_Occupiers-1.jpg" alt="">
 
Home owners also faced high unaffordability in the late 1980s when interest rates increased sharply and average home loans peaked at 17%. The cost of loans became extremely high and some were forced to sell their home or take on multiple jobs in an attempt to pay off their rapidly growing debt. On top of this, house prices fell, which left some people with mortgage debt even after they lost their home.
ABS data shows that the average loan size of owner occupiers in NSW over the 1980s was approximately $80,000, while the average interest rate increased to 17% in 1989. Assuming a 30 year mortgage on $80,000 taken out in 1989, the total repayments work out to be around $263 per week, at a time when the average person across NSW was earning between $359 and $620 a week depending on their job status and sex . The $263 home loan assumption represents between 73% and 42% of average weekly earnings at the time.
Today, standard home loan rates are at approximately 5.35%. In February 2016, the average loan size taken out by owner occupiers in NSW was $416,000 . With the same loan assumptions as above, weekly repayments work out at approximately $536 per week. In November 2015, the average weekly earnings across NSW ranged between $951 and $1,712, depending on labour force status and sex, making repayments between 56% and 31% of average weekly earnings.
This analysis is fairly ‘back of the envelope’, but looking at these numbers suggests that few owner occupiers today, nor many owner occupiers in 1989, could enjoy stress free and affordable weekly mortgage repayments – which is considered to be no more that 30% of income. Exorbitant home loan repayments persist 25 years on, but for different reasons. A surge in interest rates overwhelmed young home owners in 1989, whereas today many young people are lucky to overcome the deposit hurdle due to enormous dwelling prices. In the case of owner occupiers today, this is with the ‘benefit’ of low interest rates.
Ambiguity still exists in this comparison, for many reasons. For example, average weekly earnings is looking at individuals rather than households. Young people in the 1980s were more likely to have formed double income households than young people today. 1989 was a different world to 2016, particularly in terms of the nature of the economy, technology, job vacancies and the terms of employment.
However, a lack of affordability is not so much a generational problem as it is a socio-economic problem. Years of analysis could be done trying to understand ‘who had it tougher’, but this seems like a waste of energy. Low income households and single parent families will face tougher challenges than members of Generation Y who are in high income brackets.
 Eliza Owen is the market analyst for Onthehouse.com.au. She can be contacted <a href="https://www.onthehouse.com.au/" target="_blank">here.</a>
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Baby Boomers vs. Gen Y on housing affordability: Eliza Owen

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GUEST OBSERVER
Non-bank lending has become a phenomenon in the Australian property market. Although official statistics are hard to come by, anecdotal evidence suggests that private groups are lending Aussie companies and individuals billions of dollars each week.  
What created this amazing trend in private lending, what does the non-bank lending landscape look like and where will the market go next?  Delving into these questions will give you a good idea about the state of the Australian real estate market today.
How Did It All Start?
Non-bank lending has been going on in Australia for many years. Companies like Pepper and Resimac have taken over a huge chunk of the home mortgage market and Aussie Home Loans’ CEO John Symonds has for years been assuring Australians that “At Aussie, we’ll save you.”
In the commercial lending space, Development Finance Partners, MaxCap, Qualitas and Balmain Group have been underwriting property developments for a long time.
Things accelerated sharply, however, in July 2015 when the Australian Prudential Regulation Authority (APRA), aided by BIS Shrapnel and egged on by the RBA, significantly increased the capital requirements for Australian banks.
This, along with the Labor Party’s aggressive stance on negative gearing, and a scandal involving falsified loan documents at ANZ and Westpac, has resulted in a significant slowdown in property lending by Australia’s Big 4 banks:
<a href="/images/2016/09/05/big-4-lending-book.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/09/05/big-4-lending-book.png" alt="">
Had the Big 4 continued to grow their investment housing lending book at the same average rate as they did the 12 months ended June 30, 2015, they would have lent an additional $68.4 billion into the market.
At the same time, the Big 4 have also begun to pull back on corporate lending, and while this trend is still emerging, it has added to the challenges faced by property buyers:
<a href="/images/2016/09/05/big-4-lending-book.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/09/05/big-4-lending-book.png" alt="">
Faced with dramatically tougher lending requirements, Australian property developers, investors and buyers have been scrambling to fill this $68 billion gap.
Old Problems
The lending drought has given new urgency to the age-old financing problems faced by every property developer.  Land banking, the first step in most property developments projects, has mostly been subjected to lower loan value ratios (LVRs), shorter loan terms and higher interest rates.  Development and mezzanine funding have also seen a toughening of terms, as well as the imposition of higher requirements for presales and decreased limits on the portion of offshore sales allowed.
Perhaps the problem that’s proven most urgent, dangerous and difficult to solve has been settlement pipeline financing.  Although final settlements often only account for 20% of the total sales price, many borrowers, especially foreign investors, have found it impossible to obtain financing of any kind for this portion of the acquisition.
This has created a great deal of nervousness around settlement pipelines, and the possibility that large numbers of buyers would fail to settle their purchases.
While this has not happened and, in fact, groups like Lendlease have announced higher than anticipated, settlement risk remains a concern in many corners.
New Solutions
The challenges of property developers and investors have attracted the attention of private lenders looking to charge premium rates and fill the gap left by the banks. In addition to established players like Wingate, Balmain and a host of existing property funds, three new groups have stepped into the market.
The first of these new entrants are cashed-up Australian property developers. These players are usually large property companies that are flush from the recent completion of a project.
They tend to be highly localized, only lending into a particular type of development (e.g. only high-rise apartments) and only in one geographic area (e.g. Melbourne CBD).  These lenders are often looking for ways to get into the projects they’re funding, with an eye to taking over the development if the borrower is unable to repay the loan.
A more opportunistic group includes purpose-created special investment vehicles, family offices and high-net worth investors. This group is attracted to the high interest rates and strong security positions on offer. These players are more transactional, less strategic and much less established than cashed up developers.
The final group consists of foreign banks, investment funds and high-net worth investors, particularly from the US, China, Singapore and Malaysia. These entities are often connected to property investors from their home country, who have some knowledge of the Australian market and who see an opportunity to further their investment goals by jumping in where the large Australian banks have moved out.
Taken together, these new sources of non-bank lending are beginning to make a substantial impact on Australia’s property lending deficit.
David Chin is managing director, Basis Point, and can be contacted <a href="https://basispoint.com.au/" target="_blank">here</a>.
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The surprising rise of non-bank lending in the Australian property market

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GUEST OBSERVER
There is no doubt that the vote in favour of Brexit will generate a period of renewed uncertainty in the prime London residential market.
Some demand, especially from investors, will be delayed and in some cases redirected to other markets – although the significance of these trends should not be overstated. 
Demand for prime London property rests on a wide range of drivers – most of which are unaffected by the referendum decision: the scale of London’s business cluster, depth of skills, education, lifestyle and language.
It is not easy to identify an obvious alternative destination for investors despite short-term nervousness.
While we are entering a period of renewed uncertainty in the UK and London market, ongoing issues around EU and especially Eurozone stability, which will be highlighted in the run up to French and German elections, are likely to counter this risk and shore-up London’s safe haven appeal.
 
Liam Bailey is partner, Global Head of Research for Knight Frank and can be contacted <a href="https://www.knightfrank.com/research" target="_blank">here</a>.
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Brexit and the impact on prime London real estate investments: Knight Frank's Liam Bailey

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GUEST OBSERVER
The latest CoreLogic data shows the home value index increasing by 2.21 per cent in Sydney for the month of June, while auction clearance rates have consistently sat under 70 per cent.
Matt Lahood explains the latest market conditions, looks at the first home buyer concessions and talks important taxation changes.
The market to date
While some conditions have remained unchanged from last month, like reduced bidding heat at auction, the numbers through our open homes are strong and the value of homes in Sydney has increased by 2.21 per cent, according to the latest CoreLogic figures for the month of June.
I see two levers being pulled in the marketplace at the moment. There’s more stock coming on for sale in certain Sydney areas, which leads to greater buyer choice and the normal seasonal lull that settles in during winter.
There has been a significant jump in appraisal demand, which assumes people are gearing up for spring. An important factor to consider is that the Sydney market will slow for a few weeks given school holidays. Homeowners are naturally hesitant to open up their home when children are off from school or may take an annual vacation.
Don’t forget, the new ATO taxation rules on sales above $750,000 requiring a clearance certificate kick in this Saturday July 1st. This is part of the capital gains withholding changes affecting foreign ownership in Australia, the clearance certificate confirms you are an Australian resident. The clearance certificate must be obtained prior to settlement to prevent the 10% non-final withholding.
<h2>First home buyer concessions</h2>
The first home buyer stamp duty concessions also take effect this Saturday July 1st. First home buyers will be stamp duty exempt for purchases on new and existing builds up to the sale of $650,000 and be given stamp duty relief for purchases up to $800,000.
There has been speculation that the slight market dip could have been impacted by the July stamp duty concession release date and that post July 1st things will kick off again. In my view, we will not see any kind of major price shift due to the stamp duty concession, first home buyers just don’t have the market depth, or bargaining bandwidth. What the stamp duty concession will do is get them back into the market if they were going out of it and give them the confidence to stay in the market.
Investors and first home buyers will always be competing within these housing price brackets and investors have not gone out of the market. In fact, the main trend I have seen is people putting their superannuation into property. I believe the upward pressure on property pricing has come from property investors and this has been more evident since super was released for property purchases. Investing in property is seen as a more secure and lucrative investment than shares.
<h2>Census statistics say it all</h2>
Australian homeownership rates are close to a 70-year low and in 2016 sat at 65.5 per cent, this included those who owned or were buying the home they are in. Rental rates sat at 30.9 per cent across Australia in 2016, but this was even higher in Sydney at 34 per cent.
Considering these stark results, it is not surprising we are seeing large numbers through our rental open homes and the team is working hard to help tenants find what they need.
“We are working very closely with prospective tenants to ensure we find and place them into their new home before the available properties hit the market,” National Director of Property Management, Maria Carlino, says.
With Sydney rental vacancy rates sitting under 2 per cent demand is strong, especially in the executive market.
“The high-end properties are still very much in demand. Our latest executive property in Northbridgeleased after its first open home with an increased offer from $2,200 up to $2,300,” explains National Director of Property Management, Maria Carlino. “Both the owner and the new tenants were delighted as it is a special home.”
<h2>Revealing market results</h2>
Vendors are benefitting by hitting the market now because they are going straight back into the same market. If you take a 2.0 or 3.0 per cent adjustment on the intense bidding from a couple of months’ ago, the vendor then picks this 2.0 or 3.0 per cent up when they purchase in the same market.
The recent 2.21 per cent increase in Sydney home value for the month of June, despite less competition at auction, is consistent with the buyer activity we are seeing. An example was the sale of 1 Monmouth Street in Randwick. Though bidding was slow, agent Ben Collier and auctioneer Thomas McGlynn achieved a new street record at $3.54 million.
In certain blue-chip suburbs, properties are selling prior to auction and above the asking price ­­– this is on both sides of the bridge. On market for just seven days, Michael Rava sold a two-bedroom unit in Gerard Street Cremorne to an investor, the ‘upsizing’ homeowner received $100,000 above their asking price. In Waratah Street Rushcutters Bay, James Ledgerwood sold a two-bedroom unit after just 14 days on market to first home buyers, the vendor also obtained a $100,000 above asking price.
Another interesting sale was Avoca Street Randwick. Janet Morrison sold this property 18 months ago for $770,000 and after a renovation, Janet re-sold the property for $950,000 in mid-June this last month.
One Sydney area that constantly bucks the property market trends is the Inner West. A long-term performer, the Inner West has maintained much higher clearance rates than the Sydney average. For example, in May, Inner West clearance rates sat at 89 per cent and The Agency’s Inner West office has achieved clearance rates of 100 per cent and gross sales of in excess of $40 million since February 01.
<h2>The Agency service expansion</h2>
In major news for our NSW’s operation, The Agency has joined forces with leading Lower North Shore group Province Agents. This will propel our service offering across Sydney, connecting the ‘best of the best’ in real estate from the east and west, to the Lower North Shore. Most importantly, this merger will strategically connect buyers, sellers and property management across these three blue-chip markets.
Another significant announcement from Steven Chen, director of The Agency Projects, is the sale and marketing of the luxury, 88-level development ‘Spirit’ on the Gold Coast beachfront. Worth $1.3 billion, these stunning residential properties will feature uninterrupted views and access to world-class amenities. The Forise Holdings ‘Spirit’ development will create thousands of jobs and inject millions into the local community, according to Forise representative and Hickey Management chair Tony Hickey.
 
Matt Lahood is the CEO at The Agency - Sydney. He can be contacted <a href="https://theagency.com.au/team/matt-lahood" target="_blank">here.</a>
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