Sydney Market

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<p>Rental yields in Sydney have been on the decline over the past decade, as rents have failed to keep pace with increasing property prices, according to the latest Herron Todd White (HTW) residential report. </p>

<p>The valuation firm took a look at yields across the country and dissect where to find the best returns in residential markets.</p>

<p>According to SQM research, average yields for houses in Sydney fell from 3.7% in August 2009 to 2.8% in August 2019, while units fell from 4.9% to 3.7% over the same period.</p>

<p>[smartcode_project:default project_id=6798]</p>

<p>The HTW report notes while prices were rising, investors were happy for the capital growth to offset the declining rental yields.</p>

<p><em><a href="https://www.propertyobserver.com.au/images/2019/10/9/sydney%20yield%20.jpg" target="_blank">Click here</a> to enlarge: </em></p>

<p><img alt="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/10/9/sydney%20yield%20.jpg"></p>

<p><em>Source: data from SQM Research</em></p>

<p>"Unfortunately as prices began to fall over the past two years, rental yields did not climb as expected, as increasing rental vacancies put downward pressure on asking rents," the valuation firm said. </p>

<p>"Obviously Sydney is a large city and rental yields will differ across its many regions.</p>

<p>"So which regions are currently providing the best average yields? For houses, the Lower North Shore has the highest average yield at 3.5%, while south-western Sydney and western Sydney enjoy a 3.3% yield.</p>

<p>[smartcode_project:default project_id=7317]</p>

<p>"On the unit side, the CBD is the clear winner for average rental yield at 4.4%, while the Hills Districts, south- western Sydney and western Sydney were at 4.1%," the valuation firm added. </p>

<p>With yields at 10-year lows across most parts of Sydney, investors are looking at alternatives to the standard house or unit to help improve their potential yields, HTW noted.</p>
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j.ballantyne1990-6AQqhLzZaK

What are the Sydney suburbs with the highest residential rental yields: HTW 

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<div id="post-body-651116980849945678" class="post-body entry-content">
<div>There are still a great many property investors around in the market right now, so there shouldn't be too much upwards pressure on rents at the national level.</div>
<div> </div>
<div>And, so it is!</div>
<div> </div>
<div>The weighted average annual rents inflation across Australia's eight capital cities steadied at +0.7 per cent in the third quarter of calendar year 2016, according to the ABS Consumer Price Index figures. </div>
<div> </div>
<div>As you can clearly see in the chart below, nominal rental prices at the national level only tend to spike dramatically when property investors are spooked out of the market for some reason, thereby stymying the available supply of rental stock.</div>
<div> </div>
<div>This has only happened twice over the past 35 years or so, with the most recent trigger point being the global financial crisis. </div>
<div> </div>
<div>However, with mortgage rates close to their record lows, there are presently oodles of investors in the domestic market - and many more from overseas too! - even in the face of recent curbs. </div>
<div> </div>
<div><a href="/images/2016/10/28/pete1.jpg" target="_blank">Click to enlarge</a></div>
<br><div class="separator"><img src="/images/2016/10/28/pete1.jpg" alt=""></div>
<br><div>
<strong><span style="text-decoration: underline;">City by city</span></strong><br><strong><span style="text-decoration: underline;"><br></span></strong>
</div>
<div>Of course, the outlook is as always quite different for each capital city, region, and sub-region.<br><br>
</div>
<div>I have presented a second chart below as an index to show what has happened to nominal rents over the last four-and-a-half decades.</div>
<div> </div>
<div>One of the reasons I have done so is that although commentators seemingly love to spin out 'inflation-adjusted' results, the reality for many of us living today is that we often have 'rent versus buy' equations to weigh up, and for these decisions we understandably - and logically - tend to think in nominal terms.<br><br>"Are rents rising? Are dwelling prices rising? What about holding costs? Will mortgage rates increase or decrease? What is the smartest financial decision here?"</div>
<div> </div>
<div>In Sydney, annual rents inflation accelerated slightly to +2.5 per cent, which is still close to double the +1.3 per cent headline rate of inflation.</div>
<div>
<br>Blogsites and media do love a good falling rents meme, but this hasn't really been backed up by the facts, at least in Sydney's case.<br><br>Indeed, Sydney rents have increased at double the rate of inflation for nearly a decade now.<br><br>
</div>
<div>Since the beginning of 2007 Sydney's rental index has increased by +54 per cent, exactly double the rate of inflation for the harbour city over the same time horizon. </div>
<div> </div>
<div>Rental growth may be softer than it was, and in fact it is already easing in some pockets of Sydney, but rents have hardly 'fallen' since the financial crisis as commentary sometimes tries to imply.</div>
<div> </div>
<div>It's a very different Jackanory in the resources capitals, mind you.<br><br>After a great surge in both rents and dwelling prices through the heady days of the resources boom, the rental index numbers are in full on decline mode in Perth, falling back by -6.4 per cent over the year to September.<br><br>This puts the rental index for Perth back close to where it was at the peak of the mining boom four years ago in Q3 2012.<br><br><div><span>And in Darwin, the equivalent year-on-year decline has been -7.7 per cent, although certain other metrics have implied that the real estate market in the Top End may be stabilising somewhat. </span></div>
<div><span> </span></div>
<div><a href="/images/2016/10/28/Screen%20Shot%202016-10-28%20at%208.51.32%20AM.png" target="_blank"><span>Click to enlarge</span></a></div>
<div><span> </span></div>
</div>
<div><img src="/images/2016/10/28/Screen%20Shot%202016-10-28%20at%208.51.32%20AM.png" alt=""></div>
<br><div>Rental growth is flat on this index in Canberra, while interestingly the rental growth index for Adelaide has by and large tracked that of Melbourne closely for almost the entire data series since 1972. You learn something new every day!</div>
<div> </div>
<div><strong><span style="text-decoration: underline;">Supply response cavalry now arriving</span></strong></div>
<br><div>The chart above hints at why Rory Robertson was always unlikely to lose his high profile 2008 bet cf. Sydney house prices correcting sharply.</div>
<div> </div>
<div>While the annual rate of population growth in New South Wales rose incessantly from 2004 to 2008 up to an annualised peak of nearly 118,000, very little accommodation was actually being built, and this has resulted in nearly a chronic supply shortage and nearly a decade of strong rents growth. </div>
<div> </div>
<div><a href="/images/2016/10/28/Screen%20Shot%202016-10-28%20at%208.52.55%20AM.png" target="_blank">Click to enlarge</a></div>
<div> </div>
<div class="separator"><img src="/images/2016/10/28/Screen%20Shot%202016-10-28%20at%208.52.55%20AM.png" alt=""></div>
<div> </div>
<div>What you don't need any charts to tell you - just listen to the jackhammers! - is that this dynamic has at last changed, with dwelling construction at now really hitting its straps over the last couple of years, and a veritable flood of apartment completions in the post.<br><br>---<br><br>In other news, Domain reported that Sydney's median house price rose by +2.7 per cent in the September quarter to a fresh all-time high of $1,068,000.<br><br>In Melbourne, the median house price rose by an even more sprightly +3.1 per cent over the quarter and +9.1 per cent over the year to also hit a record high of $774,000.<br><br>Somewhat surprisingly, median unit prices in Melbourne performed even more strongly again in the quarter in rising by +4.5 percent, to be +5.5 percent higher over the year.<br><br>Melbourne has been constructing dwellings like fury in recent years, but population growth has accelerated to extraordinarily high levels as you can see in the chart above. </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>
</div>
<div> </div>
</div>
<div class="post-footer"> </div>
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pwargent-M4siyDbqQY

Rental growth steadies, though not in Sydney

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<p>CoreLogic's head of research Tim Lawless talks the Sydney housing market.</p>
<p> </p>
<p><iframe src="https://www.youtube.com/embed/sSS3G6dq1u0" frameborder="0" width="450" height="315"></iframe></p>
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jonathanchancellor-7SQnKwU6yx

Sydney's market update for November: CoreLogic

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<p>Sydney is nearing the point of the property cycle where after years as a sellers' market, it's becoming a buyers' market.</p>
<p>The shift to the buyer's favour comes because there's plenty of stock for sale, accompanied by a flailing auction success rate, and vendors prepared to drop their prices to secure their sale. Last month Sydney property values sat in negative annual growth territory, according to CoreLogic, albeit down 3.4% after around 75% growth since 2012.</p>
<p>Cooley Auctions' auctioneer Damien Cooley recently suggested a healthy auction market, where both sellers and buyers had equal bargaining positions, was between 50% and 60%.</p>
<p>That's where the market currently sits.</p>
<p>Cooley suggests it becomes a buyers' markets should clearance rates become less than 50%.</p>
<p>Buyers certainly are acting like the tide has turned.</p>
<p>It is not that buying has frozen due to any fears, just that home buyers have turned tough in their negotiations.</p>
<p>They are having to lower their buying expectations since they are discovering the banks won't lend everything they yearn for.</p>
<p>Sellers who engage inexperienced agents who've never dealt with a weakened market will be especially exposed as a buyers market puts sellers in an especially vulnerable position if they need to sell because they have already bought elsewhere.</p>
<p>It is not a time for sales' gimmicks, just realism.</p>
<p>It is a time for strong marketing so there's the increased prospect of the property being seen by the reduced numbers of active buyers, plus those potentials who have basically tuned out through months, or maybe years, of missing out.</p>
<p>There's also those passive buyers who don't consider themselves in the market, but could be tempted by what they see on offer.</p>
<p>It's likely fewer listings during the winter hibernation will slow the downward price momentum, but setting the right asking price is crucial for vendors who want to sell before spring volumes pickup.</p>
<p>Overall there's 26,000 offerings across Sydney - around 26% more stock than this time last year - which means buyers have more choice.</p>
<p>There were 22,000 listings at the start of last spring.</p>
<p>Discounting on asking prices is normal, however in an emerging slowing or falling market, the mismatch between asking and paid prices is likely to be at its highest, possibly due to pride or naivety.</p>
<p>CoreLogic currently puts the required discount before sale at 6.2% for private <span class="gmail-il">treaty</span> listings that are taking around 40 days. In March it was at a 5.6% discount and 31 days, and in March last year it was a 4.1% after just 27 days on market. </p>
<p>Little wonder buyers reckon the market is finally trending their way, so wise vendors might move to marginally underprice the market to get ahead of the emerging curve.</p>
<p><em>This article first appeared in </em>The Daily Telegraph. </p>
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jchancellor-FAypfDUnLy

Sydney market is changing from sellers' market to buyers' market 

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<p>Warmer weather has seen vacancy rates steady across Sydney as renters seek accommodation in the heart of the city, according to research from the Real Estate Institute of New South Wales.</p>
<p>REINSW President Leanne Pilkington said the September 2018 REINSW Vacancy Rate Survey saw metropolitan Sydney vacancy rates down 0.2 percentage points at 2.8%.</p>
<p>“The change in season has seen renters return to the Inner Sydney market with vacancy rates falling 0.5% to 2.4%, a level last seen in May,” Pilkington said.</p>
<p>“Middle Sydney remained steady at 3.1% while Outer Sydney dropped 0.2% at 2.9%.”</p>
<p>In the Hunter, vacancy rates rose 0.1 percentage points to 1.9%, with Newcastle up 0.8 percentage points at 2.9%.</p>
<p>The Illawarra slipped 0.2 percentage points despite Wollongong being up 0.1 percentage points to 2.1%.</p>
<p>Across regional areas, New England remained steady at 2.2%, Northern Rivers rose 0.3 percentage points to 1.3% and Orana rose 0.2 percentage points to 2.0%.</p>
<p><em><a href="https://www.propertyobserver.com.au/images/2018/10/22/vacancy%20rate%201%20.jpg" target="_blank">Click here </a>to enlarge</em></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/2018/10/22/vacancy%20rate%201%20.jpg" alt=""></p>
<p><em><a href="https://www.propertyobserver.com.au/images/2018/10/22/vacancy%20rate%202.jpg" target="_blank">Click here</a> to enlarge</em></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/2018/10/22/vacancy%20rate%202.jpg" alt=""></p>
<p>Source: REINSW</p>
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Spring sees renters return to inner Sydney market: REINSW

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<p>Despite COVID-19, the Sydney property is strongly forging ahead with auction clearance rates tracking at levels similar to those of 12 months ago, according to RiskWise Property Research.</p>
<p>Houses achieved a 71.1 per cent preliminary clearance rate and, overall, of the total volume of 625 properties, a 69.5 per cent clearance rate.</p>
<p>The volume of auctions was 18 per cent higher than a year earlier according to CoreLogic, and the final auction clearance rate is expected to finish at around 64 per cent, marginally above the decade average.</p>
<p>RiskWise CEO Doron Peleg said this was another consistent result, and similar to those seen in recent weeks.</p>
<p>“When you have a larger volume and higher clearance rates, this means that we have a stronger market,” Mr Peleg said. </p>
<p>“Houses, in particular, are showing strong results while units achieved only 66.3 per cent clearance rate which shows that, as expected, they have less resilience.</p>
<p>“Houses in Sydney also performed well last week with clearance rates recently running above those for units.</p>
<p>“Overall, the 69.5 clearance rate for Sydney is similar to results achieved around the same time last year when the Sydney property market was enjoying a strong recovery period following the election results, interest rate cuts and some loosening of the credit restrictions, particularly in relation to APRA's floor assessment.” </p>
<p>This week, the top performing areas in Sydney, based on the preliminary figures, were the Northern Beaches (81.3%) and the Inner West (77.8%).</p>
<p>Buyers Buyers COO Pete Wargent said home buyers with long-term holding strategies were well positioned to negotiate aggressively to purchase high-quality houses that usually enjoyed very strong demand and were sold through auction campaigns at premium prices.</p>
<p>“The average holding period of houses in Sydney, that in 75.9 per cent of cases belong to owner-occupiers, is 12.2 years. This means owner-occupiers with secure jobs and no serviceability issues are not impacted by short-term market movements, unless they need re-finance,” Mr Wargent said. </p>
<p>He said the Sydney property market delivered solid capital growth of 22 per cent in the past five years with popular areas enjoying even stronger results.</p>
<p>For example, houses in Paddington experienced price increase of 56 per cent and in St. Peters houses saw capital growth of 51 per cent during that period. </p>
<p>This shows that although there were credit restrictions by APRA, scrutinising of loan applications as a result of the Royal Commission and material price reductions due to fears of changes to negative gearing and capital gains tax until the election result in May 2019, houses in Sydney enjoy strong demand and deliver solid capital growth. </p>
<p>In addition, over the medium and the long term, solid price growth is highly likely for houses, particularly due to a systematic undersupply in the inner and middle rings, and also in the more affordable outer areas with good access to the CBD, such as the western suburbs.</p>
<p>“What this all means is now is the time to buy if you are a first home buyer or an owner-occupier as this current slowdown in the property market is only temporary, with houses in popular areas likely to experience solid capital growth in the medium to long term.</p>
<p>“Once the COVID-19 issue is resolved, most likely in 2021, the traditional connection between low interest rates and increase in dwelling prices is likely to take place.”</p>
<p>Other top performing areas included Newcastle and Port Macquarie, with a clearance rate of 80.0 per cent, clearly demonstrating that the demand for lifestyle locations is playing a key role in the property market.</p>
<p>Mr Wargent stressed, however, that investors buying rental apartments unsuitable for families were taking an enormous gamble, with both equity and cash flow risk expected to materially increase.</p>
<p>Serviceability is also a major factor for investors who rely on a stable rental income to cover the costs associated with property, particularly the mortgage.</p>
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Houses in Sydney deliver 71% clearance rate

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<p><span style="line-height: 1.3em;">NewsLocal has launched a real estate portal geared towards Chinese-Australian audiences led by NewsCorp NSW real estate editor Tim McIntyre.</span></p>
<p><a href="https://sydneypropertyexperts.com" target="_blank"><em style="line-height: 1.3em;">SydneyPropertyExperts.com</em></a><span style="line-height: 1.3em;"><a href="https://sydneypropertyexperts.com" target="_blank">,</a> written in both Chinese and English, covers </span><span style="line-height: 1.3em;">market trends, new developments, suburb hotspots and foreign investment issues and is written by real estate experts </span><span style="line-height: 1.3em;">Shayne Collier, Brendan Wong, Erin Forster and Alison Cheung. </span></p>
<p><span style="line-height: 1.3em;"><img src="/images/2016/02/12/Screen%20Shot%202016-02-12%20at%202.02.08%20PM.png" alt=""></span></p>
<p><span style="line-height: 1.3em;">NewsLocal editor-in-chief Kathy Lipari said</span><span style="line-height: 1.3em;"> there is a gap in the market for expert real estate content and analysis tailored specifically to our Chinese-Australian audiences. </span></p>
<p><em style="line-height: 1.3em;">"SydneyPropertyExperts.com </em><span style="line-height: 1.3em;">utilises the expertise and resources of the NewsLocal real estate team to provide comprehensive information in both English and Chinese to Chinese real estate buyers," she said. </span></p>
<p>NewsLocal general manager Michael Wilkins said <em>SydneyPropertyExperts.com </em>is a true cross-platform experience for our audiences.</p>
<p>"We have listened to the feedback from our readers and the real estate team and are excited to deliver this unique in-language product to the market,” he said. </p>
<p><em>SydneyPropertyExperts.com </em>will feature an investment section, featured properties, market reports, ask the experts, development and the latest news.</p>
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po-LsXgBTHBmX

NewsLocal targets Chinese community with new real estate website

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<p>According to recent snapshot by realestateinvestar.com.au, the following Sydney suburbs have acute stock shortages.</p>
<p>The tally combined the number of houses and units that were on the market at the time of analysis.</p>
<p>Postcode      Suburb        Recent    12 months earlier  Change (%)</p>
<p>2095            <a href="https://www.urban.com.au/property-observer" target="_blank">Manly</a>            23            69                   -66%</p>
<p>2207            <a href="https://www.urban.com.au/property-observer" target="_blank">Bexley</a>           42            123                 -65%</p>
<p>2097            <a href="https://www.urban.com.au/property-observer" target="_blank">Collaroy</a>         19            47                   -59%</p>
<p>2560            <a href="https://www.urban.com.au/property-observer" target="_blank">Bradbury</a>        28            61                  -54%</p>
<p>2064            <a href="https://www.urban.com.au/property-observer" target="_blank">Artarmon</a>        16            34                  -52%</p>
<p>2156            <a href="https://www.urban.com.au/property-observer" target="_blank">Glenhaven</a>      12            24                  -50%</p>
<p>2011            <a href="https://www.urban.com.au/property-observer" target="_blank">Potts Point </a>     30            57                  -47%</p>
<p>2011            <a href="https://www.urban.com.au/property-observer" target="_blank">Elizabeth Bay</a>  18            34                  -47%</p>
<p>2076            <a href="https://www.urban.com.au/property-observer" target="_blank">Wahroonga</a>     43            79                  -45%</p>
<p>2086            <a href="https://www.urban.com.au/property-observer" target="_blank">Frenchs Forest</a> 21            37                 -43%</p>
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