Increased rental & sales listings....

[WinstonWolfe]

Some interesting observations from Matusik's July 2010 snapshots.

- if there's an undersupply of accommodation, why are rents hardly moving?

- the real vacancy rate across Australia is 4.1%, that's 90,000 residences. The 1.8% vacancy rate commonly quoted does not allow for existing listings, only new listings. A tight rental market is considered less than 3%.

- Brisbane's vacancy rate is highest at 5.5%, Melbourne 5.0%. Perth 4.2%. Sydney 3.1%.

- According to SQM research, there are 307,500 properties listed for sale, up 28% from March2010, and up 40% on a year ago. The increase is most acute in Melbourne and Brisbane. The increase on a year ago is worse in regional areas. Cairns 100%, Townsville and Rocky 60%.

- Auction clearance rates have halved in recent months.

- Amount of property listed is increasing at an accelerating rate, with 400,000 listings expected by spring.

- best case scenario. prices remain nominally flat for a few years, rates don't go up further and wages do.

 

[VCDenton]

interesting so where should we invest in? brisbane due to a very buyer market and hence more likely to get a 'bargain' or our favorite sydney?

 

[INVSTOR]

I've met with some politicians in Perth lately and I've been hearing from them that the cost to purchase a house and private rent is too high. There's huge demand for public housing.

I'm thinking resi property will be flat for a while too.

 

[WinstonWolfe]

interesting so where should we invest in? brisbane due to a very buyer market and hence more likely to get a 'bargain' or our favorite sydney?

I'd advise you to snap up a bargain in buyer's market Cairns.....bound to be some serious growth there befitting of a long term investor's time line.

Besides, Jan Somers says you never know if you will get the finance tomorrow that you can get today.

 

[Aaron Sice]

pollies will always say that, though.

the reality is, what is for rent in Perth (especially) are poor condition dogboxes.

the drive for rents is in new homes. rents and values are comparitively higher for these.

you have an okay condition 3x1 on 728sqm triplex lot anywhere in perth and you'll get $250pw. put 3 units on the same lot next door, all 3x2DG with little 20sqm courtyards and you'll get $360pw each - and they're gone in a flash, while next door still sits vacant.

one of the many reasons why using "existing listings" argument for vacancies doesn't work. GenZ would rather stay home than fork out money for a sh_tbox.

 

[Propertunity]

- Brisbane's vacancy rate is highest at 5.5%, Melbourne 5.0%. Perth 4.2%. Sydney 3.1%.

On that basis I would be looking to invest in Sydney then or at least not in Brisbane, Melbourne or Perth atm.

... there are 307,500 properties listed for sale, up 28% from March2010, and up 40% on a year ago. The increase is most acute in Melbourne and Brisbane. The increase on a year ago is worse in regional areas. Cairns 100%, Townsville and Rocky 60%.

Looks like avoid Melbourne and Brisbane and regionals / touristy spots.

- best case scenario. prices remain nominally flat for a few years, rates don't go up further and wages do.

You may well be right taking a broad brush approach to the "Australian market" - which as you know does not exist. Some places will do really well, whilst others will languish. I know you like graphs so I have attached a couple.

I have taken a time slice of 15 years with an end point just prior to the GFC and comparing only 2 suburbs - Tamarama and Mount Druitt - just to prove a point (not wanting to cast aspersions on the good people of Mount Druitt)

So in 1993 the median price of a home in Tamarama was $370K and it grew to be $2.92M by 2007: A factor of nearly 8 times in 15 years.
Looking at Mount Druitt over the same period, its median grew from $102K to $310K : A factor of about 3 times.

Now, would I have been happy with a purchase in Mount Druitt going up 3 fold in 15 years? - Yes, I'd feel pretty damn pleased with myself.
Would I have been happier with a purchase in Tamarama instead and picking up an 8 fold increase? Probably
Could I have afforded to get into the Tamarama market in 1993 for $370K? Probably not

But it does illustrate the point, that there are markets within markets and it pays to do your due dilligence. It also pays sometimes to ignore the media noise about bubbles deflating when, IMO, there aren't any.

Cheers,
Alan

 

[WinstonWolfe]

Yes Prop, there are markets within markets, which is why we bought in inner ring Brisbane March this year.

There's opportunities for investors in all markets, but different opportunities for different markets.....stats and charts are helpful in clarifying which is which.

 

[Player]

I'm thinking that the vendors of (brand spanking new) "investment properties" with sundry guarantees won't be using Michael Matusik this year or next to support their wares.

The p4p group might also wish to refrain from adopting Matusik's current stance:

http://www.somersoft.com/forums/showthread.php?p=696623#post696623


Prop makes a good point about markets, and such a notion is likely to continue to apply.

I think WW is endeavouring to put across the sense that osetensibly we are in a time period where the overall fundamentals aren't so flash, despite what the mainstream datasphere would have us believe.

Anectdotally, I seeing some longer time frames for lettings to eventuate. Generally in Melb and Gold Coast. In Sydney, I have just (sensibly) increased rents on two of mine.

 

[buzzlightyear]

According to SQM research, there are 307,500 properties listed for sale, up 28% from March2010, and up 40% on a year ago. The increase is most acute in Melbourne and Brisbane. The increase on a year ago is worse in regional areas. Cairns 100%, Townsville and Rocky 60%

Isn't this the market simply coming back in equilibrium and not of itself a a precursor to stagnant prices. Higher prices attract more prices on the market, increasing supply which will therefore bring prices back. I know this is the case for Melbourne, I have no knowledge of Cairns, Townsville and Rockhamption however.

Melbourne's clearaace rates have reduced from mid-80's from their peak to mid-60's over the past few weeks. A definite drop. If clearance rates move to mid-50's, then I would argue sentiment has changed. And of course, it is winter and the market generally does hibernate at least in Melbourne. The spring will be the test imo. The same test applies for rents as well.

People just don't move as much in winter, so it is plausible to have a higher vacancy rate during the winter months.

 

[Aaron Sice]

People just don't move as much in winter, so it is plausible to have a higher vacancy rate during the winter months.

now now, there's no room for feely, immeasurable sentiment here. we need proof, stats, preferably in early excel format so we can all download and analyse explicitly.

 

[WinstonWolfe]

I think Sunfish recently confirmed Cairns market is flooded and falling.

Buzz, most would agree spring will be the litmus test. The issue I have with auction clearances though, is many will not risk the expense of an auction if they think the market is soft, or if the first weeks of spring clearances are weak.

One stat I create is the sub 300k listings of a region of several lower class outer ring burbs. I reckon this acts as a more sensitive thermometer and leading indicator.

Since Feb/Mar I've been resigned to Brisbane being flat for 5 years. Might be possible to average 5-7%pa in inner ring and new infrastructure/rezoned precincts, but less likely elsewhere. In Jan/Feb I thought there was a slight chance a wave of higher growth might sweep up from down south to Brisbane during 2010, but the stock market and macroeconomic data wasn't backing it.

Flat rents and higher vacancy rates have me stumped. Maybe that's partly due to IPs making up a higher portion of total stock. % bank loans to investors have been historically high recently.

Migration is falling too despite the election BS.

People just don't move as much in winter, so it is plausible to have a higher vacancy rate during the winter months.

 

[WinstonWolfe]

now now, there's no room for feely, immeasurable sentiment here.

that's right. it is too easy to say my sentiment is bigger than yours.

 

[Propertunity]

Flat rents and higher vacancy rates have me stumped. Maybe that's partly due to IPs making up a higher portion of total stock.

I have no hard data to prove what I am about to propose, but I reckon that a bunch of FHBs who purchased with the grant & the boost & the stamp duty relief, have now moved back home with mum & dad (where the food is better and the board cheaper). Then they have turned their PPORs into IPs after their 6 months of living in it (if in fact they ever did move into it ).

I read an article here: http://www.news.com.au/money/property/thousands-of-first-home-cheats/story-e6frfmd0-1225893061110
where

MORE than 3,000 NSW residents have been caught rorting first-homebuyer concessions

If I am correct, then it will take some time for the slack in the system to be taken up.

 

[Ed Barton]

I think Sunfish recently confirmed Cairns market is flooded and falling.

Buzz, most would agree spring will be the litmus test. The issue I have with auction clearances though, is many will not risk the expense of an auction if they think the market is soft, or if the first weeks of spring clearances are weak.

One stat I create is the sub 300k listings of a region of several lower class outer ring burbs. I reckon this acts as a more sensitive thermometer and leading indicator.

Since Feb/Mar I've been resigned to Brisbane being flat for 5 years. Might be possible to average 5-7%pa in inner ring and new infrastructure/rezoned precincts, but less likely elsewhere. In Jan/Feb I thought there was a slight chance a wave of higher growth might sweep up from down south to Brisbane during 2010, but the stock market and macroeconomic data wasn't backing it.

Flat rents and higher vacancy rates have me stumped. Maybe that's partly due to IPs making up a higher portion of total stock. % bank loans to investors have been historically high recently.

Migration is falling too despite the election BS.

cairns is full of investment style units in the 3 m areas atm, no rush you have plenty of time.

cns will not pick up until the world economy does, and tourism turns the corner. there will still be lots of places left to soak up once the cns economy turns. be patient and offer really low if you are buying in cns atm.

 

[Nathan]

If the numbers work, buy wherever....

 

[DEC]

- According to SQM research, there are 307,500 properties listed for sale, up 28% from March2010, and up 40% on a year ago. The increase is most acute in Melbourne and Brisbane. The increase on a year ago is worse in regional areas. Cairns 100%, Townsville and Rocky 60%.

Are you looking at the same SQM as me?

 

[WinstonWolfe]

Below is quoted verbatim from Matusik Market Snapshot July 2010 no. 444.
(this is a $490 pa subscription). I mistakenly said in the post above the data was from SQM Research, when what was said in the report is Matusik did the research for SQM Research.


"The rise in the number of properties for sale this
winter is most acute in Brisbane and Melbourne. In
Brisbane there are now about 25,500 houses and
apartments for sale, up from 18,250 or 40% this time
last year. In Melbourne there are 29,500 dwellings
listed for sale, which is up by a third on last winter’s
listings. See point 2, also below.
The lift in new winter listings is even greater away
from the capital cities and Queensland is no
exception. For example, there are now 11,000
dwellings for sale on the Gold Coast, up 35% on this
time last year. On the Sunshine Coast, 10,375 properties are for sale, up 40% again on last year.

In central Queensland (Rockhampton to Townsville)
there are close to 11,000 residences for sale, up
60% and in Cairns, 5,500 properties are available,
close to double the number during winter last year.
Also see point 3, below."