Call us on 1300 794 893

The Experts

John_mcgrath_150_normal
John McGrath
Property Expert
+ About John McGrath
About John McGrath - Founder & 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 most successful real estate companies in Australia with an established and respected market presence in NSW, the ACT, Queensland, and more recently 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 was founding director of the REA Group and served on its board from 1999 to January 2018, serving as chairman from 2003-2007. 

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.

Where returning investors should buy their next property

Tuesday, September 17, 2019

We are seeing the first signs of investors returning to the property market after a bit of a hiatus due to credit restrictions, higher interest rates on interest-only loans and rental yields getting too low in Sydney and Melbourne as prices went higher through to 2017.

Latest figures from the Australian Bureau of Statistics show the value of new loans to investors (excluding refinancing) across Australia jumped by 4.7% in July – the highest monthly gain since September 2016.

On the east side of the country, Canberra led the investor charge with a 22% spike in the value of loans from June to July, followed by Queensland at 8.1%, Victoria at 5.7% and NSW at 2.0%.

Investment activity is still well down on previous years, but it looks like some people are re-engaging with property now that prices are lower in many metro and regional markets.

Also contributing would be the two interest rate cuts, the easing in lending criteria and a lack of appealing alternative investment options due to low deposit rates and sharemarket volatility.

My best piece of advice for property investors is to buy quality and focus on location and aspect.

Go for a quality property in a great street, in a desirable neighbourhood, with plenty of amenities such as cafes, shops and public transport. These properties might cost a bit more, but you’ll get better capital gains.

I also recommend drive-by investing – purchasing in a suburb close enough to home or work so you can get to your property easily.

In terms of locations, I think a good strategy is buying close to new infrastructure. There is so much building going on and this is creating opportunities for investors to capitalise, especially in areas where prices have fallen during the downturn. Here are some examples on Australia’s east side.

Canberra – Canberra Metro

Infrastructure: Light rail

Opened: April 2019

Impact: The 13-station light rail line connects the city with the inner north and outer north Gungahlin region. Services run every 6 minutes in peak hour. The suburbs with stations include Braddon, Turner, Dickson, Lyneham, Downer, Watson, Harrison, Franklin and Gungahlin.

Opportunity: Great time to buy along the line, targeting properties within a 10-minute walk of stations. Median prices in Franklin, which has three stations, peaked in 2017 at $748,500 for houses and in 2015 at $409,500 for apartments, according to Hometrack Australia data. The medians today are $683,500 and $367,250 respectively, according to CoreLogic.

Closer to the city in Lyneham, the median price has dipped from $860,000 in 2017 to $756,000 today for houses and from $456,500 in 2015 to $395,000 today for apartments.

Prediction: CoreLogic-Moody’s Analytics predicts 9.2% growth for houses and 8.2% for apartments across Canberra over CY20 and CY21.

Brisbane – Cross River Rail

Infrastructure: Heavy train line

Starting: End of 2019, with the aim of opening 2024 

Impact: Stretching from Dutton Park to Bowen Hills, the 10.2km line will provide a second river crossing so more trains can run. It will include four new stations and revitalised precincts at Boggo Road, Woolloongabba, Albert Street and Roma Street, with upgrades to existing stations at Dutton Park, Exhibition, Salisbury, Rocklea, Moorooka, Yeerongpilly, Yeronga and Fairfield.

Opportunity: We tend to see a lift in property values when projects are announced, commenced and completed. Using Woolloongabba as a case study, the median house price sat around $770,000 from 2015 to 2018 but is now starting to grow. It’s $822,000 today, up 7.9% over FY19. The median apartment price has been drifting down since 2015 from $526,500 to $405,000 today.

Prediction: CoreLogic-Moody’s Analytics predicts 1.2% growth in house prices and 9.1% growth for apartments over CY20 and CY21 in Brisbane-South, which incorporates Woolloongabba, Fairfield, Dutton Park and Yeronga.

Sydney – Sydney Metro North West

Infrastructure: Heavy train line

Opened: July 2019

Impact: A game changer for the Hills District, where residents have had to endure long trips on packed buses to the CBD for many years

Opportunity: Fantastic time to buy in suburbs along the line within a 10-minute walk of stations. Hills prices dipped 10-15% in line with Sydney throughout the downturn. For example, Castle Hill’s median house price in 2017 was $1,620,000 and today it is $1,347,500. The median apartment price in 2017 was $890,000 and today it is $815,000. 

Prediction: CoreLogic-Moody’s Analytics predicts 15.3% house price growth in Baulkham Hills/Hawkesbury, which encompasses the Hills; and 9.5% for apartments over CY20 and CY21. 

Melbourne – North East Link

Infrastructure: Freeway

Starting: 2020, with the aim of opening 2027 

Impact: Connecting the M80 with an upgraded Eastern Freeway, this $15.8 billion road will cut travel times by up to 35 minutes to Melbourne’s rapidly growing northern suburbs. The commute by public transport will improve with the city’s first dedicated busway, with express lanes along the Eastern Freeway from Doncaster to the city.

Opportunity: Suburbs along the new road’s corridor should receive a boost. Take Greensborough, which will see greatly improved traffic flow with a new interchange at Grimshaw Street as part of the project. The median house price peaked at $830,000 in 2017 and today it sits at $755,000. The median apartment price was $633,750 in 2018 and it is now $570,000.

Prediction: CoreLogic-Moody’s Analytics predicts very strong growth of 18% in house prices in the North East, which includes Greensborough; and 5.1% growth for apartments over CY20 and CY21.

| More

 

Why fear is leaving the property market this Spring

Tuesday, September 10, 2019

It’s pretty clear now that Sydney, Melbourne and Brisbane are in recovery mode and things are looking up nationally as well.

CoreLogic’s latest report, released last week, showed Sydney dwelling values went up by 1.6% - the highest monthly gain since June 2017. Melbourne bounced 1.4% - the highest gain since July 2017. Brisbane also had a small bounce of 0.2%. 

These are surprisingly strong monthly results this early into the recovery. It’s the third consecutive month of price growth for Sydney and Melbourne and the second for Brisbane.  

On a national basis, August produced the first home price rise since October 2017 at 0.8%.

Regional markets are mixed, but we have seen some price gains over the past three months in the Capital Region (areas surrounding ACT), Newcastle and Lake Macquarie and Richmond-Tweed (NSW), Wide Bay and Townsville (QLD) and Geelong (VIC).

The election result, two interest rate cuts and APRA’s easing of credit criteria (which has increased the lending criteria for many) are having a cumulative impact across Australia. 

The effect is greater in Sydney and Melbourne because these markets are on the rebound from an 18-month downturn and a greater decline in values – they’re not just recovering from tough credit restrictions which have pulled every market down a bit in recent times.

The things we are seeing in the big recovery markets of Sydney and Melbourne right now mirror the trends of past recoveries, providing further evidence that the bottom has arrived or to some extent even passed by now.

The typical scenario in a recovery is a stabilisation in prices, higher auction clearance rates and a lower volume of homes for sale.

According to CoreLogic, auction clearances have bounced back into the 70% brackets for Sydney and Melbourne – the highest levels since early 2017; and they’re above 70% for the combined capital cities, too.

New listings (defined as properties not previously advertised for sale over the past six months) are down -23% in Sydney, -20% in Melbourne and -17% nationally.

What typically happens next is we start to see increasing values, which leads to a higher volume of homes for sale as vendors gain new confidence to sell.

This doesn’t necessarily happen quickly, as demonstrated by sales data in the most recent recovery periods of 2009 and 2011.

We also saw a low volume of auctions in the recovery of early 2012 and things remained this way until early 2013. We know now that the boom period for Sydney and Melbourne began in mid-2012 but the very start of major growth periods is never obvious at the time.

This time around, auction clearance rates have been improving since the middle of May this year but the volume of homes for sale and the number going to auction remains low.

This is because home owners are waiting for more consistency before selling. They want to see similar properties down the road selling for a price that would be acceptable to them.

Looking at the history of market booms and downturns, on a national basis this current downturn was the biggest in terms of reduced home values since at least the 1980s.

That sounds scary but the reality is our national median only dropped by less than -10%.

Research analyst, Cameron Kusher from CoreLogic puts it well when he says this “speaks to the ongoing strength of the housing market over the past 40 years, which has culminated in Australia being one of the most expensive places in the world in which to buy property”.

Focusing on the big East Coast cities for a moment, let’s take a look at the largest downturns in terms of home value declines in Sydney, Melbourne and Brisbane since the 1980s.

This data from CoreLogic shows peak to trough percentage falls and proves that even in the worst three downturns, the falls were relatively small and certainly nothing dramatic.   

Sydney – Top 3 Downturns

2017-19           -14.9%

1988-91           -11.6%

1984-85           -9.5%

Melbourne – Top 3 Downturns

2017-19           -10.9%

2008-09           -9.4%

2010-12           -8.4%

Brisbane – Top 3 Downturns

2010-12           -10.6%

2008-09           -8.4%

1994-95           -5.0%

Source: CoreLogic

All of this explains why fear is, and should, be leaving the East Coast markets this Spring.

The recovery has begun and while I don’t expect August’s big bounce in median prices in Sydney and Melbourne to continue every month, we should see solid results in all three East Coast cities this Spring, with a positive flow-on effect to 2020.

| More

 

A buoyant Spring property season ahead

Tuesday, September 03, 2019

It’s the first week of Spring and the beginning of what is traditionally the busiest season in property. 

It is clear that confidence is returning to the market across Australia, with several positive elements -all national in nature, having an impact on every capital city and regional area.   

First came the election result, which meant no changes to negative gearing or capital gains tax for investors; then two interest rate cuts; and an easing in lending that has allowed some borrowers to access tens or even hundreds of thousands of dollars in extra finance compared to last year.

This has led to the first green shoots of recovery on the East Coast.

In June, Sydney and Melbourne recorded home value increases for the first time since their respective market peaks in 2017.

In July, five of the eight capital cities all had a subtle rise in values, according to CoreLogic data. This included an 0.2% increase in Brisbane home values – the first increase since November 2018.

In mid-August, the combined capital cities recorded a final auction clearance rate above 70% for the first time since May 2017, albeit on significantly lower volumes of stock. And the latest Westpac-Melbourne Institute ‘time to buy a dwelling’ index is at its highest level since early 2014.

This new momentum points to a buoyant Spring season ahead, however listing volumes are down by up to 30% - a decade low, so we anticipate fewer Spring sales but continually rising auction clearance rates in the major cities and particularly in the most desirable suburban pockets.   

As we start to see consistently stronger prices being achieved, more sellers will be inspired to put their homes on the market, indicating a potentially later Spring/Summer selling season this year.

Due to the stock shortage, buyers are proactively calling agents to see what new listings they have coming up so they can try and get a jump on the best properties for sale.  They can see the bottom has passed and want to buy now before prices start rising again.

Besides calling agents, the best way to get first option on new listings is to register your contact details and buying criteria with as many individual agencies and agents as possible.

This is important because many agents like to conduct ‘preview inspections’ for their database clients. In this case, you will at least get first email notification of each new listing – and maybe even the opportunity to inspect it before the public marketing begins.

This will give you about half a week’s head start on other buyers. You can make an offer to try and take it off the market or you can just use this extra time to consider the home.

Agents do previews for a couple of reasons. They get valuable price feedback from genuine buyers before public marketing begins; and they can potentially attract strong pre-campaign offers.

It is not uncommon for sellers to take a good pre-campaign offer as there are many benefits for them, including avoiding advertising costs and being able to make their next purchase sooner.

Of course, you should still register on the big portals of realestate.com.au and domain.com.au to cover all bases, as not all agencies conduct preview inspections.

Here are some potential Spring trends…

  • There is already anecdotal evidence of more buying activity amongst ex-pats, especially from Hong Kong and the UK.
  • Following recent volatility on the sharemarket and falling interest rates making deposit earnings very weak, will investors return to property for stability and reliability now that the bottom has passed? 
  • McCrindle Research says seachanging is getting younger, with more working age people leaving Sydney, in particular, for coastal and treechange locations. With city stock so low, sellers can leverage this to get a great sale price and buy in a much cheaper regional area this Spring  

Easier access to finance and historically low interest rates will power demand this Spring.  There’s speculation of one or two more official cash rate cuts over the next year, so it’s a great time to borrow if your employment is secure and you have some cash buffers in place.

| More

 

The best time for first home buyers

Tuesday, August 27, 2019

It’s been such a long time since market conditions directly favoured young buyers, particularly in Sydney and Melbourne, and now the stars have aligned for them in every way.

History shows that first home ownership has provided a crucial foundation for long term financial security for millions of Australians. This Spring presents an immense opportunity for young people who have felt left behind by runaway markets to take that big first step onto the property ladder.

Here’s what first home buyers have going for them…

  • The lowest home loan interest rates since the 1950s, with talk of one or two more official cash rate cuts over the next year
  • An APRA-led loosening in lending criteria, which is now in effect across all lenders and enables more borrowing power
  • Improved or steady affordability in both capital cities and regional areas
    • Values down -13.5% since the peak of the boom in Sydney. Melbourne down -8.2%, Brisbane down -2.4% and Canberra stable with only 1.1% growth over the past 12 months, according to latest CoreLogic data
    • Values down -4.6% in Regional NSW over the past year; -1.7% in Regional Queensland; and -0.9% in Regional Victoria
  • Less competition from Australian investors, with investor activity falling 40-50% on 2016/2017 peaks in NSW, Victoria, Queensland and ACT, according to ABS data  
  • Less competition from foreign investors, with hefty application fees and state taxes putting off overseas buyers, particularly in the sub-$1 million new apartment category
  • Stamp duty concessions, with no duty payable on new or established properties up to $650,000 in NSW (concessions up to $800,000); $600,000 in Victoria (concessions up to $750,000); and $550,000 in Queensland (for properties above $550,000, eligible buyers can claim a concession on the first $350,000 of the purchase price). In the ACT, no buyer (not just first buyers) pays stamp duty if they meet certain income, family and prior ownership criteria
  • First home owner grants, which are as follows:
    • NSW: $10,000 if you buy land to build your first home worth up to $750,000; or buy a new house or off-the-plan apartment worth up to $600,000
    • Victoria: $10,000 if you build or buy a new property in Melbourne worth up to $750,000; $20,000 if you build or buy in Regional VIC by June 30, 2020 
    • Queensland: $15,000 if you build or buy a new property worth up to $750,000
    • ACT: FHOG replaced by stamp duty savings from July 1, 2019 through the Home Buyer Concession Scheme
  • Help with saving via the Federal Government’s First Home Super Saver Scheme, which provides a tax break for people saving for their first home. You can make voluntary contributions of up to $15,000 per year ($30,000 total), which will be taxed at the superannuation rate of just 15%. These funds, along with earnings, can then be withdrawn for a first home purchase
  • Help with the deposit via the Federal Government’s new First Home Loan Deposit Scheme, which will allow 10,000 young buyers per year to purchase with a 5% deposit and a government guarantee on the rest. There will be purchase price limits per region and income thresholds. Available from January 1, 2020
  • The HomesVic co-equity scheme, whereby eligible first home buyers in Victoria can co-purchase a new or existing property with the Victorian State Government with just a 5% deposit

With such positive market conditions and so much assistance available, now is the time for young people to consider making their first purchase.

I’ve got two pieces of advice to help you this Spring.

Firstly, don’t make assumptions as to whether you’re eligible for assistance. The rules are slightly different in every state. For example, in some states you are still eligible for a FHOG even if you’ve owned an investment property before. Also, some substantially renovated properties are considered new enough for you to be eligible for the grant. Go online and check.

Secondly, don’t overextend yourself. You always want to buy a high quality property in a great location but don’t push yourself too hard. Keep things financially comfortable with buffers in place.

I’d rather you buy a high quality one-bedroom apartment in a brilliant location than overextend and buy a two bedder that will be unaffordable as soon as interest rates go up.

Sure, rate rises might be years away, but remember the life of a loan is usually 25-30 years and in that time, they will surely go up.

Think smart, buy smart.

| More

 

Is property a more stable investment than shares?

Tuesday, August 20, 2019

Investors in the share market have had a rough time of late, with eye-catching headlines about tens of billions being wiped off the ASX in a matter of days last week. 

The world is jittery about a possible global recession caused by the China-US trade war, Brexit, unrest in Hong Kong, slowing growth in China and most recently, a contraction in the world’s fifth largest economy and Europe’s biggest, Germany.  

Over the first two weeks of August, the S&P ASX All Ordinaries took a -5.9% fall, whereas it took six months for property prices to decline the same amount in Sydney before the market turned in June.

In those same two weeks, the All Ords finally went beyond their last peak, which was back in 2007. That means it took 12 years to fully recover from the GFC, whereas the Sydney and Melbourne property markets have taken about two years to right themselves in the most recent downturn.

This is a timely reminder that property is a safer, more reliable and most importantly, stable asset class for everyday investors.

Unless you’re a professional or a very experienced and resilient investor, it’s hard not to get nervous and panic sell when your shares take a sudden dive.  Don’t get me wrong, Australian shares have an impressive track record for great long term returns but the market can get very volatile, very quickly. 

With share market investment, you need to have the psychological strength to weather the sudden and usually sharp dips and remain focused on the long term. 

Shares are also highly influenced by global events.  Market conditions can change overnight, whereas property is a much slower burning asset class and primarily influenced by our domestic economy.

It is so easy to panic when stocks begin to slide; and unlike property, it takes one call to your broker or a two minute online transaction to dump your investments out of pure fear.

This is one of the many reasons why I think property is such a good option for ordinary investors.

We all need to invest for financial security. Unless you’re on a very high income, it’s not really possible to retire on savings alone. You need quality assets.

Any professional investor will tell you that diversity is really important, so having both shares and property is a great idea and there’s some good buying opportunities right now in both!

Focusing on property, it looks like people are starting to recognise this as we head towards the biggest selling season of the year.

The national ‘time to buy a dwelling’ index in the latest Westpac/Melbourne Institute survey of consumer sentiment jumped 3% this month to its highest level since early 2014.

I believe there is great opportunity for investors across Australia this Spring.

·       In Sydney and Melbourne, prices aren’t likely to go any lower in the best areas.  Lack of stock is pushing prices up in some suburbs, so don’t get carried away at auction and pay too much. This very tight supply/demand dynamic could change soon 

·      To maximise capital growth, look into some of the new infrastructure projects and identify areas that are beneficiaries of road and rail enhancements. Some areas have or will soon become 20-30 minutes closer to the CBD so that will spike values in the next sales cycle 

·       Yields are a bit low in our two biggest cities, averaging 3.4% - 3.7%, but falling interest rates are offsetting this.  Avoid oversupplied apartment markets where you’ll have difficulty securing a tenant right now

·       Prices have come off the boil in every other capital plus plenty of regional areas due to lending restrictions.  Things are easier now following APRA-led changes to assessment criteria, effective from July, which means you can borrow more and take advantage of softer prices now 

·       Rental yields are stronger in other capital cities and regional areas. Latest CoreLogic data shows the average gross yield is 4.6% in Brisbane and 4.8% in Canberra. Regional NSW and Victoria are averaging 4.7%, Regional Queensland is 5.5%, Regional South Australia is 5.7% and Regional Western Australia is 5.9%

Investor activity has fallen 40-50% on 2016/2017 peaks in NSW, Victoria, Queensland and ACT, according to ABS data, so if you’re ready to buy this Spring you won’t have much competition from fellow investors.

You might come up against a strong contingent of first home buyers though, and this competition will only intensify once the new First Home Loan Deposit Scheme begins on January 1.

| More

 

Will Spring bring a bounce to property prices?

Tuesday, August 13, 2019

More new listings are starting to hit the market as the Winter season comes to a close and sellers and agents get ready for the first round of Spring auctions on September 7.

This Spring will be an important test for capital cities and regional markets across Australia.

Firstly, how will recent changes making lending easier impact demand and sale prices?  

APRA has provided some sensible relief to banking guidelines, which had been strangling borrowers and relegating them to the sidelines because they either couldn’t get finance at all or they couldn’t get enough finance to fund their next move.

Will all those buyers held back in 2018 and 2019 try again, leading to more competition? It looks like it, with data from the Australian Bureau of Statistics for June showing a rise in new lending for owner occupied and investment properties for the first time in more than a year. 

Secondly, will the two rate cuts (so far) motivate people to re-engage this Spring, when more homes are available to choose from?

In Sydney and Melbourne, there’s a third test. In June and July, both cities recorded minor price growth for the first time since their peaks in mid-late 2017. Either the tide has turned or we are seeing the impact of a severe lack of stock, with sales volumes about 30% down.

I think the market has settled at its new level and buyers are happily back in buying mode.

The unexpected result in the Federal election sounded the bell for market stabilisation. Buyers feel the bottom has been reached and they aren’t at risk of prices going down further after they buy. 

Equally, sellers can enter the market with greater confidence that there will be genuine interest, if not competition for their property.

Auction clearance rates in Sydney and Melbourne are a great barometer for market health. These declined to around 45% but have now recovered to 70% to 75%.

As we head towards Spring, we are seeing higher buyer interest, but available listings remain low for now. As we see some of that volume return going forward, it appears likely that buyer levels are sufficiently deep to cover any reasonable increase in listings.

With a low interest rate environment remaining indefinitely, I believe that many first home buyers and upgraders will be keen to transact across all city and regional markets.

The highest demand will be for the highest quality. Areas, suburbs, streets and properties that represent the better offerings of a neighbourhood will be in greatest demand this Spring.

Securing these types of homes will cost a bit more but longer-term growth suggests that a higher initial investment will be well and truly rewarded with stronger capital appreciation.

Most people own their property for around 10 years. If you compare the difference between a 5% capital growth rate each year and 8% over the life of a property, you’ll discover that the gap between different properties is likely to widen, not contract.

So, buy quality and focus on location and aspect this Spring.

In major cities, in particular, if you want to maximise your capital growth, look into some of the new infrastructure projects and identify areas that are beneficiaries of road and rail enhancements. Some areas have or will soon become 20-30 minutes closer to the CBD so that will spike values in the next sales cycle.

| More

 

Life on the coast

Tuesday, August 06, 2019

The Central Coast has always been a popular commuter hub for Sydneysiders seeking better affordability and a beachy lifestyle, with good transport links by road and rail back to the city. 

Now the region is being revitalised under a 20-year government plan that commenced in 2016 and includes a complete overhaul of Gosford CBD, the coast’s designated ‘capital city’.

In Gosford, thousands of new jobs are being created locally, providing more scope for Sydney professionals to relocate and find a new job closer to home instead of commuting.

The ATO and NSW Finance Departments have opened offices in Gosford, there’s the $350 million Gosford Hospital redevelopment and the upcoming $200 million upgrade to Wyong Hospital. Even more jobs are on the way, with a proposed $350 million private hospital and $280 million redevelopment of the Kibbleplex site, including new shops, cafes, entertainment and residential apartments.

For those who want to live on the coast but retain their city jobs, the commute will soon be easier.

Fifty-five brand new trains on the Sydney to Central Coast and Newcastle line will make the trip much more comfortable, with all the mod cons that commuters need, including roomier seats with high back chairs and armrests, tray tables so you can work, mobile phone charging ports and wi-fi.

Next year, when NorthConnex opens, commuters from as far as Newcastle will be able to drive all the way through to Sydney and even Melbourne, with no traffic lights.

Large developers are looking to the coast for new opportunities and are creating buildings of a quality, far superior to anything ever built there before. Designed for owner-occupiers, these apartments have the stylish living spaces and designer fittings that city professionals want.  

Our Central Coast offices have seen a wave of first home buyers from Sydney drawn by these new, high quality apartments that are well under the stamp duty concession threshold of $650,000.

“That price point rules out a large section of Sydney,” says McGrath Central Coast Group Principal, Jaimie Woodcock. “Up here, young buyers can get a brand new apartment, very high quality with views, near the rail line back to Sydney for well under $650,000.

“First home buyers these days see themselves as investors too, they want something that is going to hold its value and gain equity over the long term, so they are responding very enthusiastically to this new level of apartment design and quality on the coast.”

Developers are also targeting downsizers, who are coming to the coast not only for affordability, lifestyle and proximity to the grandkids in Sydney but also vastly improved local health services.

The coast’s liveability is being enhanced by many new small businesses including cafes, bars, micro-breweries and yoga studios to serve a growing population that values lifestyle.

An effective ‘greenifying’ of the entire coast is also underway to make it more visually beautiful, with contemporary streetscaping and lots of new recreational spaces for people to enjoy.

Among the biggest plans is the proposed $10 million transformation of the Leagues Club Field at Gosford. The plans show lots of green open spaces, walkways, splash and play areas for the kids and picnic zones all within a bushland setting on the city fringe.

I asked McGrath Central Coast Group Principal, Jaimie Woodcock, for his top two suburb picks and no surprise, he believes Gosford is a great pick for apartment buyers. For house buyers, he recommends Long Jetty.

“Prices have been moving up dramatically along the coastal strip in areas like Avoca, Wamberal and Terrigal and that price wave is starting to move into the older suburbs,” he explains.

“Long Jetty has an emerging retail and café strip, it’s close to the beach and has a very Newtown Sydney vibe. There are many old homes waiting to be renovated and they’re perfect for young people on a budget who want to put their own stamp on a property.”

With so much new public and private investment turbocharging the Central Coast’s economy, along with new infrastructure, enhanced services, especially in health and education; and a complete makeover planned for many areas, there are excellent prospects for capital growth in property.

Latest figures from CoreLogic/Moody’s predicts fantastic price growth on the Coast in 2020 and 2021. Apartments prices will grow faster than any area of Sydney, with predictions of a 13.1% price bump in 2020 followed by another 13.8% increase in 2021. 

They also predict respectable house price growth of 4.1% and 5.5% in 2020 and 2021 respectively.

| More

 

What Aussie suburbs are performing well?

Tuesday, July 30, 2019

Property delivered a collective $14.3 billion in gross profits to sellers over the March quarter alone. That is an incredible amount of wealth generated by plenty of mum and dad property owners across Australia, according to the latest Pain and Gain Report from CoreLogic.

Capital growth is the biggest benefit of property ownership and in many cases, the average income earner will earn more from their properties over the long term than they do working in their jobs (if they buy a good property in a good location and hold it for the long term).

The report shows 87.9% of all sales in March were profitable (ie the selling price was higher than the purchase price). It’s that high because property is a very reliable and safe asset class and most people come out of it well.

However, sales at a loss do happen and of course, they happen more frequently after a boom because people can pay too much, then panic as prices fall; and they sell sooner than they should.

So, although 87.9% is impressive, it’s actually the lowest proportion of profit-making sales since March 2013. This reflects the fluctuating market we’ve seen over the past two years across the country, with prices either falling or price growth softening pretty much everywhere due to this.

When the going gets tough, owners have to hold on. There is a big difference between buying a dud property and having to cut your losses due to bad judgement – which can sometimes be the best call; and buying a good property but selling too soon because the market slows and nerves set in.  

This is a key message for investors, as they’re the ones more likely to sell at a loss, according to the report. This happens because investors have no emotional connection to the property, so it’s easier to panic when the market fluctuates. Plus, they can claim capital losses against other capital gains.

It’s different for home owners. They’ve made the property their own and they’re typically planning to be there for the long haul, so a few bad years at the bottom of the cycle is no big deal because they know the market will come back again, like always.

In March, just 10.5% of owner-occupied properties nationwide re-sold at a loss compared to 16.7% of investment properties.

Houses that re-sold at a loss were held for a median 6.1 years, compared to houses that sold for a profit which were held for a median 9.8 years. Apartments re-sold at a loss were typically held for 6.3 years and those that sold for a profit were held for 8.7 years.

Holding your property for the long term is the key to capital gains.

With apartments, there is an additional factor that creates greater risk of a re-sale at a loss and that’s oversupply. Now and then, markets get oversupplied for a variety of reasons, such as re-zoning or a building boom that typically always runs a year or two behind a general market boom.

The gap between profitable re-sales of houses and apartments is wide. Nationally, 90.5% of houses re-sold for a profit in March compared to 79.5% of apartments – down from 85.4% a year ago and the lowest share of profitable apartment re-sales in 20 years.

Contributing to this – no doubt, are investors who bought close to the peak in oversupplied markets and are now struggling to secure a tenant while watching the price of their investment fall.

In March, the greatest proportion of all re-sales at a loss were in areas with a lot of new apartment stock. On the East Coast, those areas included Strathfield, Parramatta, Ryde and Lane Cove in Sydney; and central Melbourne CBD and Brisbane CBD where there has been a lot of development.

If you can find a way to hang on, you’ll most likely come out of an oversupply just fine in the long run. Population growth will carry your property’s value forward but you need to wait it out. Given the high entry and exit costs of property, you’re usually better off just hanging in there.

The following list shows which suburbs had the highest percentage of re-sales at a profit in each capital city and the median profit those owners achieved.

Top selling suburbs (Highest percentage of profitable re-sales)  

Sydney

Woollahra (96.3% profitable re-sales; median profit $640,000)

Blue Mountains (96.3% profitable re-sales; median profit $283,000)

Hawkesbury (95.7% profitable re-sales; median profit $328,000)

Melbourne

Macedon Ranges (100% profitable re-sales; median profit $430,000)

Banyule (99.5% profitable re-sales; median profit $360,000)

Casey (99.2% profitable re-sales; median profit $300,100) 

Brisbane

Scenic Rim (95% profitable re-sales; median profit of $148,100)

Ipswich (92.2% profitable re-sales; median profit $122,000)

Redland (91.9% profitable re-sales; median profit $130,000)

Canberra

Unincorporated ACT (54.4% profitable re-sales; median profit $176,750)

Adelaide

Tea Tree Gully (97.3% profitable re-sales; median profit $99,750)

Unley (95.9% profitable re-sales; median profit $229,250)

Mallala (95.8% profitable re-sales; median profit $153,500)

Perth

Peppermint Grove (100% profitable re-sales; median profit $776,250)

Nedlands (85% profitable re-sales; median profit $508,500)

Murray (81.3% profitable re-sales; median profit $149,000)

Darwin

Litchfield (64% profitable re-sales; median profit $361,375)

Darwin (54.4% profitable re-sales; median profit $115,500)

Palmerston (51.6% profitable re-sales; median profit $220,750)

Hobart

Brighton (100% profitable re-sales; median profit $126,500)

Derwent Valley (100% profitable re-sales; median profit of $74,000)

Glenorchy (98.9% profitable re-sales; median profit $159,250)

Source: Pain and Gain, March Quarter 2019, CoreLogic, published July 2019

Regional Markets:

The regional markets that had the highest percentage of profitable re-sales were:

Geelong in VIC (98.9%),

Newcastle/Lake Macquarie in NSW (97.1%),

NSW Mid-North Coast (96.3%),

Sunshine Coast in QLD (95.4%),

Richmond-Tweed in NSW (94.6%) and

The Illawarra (93.3%).

| More

 

The myth of winter selling

Tuesday, July 23, 2019

It’s the biggest myth in property and home owners currently waiting for Spring should really heed this message. Winter is NOT a bad time to sell! In fact, winter is usually an excellent time to sell because the number of competing homes for sale goes down (because people believe the myth!)

When you have fewer homes competing with yours for buyers, you’re far more likely to get a strong sale price. It’s the law of supply/demand and I believe winter is the best season to tip the balance in your favour.

Spring and autumn are the busiest times of the year – that’s when most people sell. I’m not saying you can’t sell well in these seasons but when the market is soft and buyer demand is lower, like it is now in Sydney and Melbourne, it’s best to sell when competition is lower, too.

In the first month of winter, we saw a bounce in auction clearance rates. Both Sydney and Melbourne began trending above 60%. This reflected not only a change in market mood following the election but also a change in supply/demand, with fewer homes going under the hammer.

If you believe the myth, buyers hibernate in winter. That’s simply not true. Sellers hibernate – and for no good reason!

Right now, a lack of stock in some of the most desirable suburbs is resulting in concentrated competition on only a few homes. Look around in your area – check out the number of homes for sale online. You’ll likely find a stock shortage, particularly in blue chip suburbs.

Buyers who need a new home are not going to be demotivated by a bit of rain and wind. That theory doesn’t make sense. The only people put off by poor weather are those not committed to buying, so think of it this way. On a cold, blustery day, the buyers attending your opens are more likely to be genuine. On lovely, warm summer days, you’re more likely to get a mix of real buyers and window shoppers attending opens for fun.

The other part of the myth is that homes don’t present well in winter. I’d argue that plenty of homes actually present better in winter. Federation homes with open wood fireplaces, period charm and a cosy ambience look fantastic in winter.

People want comfort in their homes and stepping inside a lovely, warm, beautiful family home on a rainy, cold Winter’s day is going to stir up plenty of emotional appeal.

Then, there’s the garden. Don’t believe it can’t look good in winter? These days, most city dwellers create minimalist, low maintenance gardens so they can spend more time enjoying them than working on them. If your backyard is full of manicured evergreens, selling in winter isn’t a problem.

Here’s the other big advantage to selling in winter. It puts you in the driver’s seat to buy in spring. That’s when you want to be buying, when stock levels are up and there’s more choice!

You’re less likely to go over budget bidding at auction if there are several properties you like for your next home. Spring is the ideal time to buy and if you do it early enough, you’ll have Christmas Day in your new home and the holiday season to settle in before the start of the 2020 school year.

| More

 

East coast suburbs are hip

Tuesday, July 16, 2019

A new report from CoreLogic and Moody’s Analytics paints a picture of recovery and modest growth for the East Coast capitals in 2020.

The report predicts that the Australian property market will trough this quarter following two years of decline, with greater falls in house prices (-11% down from the mid-2017 peak) compared to apartment prices (almost -7% down from the peak).

The CoreLogic-Moody’s Analytics Australia Home Value Index Forecast, released in late June, expects a return to gradual growth in 2020, powered by interest rate cuts and some relaxation in lending rules recently announced by APRA. 

Moody’s Analytics has developed an econometric model that enables price predictions for individual regions within a city. So, let’s take a look at what they predict for the three East Coast capitals overall and within their main precincts.

1. Sydney

Moody’s says Sydney’s correction is on track to be the longest and steepest on record but at the end of the day, house prices are still around +60% higher than they were in 2012.

Sydney’s house values declined -5.5% in 2018 and are forecast to fall a further -9.6% in 2019, before a +3.1% bounceback in 2020 and +4.8% in 2021.

Apartment values dropped -3.1% in 2018 and are set to decline by -7.3% for 2019, before a +4% rise in 2020 and +6% in 2021.

House prices

-        Baulkham Hills/Hawkesbury +6.6% in 2020, +8.7% in 2021

-        Blacktown +6.2% in 2020, +7.3% in 2021

-        City & Inner South +7.8% in 2020, +2.2% in 2021

-        Eastern Suburbs -2.1% in 2020, +0.5% in 2021

-        Inner South West +0.9% in 2020, +5.7% in 2021

-        Inner West +3.8% in 2020, -0.2% in 2021

-        North Sydney-Hornsby -0.4% in 2020, +1.6% in 2021

-        Northern Beaches +2.6% in 2020, +8.2% in 2021

-        Outer South West +2.3% in 2020, +5.8% in 2021

-        Parramatta +3.2% in 2020, +5% in 2021

-        Ryde +1.1% in 2020, +7% in 2021

-        South-West +3.7% in 2020, +4.7% in 2021

-        Sutherland +6.5% in 2020, +9.4% in 2021

-        Outer West/Blue Mountains +1.7% in 2020, +3.7% in 2021

-        Central Coast +4.1% in 2020, +5.5% in 2021

Apartment prices

-        Baulkham Hills/Hawkesbury +3.5% in 2020, +6% in 2021

-        Blacktown +3.6% in 2020, +5.8% in 2021

-        City & Inner South +3. % in 2020, +3% in 2021

-        Eastern Suburbs -2.7% in 2020, -3.5% in 2021

-        Inner South West +2.4% in 2020, +5.6% in 2021

-        Inner West +5.9% in 2020, +7.7% in 2021

-        North Sydney-Hornsby -1.1% in 2020, +0.9% in 2021

-        Northern Beaches +6.6% in 2020, +4.2% in 2021

-        Outer South West +5% in 2020, +9% in 2021

-        Parramatta +6.6% in 2020, +7.9% in 2021

-        Ryde +2.2% in 2020, +5.1% in 2021

-        South-West +5.5% in 2020, +7.7% in 2021

-        Sutherland +2.1% in 2020, +4% in 2021

-        Outer West/Blue Mountains +1.9% in 2020, +7.1% in 2021

-        Central Coast +13.1% in 2020, +13.8% in 2021

2. Melbourne

Melbourne house values are -14% below their peak after an 18-month decline. The fall in values has been most pronounced in the inner suburbs but the worst appears to be over already with a modest recovery expected in 2020.

Melbourne’s house values declined -0.3% in 2018 followed by a sharp fall this year projected to total -10.8%. The recovery will begin very slowly in 2020 with just a +1.3% increase followed by a better result in 2021 at +6%.

The decline in apartment values has been less pronounced with a +1.8% gain in 2018 and a decline this year projected at -3.9%. There will be a further decline in 2020 at -0.3% followed by a +1% improvement in 2021.   

House prices

-        Inner Melbourne +1.3% in 2020, +3.4% in 2021

-        Inner East +5.5% in 2020, +7.7% in 2021

-        Inner South -0.8% in 2020, +6.7% in 2021

-        North East +6.2% in 2020, +11.8% in 2021

-        North West 0% in 2020, +4.3% in 2021

-        Outer East -1.9% in 2020, +8.1% in 2021

-        South East +0.8% in 2020, +5.5% in 2021

-        West -0.6% in 2020, +2.8% in 2021

-        Mornington Peninsula +2.5% in 2020, +5.2% in 2021

Apartment prices

-        Inner Melbourne +4.2% in 2020, +3.8% in 2021

-        Inner East  +6.8% in 2020, +9.8% in 2021

-        Inner South -0.1% in 2020, +0.2% in 2021

-        North East +1.4% in 2020, +3.7% in 2021

-        North West +5.2% in 2020, +4.3% in 2021

-        Outer East +0.3% in 2020, +3.8% in 2021

-        South East -6.1% in 2020, -2.5% in 2021

-        West -6% in 2020, -7.1% in 2021

-        Mornington Peninsula -0.5% in 2020, +3.1% in 2021

3. Brisbane

Brisbane experienced strong growth between 2012-2018 and corrected this year. House prices went up +1.5% in 2018 but lost those gains and will lose a bit more this year for a total projected decline of -1.8%. The years ahead look a bit better with +1.4% growth in 2020 and +2.9% in 2021.

Apartment values dipped -1% in 2018 and will finish 2019 down about -0.7%. The future looks much brighter with predictions of +5.6% growth in 2020 and +5.8% in 2021.

House prices

-        Brisbane East +1% in 2020, +1.2% in 2021

-        Brisbane North +1.4% in 2020, +0.4% in 2021

-        Brisbane South -0.8% in 2020, +2% in 2021

-        Brisbane West +1.5% in 2020, +4.2% in 2021

-        Brisbane Inner City +2% in 2020, +1.9% in 2021

Apartment prices

-        Brisbane East +3.3% in 2020, +3.7% in 2021

-        Brisbane North +5.3% in 2020, +5% in 2021

-        Brisbane South +4.1% in 2020, +5% in 2021

-        Brisbane West +4.6% in 2020, +3.6% in 2021

-        Brisbane Inner City +3.9% in 2020, +5.4% in 2021 

Source: CoreLogic-Moody’s Analytics Australia Home Value Index Forecast, Second-Quarter 2019 Housing Forecast Report, published June 25, 2019

If you’re a buyer hoping to take advantage of the bottom and buy as low as possible, now is the time in most city markets. Start preparing for Spring now when we should see a seasonal pick-up in stock for sale. 

| More

 

MORE ARTICLES

The worst is behind us

Has the property market hit the bottom?

Green your home for less

Buying just got easier

5 economic elements impacting property

Sydney's Metro North West a game changer for The Hills

It’s a trifecta of positivity

How much will your house go up by?

Rents rise as investors exit

Prices still falling but not as fast

5 reasons why more Aussies are relocating

What happened in 1985-87

The risks to everyday Australians in Labor’s property tax policy

More young women buying property

Wiggle, wiggle, wiggle room… just a little bit

Is it the right time to buy yet?

Do auctions still work in this soft market?

Why the big drop in Chinese offshore?

90 minutes from the big smoke

What 20 years in property can do

Property market mood changing

What the Royal Commission report means for buyers

The future of Aussie apartments – lookin’ good!

Big infrastructure re-shaping East Coast cities and the ACT

Two big questions for the property market in 2019

What's ahead for property?

Paid a fortune for your property? What should you do?

My top 5 suburb picks

Does flipping work?

Close to the bottom

Has Uber Eats shrunk the kitchen?

Regional is the new black

House prices in the nation’s capital

Jewels in the crown

Do you call that a cut?

How hot are Brisbane, the Gold Coast and Sunshine Coast?

Sydney will sizzle in some suburbs

The first time ever I bought my home

House prices to drop 40%

Is it safe to get a loan from a small lender?

Winners and losers in top suburbs

How to spruce up your property for an early sale

SOLD! By auction or private treaty?

What are the top growth suburbs across Australia?

West side story

Why are luxury apartments booming in Brisbane?

Why buy property this Spring

Big city income, small town lifestyle

Where are the buyers?

Why selling in winter works

Your end of financial year property round up

What's different about this market slow down?

How low will Sydney and Melbourne prices go?

Top Performing Suburbs of Past 25 Years

City escapees and where they’re moving

Australia's golden triangle of opportunity

Western Sydney Airport brings investment opportunities

Top 10 most popular suburbs for immigrants

Budget targets traffic congestion to improve city living

What happens if your property passes in?

More property listings selling pre-auction

More homes for sale weakens auction clearance rates

Geelong leads regional growth as city dwellers escape stress

Retirement the top priority for property investors

How to buy in Sydney

First time home buyer hot spots in NSW

Growth slows but not in top tier suburbs

Australia's doom prophecy déjà vu

Surge in auction bookings for March

How immigrants are shaping our suburbs

Property trend: The rise of vertical high streets

How do we make housing more affordable?

Changing the way we use our homes

What’s next for Sydney in 2018?

What’s next in the cycle?

The transformation of regional hubs

Biggest property boom winners

High hopes for property in our nation’s capital

South East Queensland – property hotspot

The Melbourne property market outlook

An overview of the Sydney property market

Top 5 suburb picks for greatest capital growth potential

Australia’s top retirement destinations

Time to take stock of housing debt

Spring property so far

Australia's population growth hot spots

Record level of $1 million-plus sales

Stamp duty cuts working for first time buyers

How to rent with a pet

Winter wrap-up – prices levelling out

Tips for Spring sellers

Lack of pet-friendly homes to buy or rent

More kids in public schools raises property prices

More sellers are choosing auctions

Why more Sydney and Melbourne home owners are selling now

Investors depart, first home buyers return

Census insights into property

EOFY property round-up

Sydneysiders moving out

What the NSW Budget means for home owners




Pixel_admin_thumb_300x300 Pixel_admin_thumb_300x300 Pixel_admin_thumb_300x300






-->