House Sales

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<p>An increase in population and income are two demand influencers on high dwelling rents and prices, according to the directors of Real Estate Research and Teaching for the UNSW Business School.</p>
<p>According to Nigel Stapledon's<span style="line-height: 1.3em;"> submission to the House of Representatives Standing Committee on Economics inquiry into Home Ownership, the rise in house prices it is not only happening in Australia, but all over the world. This is due to low interest across the world.</span></p>
<p><span style="line-height: 1.3em;">"In the period 1993-2003, population grew at a 1.1% annual pace, in the period 2003-13, it averaged 1.6%. At the margin, that extra 0.5% per annum is a very significant difference. This surge in population also changed expectations about future population growth, which in turn influenced expectations about future rent growth. If buyers expect the future rate of rent growth to be higher, that justifies higher prices." </span></p>
<p><span style="line-height: 1.3em;">It is his belief that foreign buyers add to the pressure on prices, but the effect in the long term is not permanent.</span></p>
<p>"The broader point is that Australia is a major beneficiary of its open door to foreign capital. In the long term, Australia’s reputation as a secure, transparent place to invest is a positive. Apart from anything it lowers the cost of capital for governments, business and individuals. If we start imposing controls to help manage perceived short term problems, that will put that reputation at risk."</p>
<p>Taxation policy is not as important as the demand factors mentioned before. Nigel Stapledon says that a more efficient tax system is desirable but is not what affects housing.</p>
<p>"The real debate on the question of housing affordability is on the question of supply. There are a number of angles to this. </p>
<p><span>"</span>In economics, the margin is what matters. On the demand side, an increase in population growth rate from 1.1% to 1.6% per annum in the period 2003–13 caused rents to rise substantially. </p>
<p>"Allowing for age composition effects, potential household formation lifted from 1.4% to 1.8%. That small marginal change mattered a lot. Because supply lagged in its response, most of the initial action was in higher rents, which worked to subdue demand (more young adults - potential new households – for example stayed at their parents’ home). </p>
<p>"In period 2003-13, the stock of dwellings in Australia grew by an average 1.6% per annum – only slightly slower than potential household formation but the cumulative effect matters. With a lag, complicated by some big intervening events e.g. GFC (Global Financial Crisis), we are now seeing supply respond in a more substantial way. </p>
<p>"In 2014 new completions increased the dwelling stock by 1.8%, and in 2015 and 2016 the pipeline of starts tells us that rate of growth will be running at a 2.0% pace. Bearing in mind that population growth has now slowed to a 1.4% pace (household formation below 1.6%), then clearly the demand-supply equation is shifting towards buyers/renters. The evidence of that is the deceleration in rent growth evident in 2014. It is the indicator to watch in 2015. </p>
<p>"But imagine if the stock were to increase by more like 3% (double the normal) in 2015. That order of magnitude increase in supply would require lower rents/prices to encourage more households (those young adults staying at home) back into the market. Otherwise, there would be a lot of vacant new dwellings. </p>
<p>"As the city’s population grows, if the green zone is unchanged, what urban economic theory tells us is that when the constraint becomes binding that the increase in demand will cause the price of land to rise. In response, buyers will choose smaller amounts of land consistent with the policy-makers’ desire for increased density. </p>
<p>"While less land is used, which partially offsets the higher price per unit of land, it is only a partial offset and the price of housing rises. For the pre-existing stock of houses, the price rises and their owners (owner-occupiers and landlords) enjoy a capital gain. </p>
<p>"The binding constraint will lead to pressure for some relaxation. To the extent that policy-makers relent and rezone some of the greenbelt land, the owners of that land will achieve significant capital gains. This leads to significant resources going into lobbying and a propensity for corruption. </p>
<p>"The second policy option is to impose a development tax. This lifts the price of land and in response we again see smaller lots and increased density. If the tax is set at the right level, the same degree of increased density can be achieved as with quantitative controls. </p>
<p>"One advantage of the development tax is that the development tax captures the capital gain which would be earned by owners of greenbelt land which is rezoned. A second advantage is that it keeps the market for land competitive. </p>
<p>"I would note that constraints on higher density building in inner urban areas will also constrain supply and lead to higher rents/prices across the urban area. There are many such restrictions. For example the recent decision in NSW to impose a minimum size on apartments of 35 square metres will add to the cost of housing. </p>
<p>"The cost of commuting (both in dollars and in time) is the most significant influence on the cost of land within cities. The higher are commuting costs from the urban fringe, the more valuable is living in the inner urban areas where commuting costs are low. </p>
<p>"As a city grows, there is a need to add to the transport capacity (wider roads, more rail lines). If governments fail to expand the transport infrastructure, congestion rises and lifts commuter costs. </p>
<p>"There is strong advocacy for public/social housing, which represents less than 3% of the housing stock, to be a much bigger part of the market. At its peak in 1971, public housing represented closer to 6% of total housing stock. </p>
<p>"There is a place for public housing but do young Australians see it as the answer to their future housing needs. I suspect they all aspire to something better. It is seen as a safety net. </p>
<p>"Aspirations aside, public housing is heavily subsidised. And as the cost of housing rises in a city, so too does the cost of subsidising public housing. It follow that policies which make the cost of private housing lower also lowers the cost to the taxpayer of providing any given amount of public housing."</p>
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jchancellor-FAypfDUnLy

Aussies aspire to more than public housing

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<div>As a mainly passive investor in equities these days I must admit that I don't pay a huge amount of attention to the daily machinations of the share markets.</div>
<div> </div>
<div>That said, judging from the number of angst-ridden articles about why shares must be the way to go and definitely not property I'd say it's a fair assumption that Aussie share markets are now tanking again.</div>
<div> </div>
<div>And taking a look at the charts, yep, pretty much.</div>
<div> </div>
<div>Having briefly threatened to get back up to 6,000 after nearly eight years of trying the ASX 200 (XJO) is now deflating miserably again, all the way back down 5356.50.</div>
<div> </div>
<div>The technicals are looking rather shocking too.</div>
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<div><a href="/images/2015/08/17/imageChart.axd.gif" target="_blank">Click to enlarge</a></div>
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<div><img src="/images/2015/08/17/imageChart.axd.gif" alt=""></div>
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<strong><span style="text-decoration: underline;">Property markets divergent</span></strong><br><br><span>Meanwhile, what's been happening in property markets since 2007?</span><br><br><div>The Reserve Bank of Australia (RBA) released its latest <a href="https://www.rba.gov.au/chart-pack/index" target="_blank">Chart Packs</a> during the first week of August recording the latest housing prices.</div>
<div> </div>
<div>As I expected, beyond the financial crisis the rising tide of household debt could no longer lift all boats, and so far capital growth has been strongest in the two largest capital cities, but considerably weaker elsewhere. </div>
<div> </div>
<div>Drivers of markets going forward will include jobs growth, population growth, real wages growth and foreign capital, among a number of other factors. </div>
<div> </div>
<div><span>Predictably the Sydney property market has been the clear standout, with house prices in round numbers having appreciated by <span>~</span>$400,000 (from <span>~</span>$550,000 to <span>~</span>$950,000), or more than a <span>~</span>70 per cent increase. </span></div>
<div> </div>
<div>The line denoting Sydney would look far steeper if it wasn't for the fact the RBA switched from using a linear scale to a log scale at the end of the first quarter.</div>
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<div><a href="/images/2015/08/17/6bl-houspri-small.gif" target="_blank">Click to enlarge</a></div>
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<div><img src="/images/2015/08/17/6bl-houspri-small.gif" alt=""></div>
<div>
<div>At the other end of the scale, Adelaide's median house price has appreciated by around <span>~</span>$100,000 from <span>~</span>$350,000 to <span>~</span>$450,000, or close to a <span>~</span>30 per cent increase.</div>
<div> </div>
<div>Regional house prices in aggregate showed the lowest price growth of under $100,000, the chart following a very similar trajectory to that of Adelaide. </div>
<div> </div>
<div>In Brisbane median house prices are below their 2010 peak according to <em>CoreLogic-RP Data</em>(albeit only very marginally) but are now rising. </div>
<div> </div>
<div><span>For my money, Brisbane offers the best "value" of any of the capital city markets, though investors need to be particularly careful about what they are buying, for the reasons well documented here previously. </span></div>
<div><span> </span></div>
<div><span><span>The trendline below which records investor loans on a 12mMA basis shows that Queensland investor lending in aggregate is now tracking at its highest level since April 2008 and rising.</span></span></div>
<div><span> </span></div>
<div><span>Click to enlarge</span></div>
<div><span> </span></div>
<div><span><img src="/images/2015/08/17/A2.jpg" alt=""></span></div>
<div> </div>
<div> </div>
<div>
<div><strong><span style="text-decoration: underline;">Shares and property</span></strong></div>
<div> </div>
<div>I wouldn't get too bogged down in the whole shares versus property debate, given that these are two fundamentally very different asset classes, both of which have their place in an investment portfolio. </div>
<div> </div>
<div>For average investors equities are often best viewed primarily as an income investment (just as well given that there has been no capital growth for close to a decade). </div>
<div> </div>
<div>A fundie would justly argue that through skilful stock selection they can beat the market consistently, thereby justifying their fees. </div>
<div> </div>
<div>That's fair enough.</div>
<div> </div>
<div>The same is true of property markets, really. </div>
<div> </div>
<div>Median house price growth across Australia has been fairly mixed in recent years, with Adelaide, Hobart, Perth and Brisbane recording almost no nominal price growth at all since their respective 2010 peaks.</div>
<div> </div>
<div>That said, property investors can and do aim to beat median house price growth with quality asset selection.</div>
<div> </div>
<div>I can think of at least a hundred ways in which it's possible to steal an edge on imperfect property markets, one of which is alluded to above - buying counter-cyclically. </div>
<div> </div>
<div>Another way to manufacture growth is through renovation.</div>
<div> </div>
<div>Over the long term a few other tactics might include buying property which is:</div>
<div> </div>
<div>-located within a 15 minute commute of the centre a large and growing capital city;</div>
<div>-in a land-locked suburb;</div>
<div>-within a 5 minute walk to a hard rail link or hub;</div>
<div>-comprised of a high land value; and</div>
<div>-an asset type which is in exceptionally high demand but has scarcity value.</div>
<div> </div>
<div>There are a great many others, of course. </div>
<div> </div>
<div>
<p><span><em>PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>.</em><br></span></p>
<p><em>His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>.</em></p>
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</div>
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pwargent-M4siyDbqQY

Steal an edge on imperfect property markets: Pete Wargent

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<p>T<span style="line-height: 1.3em;">he Museum of Contemporary Art director, Liz Ann Macgregor, best know for her colourful tartan wardrobe, is swapping inner Sydney terrace living for the lower north shore.</span></p>

<p><span>With partner Peter, Liz Ann has quietly bought in Cremorne, a freestanding 1910 Federation Arts and Crafts two storey home costing a tad over $3 million. Four double bedrooms, three suitably with large built-ins.</span></p>

<p><span>Their combined 1890s Thompson Street Darlinghurst terraces have sold for $2.05 million through Ray White agent Gavin Rubinstein, a nice gain having been bought five years earlier for $1.64 million.</span></p>

<p><span>[smartcode_project:default project_id=5910]</span></p>

<p><em>This article was first published in the Daily Telegraph.</em></p>
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MCA's Liz Ann Macgregor modernises Sydney home

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<p><span>House sales have trended higher while units sales have tapered according to CoreLogic RP Data's Housing Market and Economics Update for August.</span></p>
<p><span>The report found to May this this year 352,012 houses have been sold, up 2.5% from the same time last year.</span></p>
<p><span>131,922 units have been sold this year, a 7.7% decline from the same period in 2014.</span></p>
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<p><a href="/images/2015/08/13/Screen%20Shot%202015-08-13%20at%201.42.38%20PM.png" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2015/08/13/Screen%20Shot%202015-08-13%20at%201.42.38%20PM.png" alt=""></p>
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po-LsXgBTHBmX

House sales still high, unit sales falling: CoreLogic RP Data

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<p><span style="line-height: 1.3em;">CoreLogic RP Data's Top 10 suburbs for highest proportion of house auction listings over the last financial year only has one entrant from Melbourne, the other nine in Sydney.</span></p>
<p><span style="line-height: 1.3em;">Only Melbourne's Clifton Hill features at number eight with 84 listings and 78 total </span>auction<span style="line-height: 1.3em;"> </span>listings<span style="line-height: 1.3em;">. Sydney's Queens Park leads the </span>list<span style="line-height: 1.3em;"> with 60 total listings and 59 </span>actions<span style="line-height: 1.3em;"> followed by the </span>suburb of Clovelly (49 total listings, 47 auctions) and Malabar (23 total listings, 22 auctions).</p>
<p><a href="/images/2015/08/20/Screen%20Shot%202015-08-20%20at%2011.36.54%20AM.png" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2015/08/20/Screen%20Shot%202015-08-20%20at%2011.36.54%20AM.png" alt=""></p>
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mick.cee-iDmgDDAmu8

Top 10 suburbs for highest proportion of house auction listings: CoreLogic RP Data

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<p>Over the 12 months to May 2016 it is estimated that there were 338,785 houses and 131,339 units sold nationally with house sales 4.1 percent lower and unit sales 10.3 percent lower over the year, according to CoreLogic head of research Tim Lawless.</p>
<p>In the June market update he said across the combined capital cities there were an estimated 207,565 houses and 95,583 units sold over the 12 months to May 2016, with house sales 6.4 percent lower over the year while unit sales are down 12.5 percent.</p>
<p>Watch the video in full <a href="https://www.youtube.com/watch?v=TjkHOQlUr0M" target="_blank">here</a>.</p>
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jonathanchancellor-7SQnKwU6yx

House sales lower over 2016, unit sales down: CoreLogic June market update

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<p>Auction clearance rates are at their strongest in more than a year with a clearance rate of 77 percent for 3,700 auctions, according to CoreLogic.</p>
<p>The average time on market is also decreasing with a property averaging 55 days on the market before it’s sold as of this year.</p>
<p><a href="/images/2016/10/07/Auction%20clearance%20rate.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/10/07/Auction%20clearance%20rate.jpg" alt=""></p>
<p>Although new stocks are similar compared to last year overall the number of listings this year is lower as there is a decline of 1% overall.</p>
<p><a href="/images/2016/10/07/Listings.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/10/07/Listings.jpg" alt=""></p>
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House sale time on market reducing: CoreLogic

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<p>Top two sales over the past week, for states and territories for the week ending 25 September, according to CoreLogic.</p>
<p>Australian Capital Territory </p>
<p>10 Cockle Street, O’Conner, ACT 6 bed, 4 bath, 3 car house $1,950,000 Independent Property Group Gungahlin </p>
<p>37 Coolibah Crescent, O’Conner, ACT 5 bed, 2 bath, 2 car house $1,425,000 LJ Hooker Dickson </p>
<p>New South Wales </p>
<p>30 Bronte Marine Drive, Bronte, NSW 4 bed, 2 bath, 3 car house $7,350,000 Phillips Pantzer Donnelley Woollahra </p>
<p>26 Gold Street, Blakehurst, NSW 5 bed, 4 bath, 4 car house $4,100,000 Belle Property South Hurstville</p>
<p>Northern Territory </p>
<p>61 Gsell Street, Wanguri, NT 4 bed, 2 bath, 2 car house $615,000 Ray White Darwin </p>
<p>4 Finlayson Street, Gillen, NT 3 bed, 2 bath, 3 car house $492,500 Elders Real Estate Alice Springs </p>
<p>Queensland </p>
<p>121 Towers Street, Ascot, Qld 4 bed, 3 bath, 2 car house $2,300,000 Ngu Real Estate East Brisbane </p>
<p>586 Lower Bowen Terrace, New Farm, Qld 4 bed, 3 bath, 2 car house $2,100,000 Ray White New Farm </p>
<p>South Australia </p>
<p>29 Glenburnie Avenue, Torrens Park, SA 5 bed, 3 bath, 4 car house $1,586,000 Harcourts Platinum </p>
<p>48 Howard Street, Beulah Park, SA 5 bed, 3 bath, 3 car house $1,368,000 Ouwens Casserly Adelaide </p>
<p>Tasmania </p>
<p>58 Lyttleton Street, East Launceston, Tas 4 bed, 2 bath, 2 car house $745,000 Sims for Property Launceston </p>
<p>49 Bayside Drive, Lauderdale, Tas 4 bed, 2 bath, 2 car house $740,000 Knight Frank Hobart </p>
<p>Victoria </p>
<p>107 Mont Albert Road, Canterbury, Vic 4 bed, 1 bath, 2 car house $6,290,000 Jellis Craig Boroondara Group </p>
<p>15 Howitt Street, Glen Iris, Vic 4 bed, 3 bath, 2 car house $3,010,000 Kay Burton Hawthorn </p>
<p>Western Australia </p>
<p>36 Balikpapan Avenue, Dianella, WA 5 bed, 2 bath, 2 car house $1,200,000 Excellence Property Specialists </p>
<p>5/26 Renwick Street, South Perth, WA 3 bed, 2 bath, 2 car unit $900,000 Porter Matthews Metro Belmont </p>
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Top two sales over the past week across Australia: CoreLogic

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<p>Mosman, the stylish Lower North Shore Sydney suburb, clocked a billion dollars in gross sales over the 12 months to September 2016, more than any other across the country.</p>
<p>The gross value of sales in Mosman was $1,047,292,200, according to CoreLogic’s Best of the Best 2016 report.</p>
<p>The median value of houses in the suburb is $3,564,639.</p>
<p>Brighton, an affluent beachside suburb of Melbourne, was a distant second with gross sales of nearly $857 million for the same period.</p>
<p>Among the recently sold houses near the median value, was a four-bedroom house at <a href="https://www.realestate.com.au/sold/property-house-nsw-mosman-123823394" target="_blank">8A Bickell Road, Mosman, NSW 2088</a> (above) that traded for $3.3 million. </p>
<p>The property was sold through McGrath.</p>
<p>This sleek architectural home with views over Quakers Hat Bay last traded for $165,000 in 1979, meaning the house has appreciated exactly 20 times that price in the last 37 years. </p>
<p>There were more than 300 sales in Mosman during the period, with the highest being a six-bedroom period home — built in 1910 — for $15.5 million, according to RP Data.</p>
<p>The $15.5 million Federation Queen Anne Style 1910 family estate at <a href="https://www.realestate.com.au/sold/property-house-nsw-mosman-123885122" target="_blank">30 Bradleys Head Road, Mosman</a> (below) is set on 2,244 sqm. </p>
<p>The house previously sold for $7,150,000 in 2001. The deal was brokered by McGrath.</p>
<p><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2016/12/23/MosmanTop.jpg" alt=""></p>
<p>Another high-profile deal of around $14.5 million that was featured in Property Observer recently relating to the sale by former Morgan Stanley and Merrill Lynch head of fixed income Neale Muston.</p>
<p>Set overlooking Chowder Bay, <a href="https://www.urban.com.au/news/62670-mosman-home-sells-for-14-5-million-to-chinese-buyer" target="_blank">the Mosman house</a> (below) was bought by a Chinese-origin buyer with residency.</p>
<p>It was sold on its second time marketing campaign this year. And in 2015 it was listed with $17 million hopes.</p>
<p>The architecturally designed Morella Road four-bedroom home features minimalistic styling. The sale affirms that the Chinese buyers are attracted to the “prestige” of Clifton Gardens.</p>
<p>It was sold by McGrath agents Michael Coombs and John Melville with a price guide of $14.5 million to $15.5 million.</p>
<p>The property last traded for $6.15 million in 2008 when bought by Muston who is now a director of Excalibur Trading, a private capital fund specialising in the global futures markets.</p>
<p><img src="https://www.urban.com.au/images/2016/12/23/Mosman2.png" alt=""> </p>
<p>The lowest sale was a three-bedroom duplex/semi-detached house at <a href="https://www.realestate.com.au/sold/property-duplex+semi-detached-nsw-mosman-124005778" target="_blank">87 Spit Road, Mosman, NSW 2088</a> (below) for $1,280,000.</p>
<p> <img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/01/04/87%20Spit%20Road.jpg" alt=""></p>
<p>The deal was brokered through Cunninghams Property and the property was snapped up after just 13 days on the market.</p>
<p>Previously, the house sold for $875,000 in 2013, according to RP Data.</p>
<p>* An earlier version of this article mistakenly calculated the tally as $1 trillion.</p>
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