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The Experts

John McGrath
Property Expert
+ About John McGrath
About John McGrath - Founder and Executive Director, McGrath Limited

John McGrath is considered one of the most influential figures in the Australian property industry. As Founder and Executive Director of McGrath Limited, , he took McGrath Estate Agents from a lounge room start-up in 1988 to one of Australia's most successful residential real estate groups, listing McGrath Limited on the Australian Stock Exchange in November 2015.

An integrated real estate services business, McGrath today is one of the fastest growing real estate companies in Australia with a strong market presence in NSW, the ACT & Queensland, and a growing presence in Victoria.

In October 2008, John was honoured by the Real Estate Institute of NSW with the Woodrow Weight OBE Award, a lifetime achievement award for his outstanding contribution to the real estate industry.

John himself has become a spokesperson for the industry both in Australia and internationally. John has five books that have reached bestseller status including “You Don’t Have To Be Born Brilliant” and “You Inc.”. In “The Ultimate Guide to Real Estate”, John shares with the reader his invaluable knowledge on the Australian property market.

John is a Director of REA Group and also the South Sydney “Rabbitohs,” which is one of his great passions.

Time to take stock of housing debt

Tuesday, October 17, 2017

By John McGrath

We’ve been hearing a lot about record household debt in Australia, however statistics show that the bulk of this debt relates to housing and importantly, the value of our properties far outweighs that of our debt.

For the number crunchers out there, CoreLogic has provided an analysis of the Reserve Bank’s latest quarterly report on household finances. The key statistics are as follows:

  • The ratio of household debt to disposable income was 193.7% at the end of June – a record high
  • The ratio of housing debt to disposable income was 136.4%
  • The ratio of household assets to disposable income was 935.6% – a record high
  • The ratio of housing assets to disposable income was 516.5% – a record high
  • The ratio of household debt to assets was 20.7%
  • The ratio of housing debt to assets was 26.4%

What does this all mean? Basically, we’ve got a lot of debt but most of it is due to housing. Property is a stable and reliable asset class, so as long as unemployment remains low, I don’t believe there’s a doomsday scenario in terms of our record household debt.

However, every now and then we do need to think about our debt and how we’re managing it. This is especially important because of the size of our debt and the inevitability of interest rates rising, though they have a long way to go given we’re still at record low levels. On top of this, the property markets in Sydney and Melbourne are cooling, which means asset values are going to stabilize while interest rates are likely to rise (either via the banks independently or via the RBA).

This can make people nervous – not so much owner-occupiers but certainly investors. They’re the most volatile group of property owners and given the enormous number that entered the market during the boom in Sydney and Melbourne, I think it’s important for investors to take stock of their financial situation and be comfortable with their position.

Over the past few years, Sydney and Melbourne investors have been focused on the excitement of rapid capital growth and that’s entirely understandable. However, we’re now heading towards normal market conditions with little or no further growth expected for the next few years.

To be successful in property investment, you have to stay in the market long term and many Australians in my view can be too speculative. Most Australian property investors only have one investment property and they usually sell it too early. This often happens when the market is flat and interest rates go up. Smart investors ride it out. Nervous or uninformed investors sell and usually regret it.

Now’s the time to prepare yourself for the market change. You need to get yourself into a position where you’re paying the lowest interest rate you possibly can, on the terms that suit your future goals, so you can comfortably hold your asset through the flatter period of growth that’s coming.

The top two considerations for investors today are whether your loan is structured correctly for the long term; and whether you are making the best possible use of today’s low interest rates.

Remember – if you’re planning to hold your investment property for 20 years (great idea), then you’re going to be paying interest at varying rates during this time. The long term average is 7-7.5% but today you can lock in a fixed loan for 5 years (a quarter of your hold period) at 5%. Is this worth considering?

Most investors begin their journey with an interest only investment loan. Did you know you’re paying a premium for that right now? Due to APRA restrictions, banks are charging higher rates on investment loans than home loans and higher rates for interest only terms.

So, what can you do?

There are a couple of options.

If you’re on interest only, is it worth considering switching to principal and interest (P & I)? Your repayments will be higher because you’re paying off principal as well as interest (and principal payments are not tax deductible) but if your goal is to pay off the loan, would it be beneficial to go P & I for a few years while interest rates are this low?

I randomly picked a bank and looked at their rates online. On a variable interest only investment loan, they’re charging 5.35%. On a variable P & I investment loan, they’re charging 4.90%.

Next option. If you’re paying a variable rate, is it worth considering fixing? Right now, fixed rates are generally lower than variable rates. I picked a different bank and they’re charging 5.42% on variable interest only investment loans but also offering fixed interest only loans at 4.49% for 3 years or 5.09% for 5 years.

Deciding how to structure your loan is a very individual decision and I’m not recommending one strategy over another. However, I do advise every investor (and every home owner for that matter) to review their loan now with their accountant or financial advisor’s help – especially if it’s a few years old; and see if there’s a way to get a better deal.

If you’d like some advice with this, I recommend contacting McGrath’s mortgage broking division, Oxygen Home Loans for a Home Loan Health Check on 1300 855 699.

Given the bulk of our record household debt relates to housing, it’s critical to monitor the rates you’re paying and a lot has changed with lending products of late, so I recommend being fully informed of your options.

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Spring property so far

Tuesday, October 10, 2017

By John McGrath

The best way to gauge how a market is doing is by looking at auction clearance rates. They give us a real time perspective on how buyers are feeling and whether vendors are meeting the market and being realistic on price.  
Over the five Saturdays in September – the first month of Spring selling, we saw auction clearance rates in Sydney dip into the late 60% bracket and stay there. The lowest they got to was 66.5% over the long weekend, according to CoreLogic data.
So, what does this tell us?
First of all, clearance rates are falling but not rapidly. We’re down about 10% compared to six months ago and this is perfectly normal for a cooling market.
Secondly, a 60% clearance rate indicates normal market conditions and this doesn’t concern me, particularly with respect to Sydney.  We’ve had a very long sustained boom period and now we need the market to calm down and consolidate its price growth.
Auction clearance rates include properties sold prior to auction and we’re seeing this happen more often now due to softening buyer demand.
We expected cooler market conditions to be a catalyst for increased listings. Vendors are seeing that the market has peaked and now is the time to sell for maximum value. Plus, with more stock on the market, they’re no longer feeling the concern they had last year about their ability to buy back in. This appears to be happening with SQM Research reporting a 12.3% increase in listings for sale in Sydney this September compared to September 2016. This was the greatest increase in listings of any capital city.
In terms of price changes this Spring, we haven’t seen anything dramatic. Demand has waned a bit and buyers are certainly more selective – they have a bit more choice and don’t want to pay a premium in a slowing market. But so far, we’ve only seen an 0.3% decline in Sydney’s median house price in September and that’s nothing to be concerned about at all.
Let’s look at how the median house price has changed in 2017. CoreLogic reports Sydney’s median house price every month and as you can see below, it has jumped around a bit this year – gaining in some months, losing ground in other months. These fluctuations are typical at this point in the cycle.  
Monthly changes in Sydney’s median house price 2017
January + 0.5%
February +2.7%
March +1.6%
April +0.2%
May -1.0%
June + 1.8%
July +1.3%
August -0.1%
September -0.3%
All in all, Sydney is holding up very well as it makes the transition from boom growth to normal growth. There is still the possibility of a minor price correction, especially if interest rates escalate significantly but this is unlikely.
However, it is worth noting that the banks are continuing to raise mortgage rates independently of the RBA and this is prompting some investors to sell. However, I think most investors would be better off keeping their assets and fixing their loans instead if they’re concerned about rising costs.
Many fixed rates are cheaper than variable at the moment – we’re talking mid-4% for three years and early 5% for five years on interest only. However, always talk to a broker first before making this sort of change.

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Australia's population growth hot spots

Tuesday, October 03, 2017

By John McGrath

Population growth is a key element keeping Australian housing prices strong over the long term. In major cities like Sydney and Melbourne, the supply of new homes simply isn’t keeping up with population growth and as a result, prices continue to go up. 

Population growth has played a big role in Sydney and Melbourne’s booms, which began in mid-2012. According to the Census, over the five years from 2011 to 2016 Greater Sydney experienced 9.8% population growth. That’s 1,656 people moving to Sydney every week.

Greater Melbourne’s population growth was superior to Sydney’s at 12.1%, with 1,859 new residents moving in every week. There’s no way new supply could keep up with these rates of growth and as a result, we’ve had much more demand and booming market conditions. 

The Australian Bureau of Statistics (ABS) has now released regional population data that gives us the opportunity to look at population growth on a suburb by suburb level. This gives us an insight into the most popular and fastest growing neighbourhoods across the country.

Above average population growth is something investors should always look for when researching locations. However, it needs to be considered in the context of new supply.

If an area has had massive land releases and there’s new estates with thousands of new houses, you’ll see population growth but not necessarily big price growth. This only happens when demand exceeds supply. So, keep this in mind when looking at the following data.

Here are the Top 10 local council areas in each state for population growth (by percentage change) between 2006 and 2016. Population growth is usually a slow moving phenomenon, which is why we’re looking at 10 years of data to get a good picture of Australia’s hot spots.

Top 10 Population Growth hot spots

The next two states are WA and QLD. We need to remember that these are 10-year statistics, so the mining boom would have skewed the numbers a bit in regional mining towns. As a result, some of the localities in the Top 10 might be on the decline today given the mining boom has recently ceased and people are now leaving these areas.

Source: Regional Population Growth Australia 2016 (based on LGAs), ABS, published July 28, 2017

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Record level of $1 million-plus sales

Tuesday, September 26, 2017

By John McGrath
Almost one in two houses and one in five apartments in Sydney have sold for $1 million or more over the past year, according to new research from CoreLogic which reveals a record number of $1 million-plus sales across the country over the 12 months to June 2017.
In Melbourne, one in four houses, but less than 10% of apartments, sold for more than $1 million.
After more than three decades in real estate, I’ve seen a lot change. When I was starting out as a young agent, a million dollars was a serious budget for a new home. Today, it’s the median price of a house in Sydney.
We hear a lot about affordability these days and I’m very supportive of the measures both state and federal governments are implementing to assist young buyers and essential services workers in our two biggest and most expensive cities. But there’s another side to this.
Seeing a record number of $1 million-plus sales across Australia should also remind us what property can do for us if we buy well and hold for the long term.
CoreLogic predicts an even higher number of $1 million-plus sales next year. Good quality property will continue to rise in value – over time; and yes, that goes for Sydney too. Prices can and will go higher in the future.  
How is this possible? Well, there’s many factors at play but one of the most basic is we have a small number of capital cities and a huge majority of people living in them. Australia might be a vast land mass with plenty of space available but two out of three people choose to live in a capital city.
The latest Census puts it at 67% – that’s more than 15 million people living in just eight cities. That’s an enormous concentration of the population and it’s growing.
Across our capitals, there was 10.5% population growth between 2011-2016 and that’s double the rate of growth in other areas, according to the Australian Bureau of Statistics.
With a large and growing city-based population, it’s no wonder that new housing isn’t keeping up. And it’s this long-standing imbalance between supply and demand that keeps a floor under prices and continues to push them up – sometimes rapidly like we’ve seen in Sydney and Melbourne and sometimes more slowly with various cyclic ups and downs, like we’re seeing now in other capitals.  
When we look at the number of $1 million-plus sales, it’s just another market measure telling us that Australian real estate is robust with plenty of room left for future long-term growth.
Think back 10 or 15 years and recall what you thought of property prices then. Did you think Sydney was expensive? Did you think prices couldn’t possibly go higher?
Take a look at these statistics for $1 million-plus sales today compared to 10 years ago in our major capital cities.
Today – 47.8% of all house sales and 21.3% of apartments sold for $1 million-plus
10 years ago – 13.8% of house sales and 4.7% of apartments sold for $1 million-plus
Today – 25.9% of house sales and 7.4% of apartments sold for $1 million-plus
10 years ago – 5.8% of house sales and 2.7% of apartments sold for $1million-plus
Today – 7.9% of house sales and 2.8% of apartments sold for $1 million-plus
10 years ago – 2.4% of house sales and 2.4% of apartments sold for $1 million-plus
Today – 11.9% of house sales and 2.1% of apartments sold for $1 million-plus
10 years ago – 2.6% of house sales and 0.7% of apartments sold for $1 million-plus
Today – 10.7% of house sales and 3.9% of apartments sold for $1million-plus
10 years ago – 7% of house sales and 4.2% of apartments sold for $1 million-plus
The lesson to be learned from these numbers is two-fold.
Firstly, prices are going to keep going up in our capital cities. We might see a correction in Sydney and Melbourne after more than five years of runaway growth but if so, it’s going to be small.
Secondly, the best time to buy is as soon as you can and then hold for the long term.
Right now in Sydney and Melbourne, there’s a bit of confusion in the marketplace. Some people are holding off on their next move in property, others are rushing to buy or sell as soon as possible. People aren’t sure what the market is going to do next and it’s impacting their decisions.
Timing the market isn’t necessary if you have a long-term view. Sure, buyers should be careful given we seem to be at the peak in Sydney and Melbourne but what really matters, if you want to make money in real estate, is the time you spend IN the market, not the timing of your purchase.
Buyers should keep this in mind this Spring.

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Stamp duty cuts working for first time buyers

Tuesday, September 19, 2017

By John McGrath
Stamp duty cuts and concessions in NSW and VIC appear to be working well, with new statistics showing a substantial increase in the number of first home purchases.
The latest Housing Finance figures released by the Australian Bureau of Statistics cover the month of July, which was the first month that stamp duty changes became effective in both NSW and VIC.
In NSW, the number of first homes financed in July was 1,950, which was a significant increase (28%) on the 1,528 in June. We haven’t seen a number this high in about five years.
The proportion of the market comprising first home buyers was 11% – up from 9% in June. We’re still a long way off the long term average of 17%, but a 2% change in just one month is very encouraging.
In VIC, the number of first homes financed in July was 2,619 – a four-year high and a decent increase (11%) on June when 2,366 homes were financed. This took first home buyers to 17% of the marketplace, up from 14% in June. (The long term average is 21%.) 

To re-cap, here are the stamp duty cuts, concessions and grants on offer to first home buyers in each state.

  • No stamp duty on first home purchases up to $650,000 (new and existing property)
  • Stamp duty concessions on first home purchases up to $800,000 (new and existing)
  • Buyers of brand new properties also receive a $10,000 grant for homes up to $600,000


  • No stamp duty on first home purchases up to $600,000 (new and existing property)
  • Stamp duty concessions on first home purchases up to $750,000 (new and existing)
  • First Home Owner Grant (FHOG) doubled to $20,000 for regional buyers who build or buy a brand new home up to $750,000. Regional areas include the cities of Geelong and Ballarat
  • Original FHOG of $10,000 remains available to Melbourne buyers of brand new properties

On top of this, there’s the Federal Government’s new First Home Super Saver Scheme which also commenced on July 1. It enables first home buyers to make voluntary contributions of up to $15,000 per year into their super (up to an overall total of $30,000) to save for their first home.
These contributions are taxed at the usual super rate of just 15% and can be withdrawn from July 1, 2018, along with any earnings, to buy a first home.
The savings on offer represent serious money and won’t be around forever, so I implore young people to take notice of this opportunity. 
Most Australian mums and dads would tell their young adult kids that property is a cornerstone asset that has provided them with decades of financial security and significant capital growth for use in their retirement.
If there’s a way to get into the market, especially with so much assistance now available, young people should consider taking it. This is particularly so for regional buyers who are essentially getting access to major savings aimed at city buyers who have to pay much higher prices. Take advantage of it!

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How to rent with a pet

Tuesday, September 12, 2017

By John McGrath
A few weeks ago I discussed the difficulty pet owners face in finding pet friendly accommodation to buy or rent. The rise in apartment living, coupled with outdated strata rules disallowing pets, means we have a significant lack of pet friendly properties in our market at a time when pet ownership and renting across the country is increasing.
This week I’ve got some great tips to share from McGrath’s Head of Property Management, Michael Conolly, on how tenants with pets can improve their chances of securing the rental home they want.  
According to Michael, pet references are the key to success.
“References from past landlords and agents, neighbours and even dog walkers – the more references the better,” Michael says.
“Even a reference from your pet groomer is helpful because after property damage, the shedding of hair and smells are the next biggest fears of landlords when it comes to tenants with pets.”
Michael also recommends a Pet CV with photos of your pet and the following essential information:

  1. Breed
  2. Age
  3. Size
  4. Vaccinations
  5. Whether the pet has a microchip
  6. Whether the pet has been de-sexed
  7. Whether the pet has had any professional behavioural training

An additional strategy for pet owners is to offer to pay a bit more in rent.
“Landlords of pet friendly apartments can’t charge a higher rent because the block is pet friendly, however tenants can volunteer to pay more, which can be a good strategy.”
In NSW, Michael says changes to strata laws that make it easier for buildings to adopt pet friendly policies – either by allowing pets freely or considering pets on application, has had little effect to date, with most buildings choosing to maintain a hard line on pet ownership.
“The changes to strata laws in November are making it a little easier in some areas of Sydney. We’ve seen some apartment buildings in the inner city, inner west and eastern suburbs adopt pet friendly policies but overall, the effect has been minimal. The take-up is still slow.
“Houses are naturally the best option for tenants with pets, especially those with enclosed yards. Landlords allowing pets are slowly on the rise but not at the rate pet owners would like.
“Pet ownership in Australia is increasing. You only have to visit inner city parks and coffee shops to see this. Statistics show there are 4.8 million pet dogs in Australia and 3.9 million pet cats* so the reality is that owners, agents and body corporates have to become more accepting of pets in rental properties.”
So, what’s in it for the landlord?
As mentioned earlier, a tenant with a pet may offer to pay more in weekly rent but we don’t recommend approving a tenant simply because of this. They have to have great pet references and a good track record as tenants themselves.
The other benefits are reduced vacancy periods and potentially better maintenance of the property than tenants without pets, as Michael explains.
“People with pets stay in rental properties longer so landlords get longevity of tenancy.
“Ironically, tenants with pets can also be more particular about maintaining a property.
“Both of these benefits are a function of how hard it is to find owners that will allow pets, so paradoxically tenants with pets are often perfect tenants because they don’t want to be out looking again in a restricted marketplace.”
In my opinion, all apartment buildings should be pet friendly, with appropriate rules. The property market needs to evolve in line with the lifestyle changes of the population. If apartment living and pet ownership are both on the rise, then the marketplace needs to adjust.
Given the increasing demand, I think making your property pet friendly will ultimately make it more valuable too.

*Pet Ownership in Australia 2016, Animal Medicines Australia
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Winter wrap-up – prices levelling out

Tuesday, September 05, 2017

By John McGrath

The numbers are in and price growth in Sydney during the three months of Winter was flat at just 0.3%, according to the latest monthly report from CoreLogic. This result was pretty much an extension of Autumn when we saw virtually no growth at all.

Compare this to the Summer quarter when we saw 4.5% growth and last Spring when we had a 2.3% bump and clearly, things have changed in 2017.

The Winter quarter result reiterates to me that Sydney is very near the top of its cycle or has even gone through it by now. There’s no bubble and I believe no chance of a major correction. Price growth has simply slowed down which is exactly what we want it to do at this stage.

After more than five years of very strong growth, during which time median home values in Sydney have risen by 75%, it’s time for some stabilisation. We need the market to calm down. It’s had a phenomenal boom run but continued growth at this point would be dangerous.

I think we’ll have a strong Spring season and maybe a small amount of price growth during what is traditionally a hot selling period. But equally, I wouldn’t be surprised if citywide price growth remains flat.

Even if we continue to see above reserve prices in the best suburbs, there is clearly weakness in other parts of the market that might counterbalance any strong results elsewhere and give us another quarter of flat growth across the city as a whole.

There is a possibility of a small and short correction of a few percent at some stage – maybe this year or next year; and this would be healthy for the sustainability of the market. If it happens, it’s nothing to worry about.

The slowing of price growth in Sydney appears to have been a catalyst for increased listings with vendors no longer having to experience FOMO (Fear of Missing Out) as prices level out.

We’re already seeing indications of this with a weekend newspaper report quoting a 16% increase in listings today compared to this time last year, according to CoreLogic data.

It’s fair to say that home owners who might have been holding off til the peak are realising we are probably there or past it by now. 

This increase in stock won’t do much to the market, it will simply increase supply a bit, in an environment where we are vastly undersupplied, to meet the buyer demand still out there.

It’s still a seller’s market, however it will be tougher to sell homes with less desirable features such as a poor aspect or compromised location such as a busy road. It is typical to see buyers become much more selective at the end of a boom when listings increase.

If you have a good quality home in a good location and you invest in a great agent and a smart marketing and selling strategy, you should expect to do well this Spring.

Sydney continues to have strong drivers, including deep demand, population growth, overseas investment and low interest rates. While I do think some precincts of Sydney are overvalued compared to other areas of Australia, it is a world class international city and a major financial centre. Take a look at similar cities around the world and you’ll find a similar situation.

As Sydney slows down, I see great potential for significant growth in South East Queensland, which remains substantially undervalued compared to Sydney and Melbourne.

I also expect growth in the single digits for regional markets close to the two big capital cities, such as Wollongong, Newcastle, the Central Coast and Geelong. 

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Tips for Spring sellers

Tuesday, August 29, 2017

By John McGrath

This Saturday is the first of the Spring 2017 season and I’m excited to see how things unfold this year, particularly in Sydney and Melbourne which appear to be moving past their peak.
I’m expecting a strong Spring this year, despite indications of the market cooling in both cities. Excellent sale prices are still being achieved, particularly in sought-after locations close to the CBD where demand is highest, so I feel this is a good indicator of robust market conditions this season.
Last Spring, both cities were experiencing a significant shortage of stock and this had ramifications for both buyers and sellers. Buyers had the choice of paying a premium price or staying in the market longer, neither of which was appealing. Sellers stood to benefit price-wise from the supply/demand imbalance but buying back in was too hard, so many prospective vendors held off.
This caused some stagnation in the marketplace.
Things are different this year. Latest stock data from CoreLogic shows new listings in July were up by almost 17% in Sydney and 10.8% in Melbourne compared to July 2016. If this trend continues, there’s every reason to expect more homes for sale this Spring compared to last. My feeling is that while both cities will remain sellers’ markets, buyers will have more properties to choose from and we’ll see far more dynamic market conditions this season.
The number of properties selling via auction is also increasing and I think vendors are making the right choice. Auction is the best way to find out the maximum price the market is willing to pay – right now, for your home. Clearance rates are still high in the 70% range in both Sydney and Melbourne, so we’re well above normal market conditions (60%) and sellers should use this to their advantage this Spring.
I recommend getting in early with a September or October campaign this year. November is traditionally a high-volume month so vendors will likely have more competition from other homes for sale if they wait until November. This may or may not affect your sale price, it depends on the supply/demand balance in your local area.
Generally speaking, if overall stock levels are finally trending up in Sydney and Melbourne, which appears to be the case, then I’d say September and October sellers might have a slight edge over November sellers this year. Perhaps keep this in mind when planning your sale timeline.
I also want to encourage Spring sellers to listen to their agents on price.
One of the trends we always see when a boom appears to be over is a rush of owners coming to market to achieve the ‘high price’ their neighbours got during the height of the boom.
Depending on market conditions in your area, this might not be possible anymore. Demand is slowing down, especially in the investor segment, so sellers need to understand this and be realistic on price if they want to achieve a sale this Spring.
Whether buying or selling this season, I wish you the very best!

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Lack of pet-friendly homes to buy or rent

Tuesday, August 22, 2017

By John McGrath

The shift towards apartment living coupled with one of the highest pet ownership rates in the world has created a problem in the Australian property market – a lack of pet-friendly homes to buy or rent. 

It is standard practice in most strata schemes for body corporates to disallow pets among owners and tenants. This wasn’t a big problem in the past when affordability was less of a strain and pet owners in major cities could afford to buy or rent a house.

But today, with more of us living in apartments due to affordability or circumstance (such as living alone or as couples without kids – both growing trends), apartment living is on the rise and things are getting difficult for pet owners.

Last year, industry body released a comprehensive report on pet ownership in Australia. It described the rise of higher-density living in major urban areas as “the biggest current threat to pet ownership in Australia – particularly in the current environment of strict body corporate or strata rules that exclude pets in multi-dwelling developments”.

The report also noted a change in attitude amongst pet owners, with many seeing their ‘fur babies’ as members of the family, not just companion animals. “There has been a marked change in the role dogs and cats play in the household. The relationship between humans and their pets has become much closer with a significant lift in the proportion of owners who see their pets as members of the family rather than merely companions.”

The report found two-thirds of households with dogs (65%) and cats (66%) now regard them as part of the family, up from 59% and 57% respectively in 2013.

In the sales market, this means buyers are struggling to find a place to live. In most cases, their love for their pet will make them walk away from apartments that aren’t pet friendly. This is also causing sellers to lose money. I live in an apartment complex myself, so am very much aware of the issue at hand and have seen some vendors lose tens of thousands of dollars off their sale price because the building won’t allow pets.

In the rental market, tenants are struggling to find good quality homes because most landlords don’t want pets.

According to a recent newspaper report, the NSW Animal Welfare League says 12.8% of pets surrendered last year were given up by tenants who could not find pet-friendly accommodation. This represents an 8% increase on the previous year.

A new research paper from the University of Western Sydney titled ‘Renting with pets: a pathway to housing insecurity?’, found that many tenants had to rent poorly-maintained properties in poorer locations because they were the only ones that allowed pets. Other tenants were living with unauthorised pets, causing feelings of insecurity and stress due to the constant threat of eviction.

I think all apartment buildings should be pet-friendly, with appropriate rules. The property market needs to evolve in line with the lifestyle changes of the population. If apartment living is on the rise and our pets are meaning more to us than ever before, then the marketplace needs to adjust.

Over my 30-plus years in real estate, I’ve often found that problems in the market often come with opportunities and in my opinion, making your property pet-friendly will make it more valuable.

US research shows tenants with pets stayed longer in their rental homes than those without pets. This means lower vacancy periods, which is one of the most costly aspects of owning rentals.

For sellers, the more buyers you have, the better your sale price. We’re seeing plenty of evidence on the ground that buyers are walking away from apartments that don’t allow pets.

If you live in a pet friendly building, make sure this is highlighted in your marketing. Pet owners are motivated by love and emotion is a key element in how much a buyer will pay for your home. 

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More kids in public schools raises property prices

Tuesday, August 15, 2017

By John McGrath 

More parents are choosing to educate their children in government schools, a complete reversal of the 40-year trend towards private education, according to the latest Schools Report from the Australian Bureau of Statistics. This change began in 2015 and has been increasing ever since.

The number of students staying through to Year 12 has also increased from 75% in 2006 to 84.3% in 2016, which means family home owners in prized school catchments are staying put for longer.

So what does this mean for real estate? In short, a lot!

The desirability of homes within the catchment zones of the best public schools has been growing across Australia.

A key factor was the introduction of the My School website launched in 2010, which provides directly comparable performance data for every public school based on NAPLAN results and other factors.

The ability to directly compare schools means family buyers can handpick a top public school for their kids and give them guaranteed entry by simply moving into the catchment zone.

Attending a top public school is also cheaper than a private school, so parents can save a lot of money going this route while also ensuring a good education for their kids.

On the ground, we are constantly meeting families who have a particular catchment zone in mind. Catchments are also a high priority for a rising number of Chinese buyers in Australia, with our high-quality education often a key reason for them migrating here in the first place.

The effect of high-quality schools on local property prices is highlighted in the latest Domain School Zones report, which show house price growth data by catchment zone rather than by suburb.

Let’s take a look at the top three primary and secondary school catchment zones in our East Coast capital cities for 2016. 

Sydney’s top school catchment zones by house price growth: 2016

Primary schools

1. Neutral Bay Public School – house prices up 31.4% to a median $2.575 million

2. Woodport Public School – house prices up 27.2% to $738,000

3. Vaucluse Public School – house prices up 26.8% to $4.12 million

Secondary schools

1. Hunters Hill High School – house prices up 20% to $3.18 million

2. Rose Bay Secondary College – house prices up 19.9% to $3.1 million

3. Lake Macquarie High School – house prices up 18.8% to $463,150

Melbourne’s Top School Catchment Zones

Primary schools

1. Glen Huntly Primary School – house prices up 41.3% to $1,180,000

2. Glenferrie Primary School – house prices up 35% to $2,025,625

3. Kerrimuir Primary School – house prices up 34.4% to $1,183,000

Secondary schools

1. Charles La Trobe Secondary College – house prices up 31.9% to $950,000

2. University High School – house prices up 23.7% to $1,113,500

3. Elwood College – house prices up 22.6% to $1,511,000

Brisbane’s Top School Catchment Zones

Primary schools

1. Logan Reserve State School – house prices up 40% to $597,500

2. Broadbeach State School – house prices up 23.8% to $1,015,000

3. Sunnybank State School – house prices up 22% to $657,500

Secondary schools

1. Sunshine Beach State High School – house prices up 19.1% to $840,000

2. Sunnybank State High School – house prices up 14% to $610,000

3. Merrimac State High School – house prices up 12.3% to $870,000 

Source: Domain’s School Zones Report

As you can see, the data clearly demonstrates the value of a school catchment, with house price growth in the top catchments well above the median growth for the corresponding capital city over the same time period.

Catchment zones are something all buyers should consider, as it appears that a premium is usually paid for houses in the best school areas.

Couples not intending to have kids, or downsizers whose kids have left home, might want to avoid top school catchments and instead look to suburbs just outside the catchment zone where houses can be tens of thousands of dollars cheaper.

The flipside is if you do buy in a top school zone, whether you make use of the school or not, you’ll probably enjoy a premium level of capital growth over time as well.

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