April 2013 - Rich's Market Overview
By Rich Harvey, Managing Director propertybuyer
Welcome to your April propertybuyer market update.
In this edition we will look at;
- Rich's Market Overview & Middle Markets Driving Value
- Seminar: Boom or Bust on the Northern Beaches?
- Client stories
1. Rich's Market Overview
At the ground level we are seeing much larger numbers at inspections with multiple offers for private treaty and auction properties particularly in the sub $1 million range. On the weekend, there were 50 people lined up to go through a 1 bed unit in Marrickville, 46 groups through a semi in Maroubra and 100 people though a house in Narrabeen. Some agents are receiving offers on the spot and there are more reports of "over reserve" results at auction. Agents are reporting that they are seeing an increase in enquiry from vendors looking to sell this year. The Sydney market is certainly leading the charge in the recovery stakes with auction clearance rates above 70% for most weekends this year. Upper end prices are starting to move as the share market is showing some recovery also.
It's important in a rising market to carefully judge how the property cycle is likely to perform in specific areas. Valuations are in a state of flux which means it's even more important to get unbiased property advice. The chart (1) below shows we are poised to see rising values during the next cycle.
The national property market is showing strong signs of recovery in 2013, but we still have some way to go. Consumer and business confidence is up, buoyed by falling interest rates, low inflation, unemployment and rising share market. RP Data report that the combined capital city index has risen 4.7% since last May. Darwin, at 13.9%, has recorded the largest recovery in dwelling values followed by Perth (+9.4%), Hobart (+6.9%) and Sydney (+5.4%).
Building approvals and finance applications are on the rise with significant improvements over the January/ February period. Rental yields are holding up well in most areas with vacancy rates typically under the 2% range. While there is never a "perfect time" to buy, now is an ideal time to benefit from more active turnover in the market and ride the wave on the next cycle.
Broad 'Middle' Priced Market Driving Growth in Home Values
Home values across the middle priced 60% of capital city suburbs have recorded growth of 1.6% over the year to February 2013 whereas values have fallen across the most affordable and most expensive suburbs.
The RP Data-Rismark Stratified Hedonic Index measures the housing markets performance across three broad price segments: the most affordable 20% of capital city suburbs, the middle priced 60% of suburbs and the most expensive 20% of suburbs. The Index provides insight about how values are changing across these broad price segments.
According to the RP Data-Rismark Home Value Index results for March 2013, capital city home values increased by 1.3% over the month, 2.8% over the quarter and 2.4% over the year. Home values have now increased by 4.7% since they reached their recent low. Although the Stratified Hedonic Index lags the Home Value Index by a month and uses a slightly different calculation methodology, it shows that the increase in home values is being driven by higher dwelling values across the 'middle' priced market. According to the Index, home values have fallen by -0.9% across the most affordable suburbs over the past year, are -0.6% lower in the most expensive suburbs whereas the middle market has recorded value increases of 1.6%.
Across the major capital city housing markets you can once again see that it has been the rebounding conditions across the middle priced suburbs that have driven value growth across most capital cities. Over the 12 months to February 2013 home values have increased across the middle priced suburbs in each capital city except for Adelaide where they have fallen by -0.7%. It is also important to remember that over the 12 months to March 2013, each capital city except Adelaide has recorded an increase in home values, with Adelaide home values falling by -0.5%. On the other hand, the most affordable suburbs have recorded the weakest market conditions over the year in Melbourne, Brisbane and Adelaide whereas in Sydney and Perth the most expensive suburbs have endured the weakest performance.
At a combined capital city level in February 2013, home values were -6.4% lower than their peak in the most expensive suburbs, -3.4% across the most affordable suburbs and just -1.6% lower across the middle market. The most expensive suburbs have been noticeably weaker across the more expensive capital cities of Sydney, Melbourne and Perth, with values -3.9%, -11.6% and -10.1% lower than their peak respectively. In Brisbane and Adelaide the most affordable suburbs have been the weakest performed over recent times with values -16.3% and -10.0% lower than they were at their peak.
Sydney home values are now back above their previous peak, which is highlighted by the fact that home values across the most affordable and the middle priced suburbs have surpassed their previous peak. Home values across the most affordable Sydney suburbs are 2.8% higher than their previous peak and the middle priced suburbs are 2.4% higher than they were at their previous peak. In all other major capitals values across each sector of the market remain below their historic highs and in some instances will need to see a significant recovery in order to return to the previous highs.
Overall the data shows that the recent increase in capital city home values has been driven by improving market conditions across the broad middle priced suburbs across each capital city. Despite the value increases, home values generally remain below their historic highs and in some instances would need to see a significant further improvement to return to these highs. With home values expected to continue to increase over the coming months we anticipate that the improvement in market conditions is likely to continue to be driven by the middle priced suburbs. However, the recent increase in equity markets and higher rates of auction clearance may result in further improvement across the premium housing market.
Article supplied by RP Data 2013
2. Seminar: Northern Beaches Property Market - Boom or Bust?
The Sydney property market has shown a considerable rebound in confidence since the start of the year. Auction clearance rates have consistently been above 70%, more buyers are about at open homes and there is more competitive buying over a range of prices.
Is now the time to buy or sell, to trade up or downsize? What direction will property prices head for the remainder of the year? What broader economic factors might improve or slow the market?
Come along to a very special evening hosted by three experts in the property game; Andrew Wilson, Senior Economist at Australian Property Monitors, Rich Harvey, CEO of propertybuyer and Rob Klaric, CEO, The Property Expert, International.
At this seminar you will gain specific insights into the Northern Beaches property market, how it has been performing and how to navigate your next move in the property whether you are a home buyer or property investor.
Topics covered at this one off special event include:
- Outlook for property prices in 2013
- What's happening on the Northern Beaches
- When to sell, when to buy
- The secret weapon to find off-market properties
- Hot spots!
- 7 classic mistakes most buyers make
- Tips to maximize your selling price
- How to find your ideal property in 4 weeks or less
- Negotiating with agents
- How to assess and pay fair market value
- Your questions answered!
Date: Thursday 9th May 2013
Time: 7.30pm to 9.00 pm (7.00pm for registration)
Venue: Manly Golf Club, 38-40 Balgowlah Road, Manly
Cost: Free - reserve your seat here
Registration: Register here
Telephone enquiries: 02 9975 3311
Dr Andrew Wilson, Senior Economist, Australian Property Monitors
Dr Andrew Wilson is Senior Economist for Fairfax-owned Australian Property Monitors and provides regular property market analysis to a broad spectrum of print, radio, TV and online media. Dr Wilson was recently appointed as a housing market expert and advisor to the Federal government funded Australian Urban Research Infrastructure Network. He is well positioned to provide commentary on property market trends, both nationally and locally, and how the current market affects buyers, sellers and renters.
Rich Harvey, Managing Director & founder, propertybuyer
Rich is a buyers' agent, property investor and professional economist with over 18 years experience in the property industry. He is a research expert and highly skilled in investment analysis and negotiation techniques that can deliver real savings for his clients. Rich and his team have purchased over 1200 properties for their clients. As Australia's leading Buyers Agent, Rich has won 20 major awards including the prestigious National Telstra Business award in 2007 and also named the winner "Best Buyers Agent in Australia" by the Real Estate Institute of Australia (REIA).
Rob Klaric, Founder, Klaric Partners Property Consultants
The multi-award winning agency, Klaric Partners Property Consultants, was established in Sydney 1997. Robert Klaric took pride in his reputation to provide a dynamic, innovative and progressive service to the Northern Beaches and Lower North Shore. In 2012, "The Property Expert International" was created as a result of the public need for the professional services of an Independent property advisor and advocate, who exclusively looks after the Vendor as their Advocate and Trusted Advisor in all facets of real estate. Robert Klaric is recognized as a long-standing property industry icon, & with a superior level of real estate knowledge & experience in Sydney.
Limited seating is available so book early to reserve your spot today!
3. Client Stories
Here is a selection of feedback from some of our happy clients last month:
"...a fantastic job."
Sanjay N, VP Product Strategy & Management
Buyer type: Investor
Buyer's brief: Low maintenance investment with proximity to public transport
I wanted to purchase an investment property for the right price, in an ideal location with good rental yield. I had been looking for over 2 years and found it hard to progress as I was living overseas.
propertybuyer have a solid representation for the buyer and building trust in a very short time. Thank you very much with assisting us with securing this property. Matt did a fantastic job throughout the process and took the time and effort to understand our requirements. I felt satisfied afterwards and it is totally worth every dollar I spent. I look forward to another engagement in the future.
"Totally worth every dollar I spent."
Buyers' Advocate, Matt Corbett
Sanjay wanted a nice one bedroom apartment in good condition with a decent rental yield. The market was extremely hot and properties were selling within a few days of their first open, many over fair value. After walking away from a couple of opportunities, I found a large one bedroom apartment with internal laundry, lock-up garage and currently rented at $460pw. The expired lease would bring closer to $500pw, so the yield was very respectable. We managed to locate the property prior to its first open and secure it within 2 days, before the market once again dictated a higher price. Sanjay was very happy as we also negotiated a price below what he was willing to pay.