Australian Property Outlook for 2010

I hope everyone had a fantastic break over the festive season. We at Find Investment Property wish everyone all the best for 2010.

In the first week of the year, the Australian Financial Review had a summary of each of the property markets across Australia. Below is a brief summary from each of the stories that appeared in the paper from the 4th January through to the 8th January 2010. The articles cover the Melbourne Property Market, Sydney Property Market, Queensland Property Market, Western Australian Property Market, Tasmanian and the Adelaide Property Markets.

In each of these articles, the journalist has interviewed a few people in the relevant states property industry that may have some bias towards each state, thus all pushing a positive sentiment for their respective property markets.

Having said this I do think they all have good arguments for why buying in each area should see capital growth occur in 2010.

Melbourne Property Outlook 2010

Comments below are from Cameron Anderson, a Director at Red C and Canopi Homes. He previously was in a senior management position at Stockland.

• 2009 property market was fuelled by federal government grants and Melbourne’s appetite for new homes (Due to Stamp Duty Savings)
• Cautious outlook for 2010 – median growth expected to be 3% before the market picks up steam in 2011.
• RP Data stated Melbourne’s median price grew 15% for the first 9 months of the year
• Little supply of apartments in the pipeline at the moment
• Rental pressure in Melbourne and it’s growing because the banks have been reluctant to lend money to high-rise developers
• Big drivers for property prices include supply constraints and population growth

Other comments on the Melbourne property market from Angie Zigomanis at BIS Shrapnel and Tim Lawless at RP Data Research

• Expected to have solid growth through the year as upgraders and investors take over from first home buyers
• Higher interest rates will slow growth down from the highs of 2009
• Late recovery in 2009 may show that first home buyers are less sensitive to rising interest rates
• New development in Melbourne is falling short of Melbourne’s migrant-driven population growth
• 2009 price growth was helped by cashed up Chinese buyers which is expected to continue into 2010

Sydney Property Outlook 2010

Comments below are from Brian Haratsis from MacroPlan Australia and Rob Ellis from Property Insights

• Population boom to lift prices
• People that can afford to buy now will stand to benefit the most
• Sydney expected to see the fastest population growth in 15 years
• Climbing prices in South-East Queensland have slowed migration from NSW to QLD
• Same levels of international migration plus high birth rate levels
• Employment generated population growth – young brains from around the world will come to work in Sydney-based financial services, IT and Business services
• Apartment market is being starved of stock owing to tight lending practices that restrict developers by loan to value ratios plus high levels of pre-sales
• Rents poised to soar even higher due to the shortage of rental accommodation, especially with rising interest rates deterring some people from buying
• Prestige property to remain flat for the next 24 months before a potential boom in the high end market
  10% price growth for 2010 wouldn’t be a surprise

Comments below are from Louis Christopher of SQM Research and Jason Anderson from BIS Shrapnel

• 6 – 8% price growth expected in the next 12 months
• Nothing to indicate buying trend will stop or slow
• Price growth in 2009 was 11.6% but affordability was its lowest level since 2002 because interest rates were so low
• Prestige prices (those over $2m) to rise by 12 to 15% in 2010
• Sydney will face an ‘extreme’ shortage of rental properties, worse than any other state
• Rental demand would boost demand for properties in outer suburbs which could result in price growth of 10%

Perth Property Outlook 2010

Comments below are from Nigel Satterley from Satterley Property Group, Western Australia’s largest private residential property developer.

• Perth property prices poised for a decade of strong growth
• 6% expected in 2010 with increases of 7 – 10% over the next 7 to 8 years
• Perth property prices fell by as much as 25% during the downturn
• Population growth and growing confidence affecting the market
• Demand is increasing for premium property
• Medium house price in Perth in September 09 was $462,000
• Prior to 2008, Perth’s property prices doubled in 4 years as demand outstripped supply
• Bank funding for property developments will remain constrained

Adelaide Property Outlook 2010

Comments below are from Michael Brock, Managing Director of Brock Real Estate and president of Real Estate Institute of South Australia.

• Enormous untapped potential in the real estate market
• Adelaide soon to assert itself as one of the most attractive investment destinations in the country
• 2009 saw house prices jump 5% and growth is predicted to double in 2010
• Adelaide’s median house price in September 09 was $421,765
• Property investors now taking the place of first home buyers
• Population Growth expected from skilled migrants and those serving the defence and mining industries
• Adelaide vacancy rate is 1.2% while North Adelaide is only 0.2%
• Many new apartment projects on hold due to finance obligations which can’t be met by Developers

Tasmania Property Outlook 2010

Comments below are from Tim Lawless, Research Director at RP Data

• Could perform well in 2010 due to lifestyle buyers entering the market
• Houses in Hobart are $140,000 cheaper than the national capital city average with an average price of $330,000
• Units average $270,000, $120,000 cheaper than the capital city average
• Tasmania does not have strong population growth or a large economic base
• Rental returns in Tasmania are above 5% with vacancy rates below 2%
• Population growth is just over 1% driven by migrants, retirees and younger families seeking affordable housing

Queensland Property Outlook 2010

Comments below are from Wayne Rex, President of The Property Council in Queensland

• Brisbane property prices increased 6.9% in the first 11 months of 2009
• South East Queensland has seen a stabilisation of prices and turnover
• Building Approval levels have dropped to low levels not seen since the 1980’s
• Many house and land packages still available in South East Queensland for under $425,000
• Release rate of new stock and lack of competition is affecting prices
• Queensland property market will be steady for the first 6 months of the year as people will still remain cautious
• Funding still difficult to attain along with substantial pre-sales

Other comments from Bill Morris, Rod Cornish (Macquarie Capital Advisors) and Lachlan Walker (Colliers International)

• Still not enough homes being built in Queensland
• South East Queensland saw a population increase of 75,000 in 2008-09 with a need for 30,000 homes, yet only 17,000 were built
• Interstate migration has dropped in Queensland (Victoria now leading the way), there is still a high number of people coming from overseas
• Developers still finding it difficult to attain finance
• Developers can’t buy land at the right price meaning they can produce a home at affordable levels (under $500,000)
• QLD suffering from a shortage but Sydney supply shortage is more severe

7 Comments »

Queensland’s premier, Anna Bligh, has indicated a new underground Metro for Brisbane and surrounding suburbs could be built by 2030.

Not to be outdone by Sydney’s CBD Metro fiasco, the premier has launched a vision for an underground light rail project linking Toowong, West End, the CBD, Newstead, Bowen Hills, Bulimba and Bowen Hills by 2030.

Queensland Rail is already midway through a $20 million feasibility study for an underground rail tunnel to replace the Merivale Rail Bridge at South Brisbane, which would allow extra trains to connect some new CBD underground stations by 2016.

But Ms Bligh said Brisbane’s Rapid Metro is beyond the cross river rail link – which is all heavy rail. She is talking about an underground metro system like you see in some of the great cities in the world, such as London.

She states that Brisbane needs an entirely new metro system just to support the CBD and will run completely separate from the heavy rail system already in place with further expansions in the pipeline.

“This is a new way of thinking about Brisbane that takes us to 2030.”

The rationale behind the vision is the indication that twice as many people will be trying to access the Brisbane CBD in the next 25 years with employment in the area expected to double from 200,000 to 400,000.

A prediction / forecast like this can cost any city an enormous amount of money, especially if it is wrong. I think we need to consider how we are going to be working in 25 years time. With the advancements in technology and with businesses looking for cheaper accommodation to house their businesses, the growth in CBD employment is unlikely to be anywhere near what it has been in the past. If anything, it may even remain stable. We are already seeing a number of high profile businesses moving their staff to middle ring and outer ring business parks where rent is cheaper and travel times are reduced for many of the staff.

We also need to factor in the possibilities that businesses, due to technology development, may not need to house all their staff in one location with the possibilities of business hubs being created along with the option that many of us may be working from home.

1 Comment »

Kawana Waters – Sunshine Coast

Many of you have probably never heard of Kawana Waters located on the Sunshine Coast between Mooloolaba and Caloundra. Kawana Waters is a beachside town just under 1 hours drive north from Brisbane.

Some quick facts on the Sunshine Coast include:

• Population of Sunshine Coast (2008): 303,000 approx
• Population of Sunshine Coast (2031): 501,179 Estimated Forecast
• Annual Regional Population Growth rate (2008): 2.9%
• Proposed Government Infrastructure spend in region: $18.2billion (2008 – 2026)
• Median Age Group: 41 years
• Average Household Size: 2.5 people per dwelling

Lake Kawana is the centre of the major development in the Kawana Waters region. This lake is the centre piece of the Kawana Town Centre Development. It stretches over 2.5km in length and has become a popular destination for water based sports such as rowing, kayaking and canoeing. Surrounding the lake are over 8km of walking paths and bike tracks.

Major infrastructure planned for the Kawana Waters Region includes:

• Stockland’s Kawana Waters Town Centre – mixed use retail and commercial precinct
• Sunshine Coast University Hospital ($1.21billion – State Government Project)
• CAMCOS Rail Link to Brisbane rail network including transit station within the Kawana Town Centre – State Government Project
• Multi Model Transport Corridor (MMTC) project ($1 billion road infrastructure linking existing road networks North to Sunshine Motorway and South to Bruce Hwy – State Government Project
• Coast Connect Project – Rapid Bus network linking Kawana Town Centre to broader Sunshine Coast community – State and Local Government Project

Click to see new projects on the Sunshine Coast, QLD.

No Comments »

The sunshine state… Queensland lived up to its name. Last Sunday I flew into the Gold Coast Airport for a 1 week trip through to the Sunshine Coast via Brisbane. We met with over 15 different developers including both those that are currently listed on the site as well as those that are looking to come online.

On Monday we met with Sunland and Niecon. We also walked through the main streets of the Gold Coast and noticed the lack of new development that was occurring except for a couple of major projects.

After driving through to Brisbane on Monday afternoon we spent Tuesday meeting with Vecchio Property Group, Meridien, Colliers, Aria Property Group and DTZ. It was a full day with some great feedback from those that are currently listed and those that weren’t were impressed with our offerings.

Wednesday in Brisbane was a public holiday due to Ekka. The city streets were quiet. I took a walk from the city across the foot bridge to Southbank… what a beautiful day. Southbank is definitely a favourite of mine, so close to the city with cafes, restaurants and more. Part of Southbank area includes manmade swimming pools and lagoons. It was packed, kids of full of life and families enjoying the day off work and school.

Thursday we met with Pradella in the morning along with a local real estate agency and Witt Property Group. After our final meeting we headed north to Mooloolaba, where they are currently doing some streetscape changes which see a more friendly pedestrian experience along the main strip of shops.

On Friday morning we met with Avara Property Group and RGD Property in Kawana. Kawana is amazing new city and I will spend more time discussing it in a future Blog post. In the afternoon we met with an FKP representative regarding Perigien Springs Land Estate and Reed Property in Maroochydore.

Saturday we met with Colliers Sunshine Coast in regards to Viridian Resort and Spa located just off Hasting Street in Noosa as well as the development manager from Settlers Cove.

The trip to Queensland was informative. We have learnt a lot about the different local markets and the new developments that will be coming up over the next 12 months. There are a lot of exciting new developments and Find Investment Property will be bringing you many of these investment opportunities when they first launch onto the market.

No Comments »

The May edition of the Midwood Queensland Investment Report has suggested that Queensland house prices will hit bottom by the end of this year and return to a peak at the end of 2011.  Back in November 2008, the Midwood report predicted a 20% fall for the Queensland housing market. With the Gold Coast already falling 16% since the peak in December 2007 and Brisbane falling 10%, it looks like the bottom is near.

Bill Morris, author of the Midwood report suggests that the Gold Coast and Brisbane markets will lead the sector to a recovery followed closly by Townsville and Cairns.

It sounds like Mr Morris is banking on interest rates staying low and more developers pulling out of new developments as financing becomes more difficult. Unit purchases in the Gold Coast in the month of May have been encouraging with 79 sales in the month. It is the best figure over the last 9 months.

No Comments »

The AFR have put together an overview for each of the capital cities in each state of Australia. Below is a quick summary of each:

Sydney (-7.31% last 12 months)

• - Top end market is suffering
• - First Home owners Boosted grants + Low interest rates are creating a floor in the housing market at the lower end
• - Homes under $500,000 are the strongest sales seen in many years
• - Cheaper to buy than rent in some areas
• -Expected flat 2009 with growth returning in 2010
• - Rising unemployment will apply pressure on Sydney house prices

Perth (-10.1% last 12 months)

• - Perth house prices likely to remian depressed for the next 12 months
• - Pace of the drop in property prices is set to slow down
• - Some perth suburbs are still growing
• - RP Data using different methodology calculates Perth’s property decline at only 6%
• - Market likley to go sideways due to rising unemployment
• - First home buyer still strong

Darwin (+10.8% last 12 months)

• - Continue to power ahead
• - Properties are selling very quickly – usually within 2 weeks if priced between $300,000 and $750,000
• - Population forecast to grow by 70% to more than 200,000 people by 2030
• - Driving growth is defence and international resource investment for gas and oil
• - Vacancy rates are negligable and average yields are 6.3% on units and 5.3% on houses
• - Darwin is Australias most expensive city at the moment to live in according to HTW’s monthly review

Adelaide (-1.9% latest 12 months)

• - First home buyer market is still very hot
• - Defence Housing Australia looking to purchase a number of sites for their recruits
• - Upper market, above $600,000, is a little slower

Brisbane (-6.3% latest 12 months)

• - Market has slowed as property prics ahve caught up with both Melbourne and Sydney
• - RP Datat only shows a fall of 3.42%
• - House prices under $500,000 have increased by as much as 10% according to Michael Matusik
• - Sales volumns are down 40% in some locations of Brisbane
• - Top end market still suffering as more properties come on tot he market than are sold

Melbourne (-6.7% latest 12 months)

• - Static prices predicted for the next 6 months and then moderate growth
• - Stability and price growth based on conitnued population growth, continued Goverment grants and a reaosnablely health economy
• - Of the top 20 growth suburbs in Melbourne, 15 had a median price of under $500,000

No Comments »