South Australia, Tasmania & The NT
June 2015 Market Update Region by Region
Overview
Taking time to assess ‘where you’re at’ is a valuable use of your minutes. By pausing and evaluating what’s happened in the past, you’re often more prepared to tackle the hurdles ahead. This month we’ve used the excuse of June’s mid-year position to reflect upon the first half of 2015 in property markets. Each of our offices has handed in their scorecard on how real estate is performing in their area, and the results are compelling.
As we approach the midway point of 2015 we are hearing lots of positive signals flowing from the eastern states about property prices, strong markets and heated market conditions.
Adelaide
This is largely driven by interest rates being at all time lows but despite this the South Australian market remains in a becalmed state. Adelaide in particular has not historically experienced boom and bust conditions. But equally it has not experienced extended flat periods. Its probably best described as at times stronger and sometimes weaker but generally “safe”. Currently there is no doubt that we are in a weaker phase in general.
The market is however segmented which means we need to be careful about generalizing.
Many segments of our market are pretty flat with prices only seeing modest increases in some areas. Inner suburban housing closer to the city, facilities and the coast are showing steady growth in prices and turnover. Outer suburban areas and housing in the sub $500,000 range are reporting flat to negative conditions.
Inner markets are simply supported by stock shortages and the safety of those markets. Values don’t decline in Norwood, Walkerville, Unley and North Adelaide Council Areas. Houses are often character styles and with a mixed offering from small cottages worth between $500,000 and $800,000 up to more prestigious homes of $1 million upwards where the market continues to rise steadily.
Outer suburbs paint a different picture with rising stock levels, extended selling periods, and uncertainty surrounding employment in the North leading to low confidence levels, limited new investment and potentially zero to negative real growth.
It is well recognised that with the closure of traditional manufacturing in this state there needs to be other stimulus and the opportunities are hard to envisage. Many of us are waiting on decisions relating to public spending and stimulus strategies that will hopefully come from the public sector.
The private sector business community is currently increasingly cautious with below average confidence levels and in view of that, growth in many economic areas including property will be subdued.
Unfortunately this paints a somewhat bleak picture for property in the short term. The upside is that, for those of us that can remember, similar conditions existed in the early 1990’s and in time, as it did then, recovery and confidence will be restored. So maybe its just a good time to be considering investment with a view to the longer term. But if doing so be careful and take advice.
A big risk in the Adelaide market is that of generalisation. While some market segments are down, others remain strong with the appeal of inner city and beachside living being strong, values in the inner suburban areas are holding and growing in some places.
The former AAMI stadium (Football Park) is a massive western suburbs project that will bring on stream a variety of housing in a near city location. This project will be a significant factor in the property market in the coming years and we will be reporting on its scale and influence in the years to come. The property is some 23.5 hectares of prime residential and commercial land that has been earmarked for staged development.
Mount Gambier
The property market within Mount Gambier is currently relatively stable. There was a slight decrease in house sales for the first quarter in 2015 (January to March) compared to the first quarter of 2014, however sales are still noticeably higher than they were in 2011 when sales levels had softened. The chart below shows that in the first quarters of 2014 and 2015 sales numbers were up on previous years dating back to 2009/10.
This is a positive sign for the Mount Gambier housing market. Sales numbers indicate that the Mount Gambier market has stabilised and we are returning to the levels of previous years when there was more positivity in the local property market.
Sales evidence indicates that most of the dwellings sold in the past 12 months in Mount Gambier were in the $200,000 to $250,000 price range. The $200,000 to $250,000 price range is affordable for owner occupiers entering the market and for investors looking at a property that provides a stable rental return.
There has been an increase in the past 12 months of properties that have achieved a value greater than $400,000. This could be due to the interest rates being at record low levels or recent positive news regarding employment in the region.
There are few dwellings purchased for under $150,000 or over $500,000. Dwellings under $150,000 are generally in less sought after locations and have limited market activity. Dwellings over $500,000 are at the top end of the market and have a reduced market segment.
Properties located within the Lakes location and centrally around the town centre have shorter listing times than most other areas, as they are tightly held locations. We have not seen much growth, if any, with often decreased values on dwellings within the region since the market peaked. Most properties that have seen growth have been renovated or updated and are in sought after locations. Properties not located in sought after locations generally are not reaching their values when the market peaked and have dropped back.
For growth to become noticeable within the region, sales activity needs to increase. With the new James Morrison Academy and the Dairy Processing Plant in Penola it is expected that this will happen. Construction on the Dairy Processing Plant is due to commence before July this year and will be completed in about a year. It is expected to cost $60 million to develop and to create 50 full time jobs and 80 constructions jobs.
It is expected that this will have a positive impact on the economy within the region. It will be an interesting year which we will be monitoring closely to see if sales continue to increase throughout the year.
Tasmania
Tasmania’s economic data remains relatively stable with unemployment at 6.9%, up slightly on last month. Economic developments, in line with Tasmania’s future economic focus, are mainly tourism and food production. Reported developments include expansion of Hellyers Road Distillery and two new farms in the North West, the opening of Stage 2 of the Blue Derby Bike Trail in the North and in the South, Houston Farm will increase lettuce production for export and Mount Wellington tours are being offered with guides specialising in and focusing on Tasmanian Aboriginal culture. Conversely further contractions will be felt within the forestry industry as Forestry Tasmania undergoes restructure.
Tasmania’s cycle trails are creating quite a buzz enabling Tasmania to build on its tourism market traction which with other tourist draw cards such as Mona, our famous Salamanca markets, Port Arthur, Cradle Mountain and Cataract Gorge will reinforce Tasmania’s image as a sought after worldwide tourist destination. Strengthening tourism and food production industries that create and support employment and business opportunities will create stability and positive flows to other markets such as the housing market.
The Tasmanian residential property market has recently experienced higher volumes of sales across the state. Launceston in the north has enjoyed the greatest percentage rise in sales volumes relative to previous periods. Newstead, Newnham, Riverside and Mowbray are areas where the greatest volumes of sales have occurred in this region.
Suburbs in the south that have experienced the greatest sales volumes include Kingston, Sandy Bay, Blackmans Bay, Howrah and Lindisfarne.
In the North West region Devonport has had the greatest number of sales.
The scheduled reduction of the first home builders boost grant from July 2015 to $10,000 makes this market segment one to watch. With state budgetary challenges there is interest to see if the Government will extend the FHBB grant program to maintain economic and employment momentum within the construction and real estate sectors.
Northern Territory
Darwin
In spite of being able to offer stellar returns to investors and residential property owner occupiers over recent years, the first half of 2015 has witnessed a slow down in Darwin’s property market.
The greater Darwin region has seen a steep drop in sales activity for houses, units and townhouses. One of the main factors contributing to the slump is the new First Home Buyers Grant (FHOG) policy that kicked in whereby first home buyers are restricted to contracts to construct or purchase a new home or unit. As a result, the new policy has begun to create two segment markets whereby a significant increase in new housing stock has taken place and established homes, mainly in Palmerston, Sanderson and Nightcliff LGA (northern suburbs), have remained static and decreased in value.
According to recent data released by REINT, the first quarter figures indicate a dramatic fall in sales volume for houses in Sanderson LGA of 34.7% while Nightcliff LGA has also declined but by a smaller percentage at 3.4%. Inner Darwin CBD and Nightcliff LGA units and townhouses have followed in a similar fashion, having declined by 42% and 55.3% respectively.
The Australian Bureau of Statistics housing finance data reports that the number of home loans taken out by owner occupiers in the Northern Territory fell by 0.7% in March. We note that in contrast, other states have experienced a jump.
The median house price for dwellings had decreased by 1.7% year on year to $553,000 while units have also move in the same direction and dropped by 0.91% according to CoreLogic RPData Daily Home Value Index year on year to 30 April 2015.
Conversely, the absorption rate of vacant land in the suburbs of Muirhead, Johnston, Zuccoli and Durack have seen continued growth with new housing developments performing strongly and being well received in the market. All in all, it is likely that newly built housing may continue to be on an upward trend whereas the established stock market will remain dampened.
The market for units in Darwin’s inner suburbs has remained relatively flat in the first half of 2015. This is largely due to the considerable amount of new stock coming onto the market in a short space of time with the completion of SOHO, Kube, The Avenue, Wharf 2, Kim on Smith and Catalina Apartments, which have added more than 800 new apartments to the market.
At the same time, weak buyer activity and softening population growth has also put downward pressure on house prices in the Northern Territory. Falling house prices coupled with the recently announced rate cuts by the Reserve Bank Australia to a record low seem to be the right opportunity for first home buyers to dip their feet into the dull property market.
The combined influence of the changes in development phase of Ichthys INPEX project, the substantial supply of new units pouring into Darwin’s CBD market and the movement of Defence personnel has had an immediate impact on Darwin’s housing market with rental rates easing and the demand for existing older stock clawing back to show a clear easing in rental demand. Latest SQM
Research data showed Darwin house rents dropped by 4.7% year on year to 31 March 2015 but still topped the highest rent yielding cities list at 5.7% for houses and 5.9% for units. Being one of the least affordable housing markets in the country, this drop in rent as a portion of median income spent is good news for tenants to get some much needed rental relief.
Looking at the year ahead, the downward trend is expected to continue through 2015 with a downturn in commodity prices and the winding down of the Northern Territory’s key economic driver, the Ichthys INPEX project. Shortage of affordable housing will remain a key issue for 2015 while increasing supply of smaller lot sizes in Darwin’s northern suburbs and Palmerston and record low interest rates will definitely provide a much needed boost to the housing market and potentially affect home ownership. In addition, the federal government 2015 / 2016 budget putting an emphasis on developing the Top End is certainly a broadly welcomed decision.
Data Supplied by HTW
South Australia, Tasmania & The NT
June 2015 Market Update Region by Region
Overview
Taking time to assess ‘where you’re at’ is a valuable use of your minutes. By pausing and evaluating what’s happened in the past, you’re often more prepared to tackle the hurdles ahead. This month we’ve used the excuse of June’s mid-year position to reflect upon the first half of 2015 in property markets. Each of our offices has handed in their scorecard on how real estate is performing in their area, and the results are compelling.
As we approach the midway point of 2015 we are hearing lots of positive signals flowing from the eastern states about property prices, strong markets and heated market conditions.
Adelaide
This is largely driven by interest rates being at all time lows but despite this the South Australian market remains in a becalmed state. Adelaide in particular has not historically experienced boom and bust conditions. But equally it has not experienced extended flat periods. Its probably best described as at times stronger and sometimes weaker but generally “safe”. Currently there is no doubt that we are in a weaker phase in general.
The market is however segmented which means we need to be careful about generalizing.
Many segments of our market are pretty flat with prices only seeing modest increases in some areas. Inner suburban housing closer to the city, facilities and the coast are showing steady growth in prices and turnover. Outer suburban areas and housing in the sub $500,000 range are reporting flat to negative conditions.
Inner markets are simply supported by stock shortages and the safety of those markets. Values don’t decline in Norwood, Walkerville, Unley and North Adelaide Council Areas. Houses are often character styles and with a mixed offering from small cottages worth between $500,000 and $800,000 up to more prestigious homes of $1 million upwards where the market continues to rise steadily.
Outer suburbs paint a different picture with rising stock levels, extended selling periods, and uncertainty surrounding employment in the North leading to low confidence levels, limited new investment and potentially zero to negative real growth.
It is well recognised that with the closure of traditional manufacturing in this state there needs to be other stimulus and the opportunities are hard to envisage. Many of us are waiting on decisions relating to public spending and stimulus strategies that will hopefully come from the public sector.
The private sector business community is currently increasingly cautious with below average confidence levels and in view of that, growth in many economic areas including property will be subdued.
Unfortunately this paints a somewhat bleak picture for property in the short term. The upside is that, for those of us that can remember, similar conditions existed in the early 1990’s and in time, as it did then, recovery and confidence will be restored. So maybe its just a good time to be considering investment with a view to the longer term. But if doing so be careful and take advice.
A big risk in the Adelaide market is that of generalisation. While some market segments are down, others remain strong with the appeal of inner city and beachside living being strong, values in the inner suburban areas are holding and growing in some places.
The former AAMI stadium (Football Park) is a massive western suburbs project that will bring on stream a variety of housing in a near city location. This project will be a significant factor in the property market in the coming years and we will be reporting on its scale and influence in the years to come. The property is some 23.5 hectares of prime residential and commercial land that has been earmarked for staged development.
Mount Gambier
The property market within Mount Gambier is currently relatively stable. There was a slight decrease in house sales for the first quarter in 2015 (January to March) compared to the first quarter of 2014, however sales are still noticeably higher than they were in 2011 when sales levels had softened. The chart below shows that in the first quarters of 2014 and 2015 sales numbers were up on previous years dating back to 2009/10.
This is a positive sign for the Mount Gambier housing market. Sales numbers indicate that the Mount Gambier market has stabilised and we are returning to the levels of previous years when there was more positivity in the local property market.
Sales evidence indicates that most of the dwellings sold in the past 12 months in Mount Gambier were in the $200,000 to $250,000 price range. The $200,000 to $250,000 price range is affordable for owner occupiers entering the market and for investors looking at a property that provides a stable rental return.
There has been an increase in the past 12 months of properties that have achieved a value greater than $400,000. This could be due to the interest rates being at record low levels or recent positive news regarding employment in the region.
There are few dwellings purchased for under $150,000 or over $500,000. Dwellings under $150,000 are generally in less sought after locations and have limited market activity. Dwellings over $500,000 are at the top end of the market and have a reduced market segment.
Properties located within the Lakes location and centrally around the town centre have shorter listing times than most other areas, as they are tightly held locations. We have not seen much growth, if any, with often decreased values on dwellings within the region since the market peaked. Most properties that have seen growth have been renovated or updated and are in sought after locations. Properties not located in sought after locations generally are not reaching their values when the market peaked and have dropped back.
For growth to become noticeable within the region, sales activity needs to increase. With the new James Morrison Academy and the Dairy Processing Plant in Penola it is expected that this will happen. Construction on the Dairy Processing Plant is due to commence before July this year and will be completed in about a year. It is expected to cost $60 million to develop and to create 50 full time jobs and 80 constructions jobs.
It is expected that this will have a positive impact on the economy within the region. It will be an interesting year which we will be monitoring closely to see if sales continue to increase throughout the year.
Tasmania
Tasmania’s economic data remains relatively stable with unemployment at 6.9%, up slightly on last month. Economic developments, in line with Tasmania’s future economic focus, are mainly tourism and food production. Reported developments include expansion of Hellyers Road Distillery and two new farms in the North West, the opening of Stage 2 of the Blue Derby Bike Trail in the North and in the South, Houston Farm will increase lettuce production for export and Mount Wellington tours are being offered with guides specialising in and focusing on Tasmanian Aboriginal culture. Conversely further contractions will be felt within the forestry industry as Forestry Tasmania undergoes restructure.
Tasmania’s cycle trails are creating quite a buzz enabling Tasmania to build on its tourism market traction which with other tourist draw cards such as Mona, our famous Salamanca markets, Port Arthur, Cradle Mountain and Cataract Gorge will reinforce Tasmania’s image as a sought after worldwide tourist destination. Strengthening tourism and food production industries that create and support employment and business opportunities will create stability and positive flows to other markets such as the housing market.
The Tasmanian residential property market has recently experienced higher volumes of sales across the state. Launceston in the north has enjoyed the greatest percentage rise in sales volumes relative to previous periods. Newstead, Newnham, Riverside and Mowbray are areas where the greatest volumes of sales have occurred in this region.
Suburbs in the south that have experienced the greatest sales volumes include Kingston, Sandy Bay, Blackmans Bay, Howrah and Lindisfarne.
In the North West region Devonport has had the greatest number of sales.
The scheduled reduction of the first home builders boost grant from July 2015 to $10,000 makes this market segment one to watch. With state budgetary challenges there is interest to see if the Government will extend the FHBB grant program to maintain economic and employment momentum within the construction and real estate sectors.
Northern Territory
Darwin
In spite of being able to offer stellar returns to investors and residential property owner occupiers over recent years, the first half of 2015 has witnessed a slow down in Darwin’s property market.
The greater Darwin region has seen a steep drop in sales activity for houses, units and townhouses. One of the main factors contributing to the slump is the new First Home Buyers Grant (FHOG) policy that kicked in whereby first home buyers are restricted to contracts to construct or purchase a new home or unit. As a result, the new policy has begun to create two segment markets whereby a significant increase in new housing stock has taken place and established homes, mainly in Palmerston, Sanderson and Nightcliff LGA (northern suburbs), have remained static and decreased in value.
According to recent data released by REINT, the first quarter figures indicate a dramatic fall in sales volume for houses in Sanderson LGA of 34.7% while Nightcliff LGA has also declined but by a smaller percentage at 3.4%. Inner Darwin CBD and Nightcliff LGA units and townhouses have followed in a similar fashion, having declined by 42% and 55.3% respectively.
The Australian Bureau of Statistics housing finance data reports that the number of home loans taken out by owner occupiers in the Northern Territory fell by 0.7% in March. We note that in contrast, other states have experienced a jump.
The median house price for dwellings had decreased by 1.7% year on year to $553,000 while units have also move in the same direction and dropped by 0.91% according to CoreLogic RPData Daily Home Value Index year on year to 30 April 2015.
Conversely, the absorption rate of vacant land in the suburbs of Muirhead, Johnston, Zuccoli and Durack have seen continued growth with new housing developments performing strongly and being well received in the market. All in all, it is likely that newly built housing may continue to be on an upward trend whereas the established stock market will remain dampened.
The market for units in Darwin’s inner suburbs has remained relatively flat in the first half of 2015. This is largely due to the considerable amount of new stock coming onto the market in a short space of time with the completion of SOHO, Kube, The Avenue, Wharf 2, Kim on Smith and Catalina Apartments, which have added more than 800 new apartments to the market.
At the same time, weak buyer activity and softening population growth has also put downward pressure on house prices in the Northern Territory. Falling house prices coupled with the recently announced rate cuts by the Reserve Bank Australia to a record low seem to be the right opportunity for first home buyers to dip their feet into the dull property market.
The combined influence of the changes in development phase of Ichthys INPEX project, the substantial supply of new units pouring into Darwin’s CBD market and the movement of Defence personnel has had an immediate impact on Darwin’s housing market with rental rates easing and the demand for existing older stock clawing back to show a clear easing in rental demand. Latest SQM
Research data showed Darwin house rents dropped by 4.7% year on year to 31 March 2015 but still topped the highest rent yielding cities list at 5.7% for houses and 5.9% for units. Being one of the least affordable housing markets in the country, this drop in rent as a portion of median income spent is good news for tenants to get some much needed rental relief.
Looking at the year ahead, the downward trend is expected to continue through 2015 with a downturn in commodity prices and the winding down of the Northern Territory’s key economic driver, the Ichthys INPEX project. Shortage of affordable housing will remain a key issue for 2015 while increasing supply of smaller lot sizes in Darwin’s northern suburbs and Palmerston and record low interest rates will definitely provide a much needed boost to the housing market and potentially affect home ownership. In addition, the federal government 2015 / 2016 budget putting an emphasis on developing the Top End is certainly a broadly welcomed decision.
Data Supplied by HTW