This Week in Real Estate – 3rd November 2022
Land Sales Spike In SEQ
Land sales have increased to more than ten times pre-pandemic levels in parts of South-East Queensland, with the result that few locations now offer affordable land. Sales data research by Oliver Hume shows there are now only seven suburbs with median prices for blocks of land below $300,000. These suburbs are mainly within the Logan City and Ipswich City corridors. South McLean in Logan is the most affordable place to buy, with the average starting price $226,000, followed by Walloon, west of the Ipswich CBD, which is $230,500. Other affordable suburbs within Ipswich and Logan include Collingwood Park ($275,000), Deebing Heights ($280,500), Logan Reserve ($267,000), Greenbank ($273,500) and Jimboomba ($273,950). Oliver Hume CEO project marketing Julian Coppini says while the land market is adjusting to the new interest rate environment, there are still plenty of affordable opportunities. “Many buyers are weighing up the rising rents with rising mortgage payments and deciding it is still a better option to buy,” he says.
Gold Coast Unit Sales Rising
Sales of new Gold Coast apartments are on the rise, with almost 400 changing hands in the June Quarter. The Colliers Apartment Sales Report shows 396 new apartments sold during the quarter, compared with 377 in the previous quarter. The average price paid was $1.117 million, 3.8% higher than in the previous quarter. Colliers Residential Gold Coast director David Higgins says sales are below the extraordinary peaks which were hit in the first quarter of 2021. “However, sales over the 18 months to June this year have all been significantly higher on a quarterly basis than the preceding 18 months and that reflects sustained demand in the market even through the first of the interest rate increases,” he says. The report says the number of apartments remaining for sale across the 81 Gold Coast projects is 875, up from 411 in the March Quarter. In the 2022 financial year, there were 2,073 new apartment sales on the Gold Coast.
Quote of the Week
“Many buyers are weighing up rising rents with rising mortgage payments and deciding it is still a better option to buy.” Oliver Hume CEO project marketing Julian Coppini
Prices More Positive In October
There are early signs emerging that the downward trend in values has started to ease, according to PropTrack. Its latest Home Price Index shows many capital cities have values which are still above prepandemic levels, helped by several which recorded growth in October. Senior economist Eleanor Creagh says Adelaide is 14% higher than this time last year, followed by Brisbane (7.5%), Perth (5.7%), Hobart (3%), Darwin (3%) and ACT (1%). Sydney’s index is down 6.3% on this time last year, while Melbourne is down 3.4%. PropTrack says many capital cities recorded positive growth during the month of October including Melbourne, Adelaide, Perth and Darwin. Regional areas continue to perform well, according to the report, recording annual growth of between 3.6% in regional Northern Territory and 18% in South Australia. “Sellers are adapting to market conditions after several months of price falls, while buyers are taking advantage of the less competitive conditions and sentiment is finding a floor,” Creagh says.
Vacant Rentals Last Only 19 Days
The average time a rental property is on the market is sitting at an average of just 19 days. A PropTrack report shows rental prices grew at the fastest pace on record in the September quarter, rising 4.3%. The national median rent is now $480 per week and rental stock is at its lowest level in almost two decades. The report found the return of foreign workers and international students after the easing of pandemic restrictions is placing even more pressure on the rental market. It says the number of days a rental property remains listed has been sitting around 19 or 20 days for the past eight months, which is lower than the 22 days it took at this time last year. In Sydney and Melbourne rental properties are being snapped up within 20 days. Cameron Kusher of PropTrack says the growth and tightness of the rental market appears to be shifting from regional areas back to the capital cities.
Yields Rise In Tight Rental Market
Rising rents mean that real estate investors are achieving gross yields of up to 7% in some locations. Chris Foster-Ramsay, principal of Foster Ramsay Finance, says high rents and low vacancies are boosting gross yields and net returns for investors. The situation is expected to continue with no relief in the rental market in sight. SQM Research figures put national vacancy rates at a record low of 0.9% and listings across combined capital cities about 35% below the previous five-year average. According to SQM, the total number of rental vacancies Australia-wide is about 33,813 residential properties. It says over the 30 days to 12 October, capital city asking rents rose by 1.4%. Strong overseas migration expected within the next year is expected to put further pressure on the rental market. With the permanent migration cap lifted from 160,000 to 195,000 for the next 12 months, more than 2 million applications have already been processed for prospective immigrants since June.
