The Week In Real Estate 19/08/2022

Rental Listings Slump To Record Low
The number of properties for rent dropped 4.5% to a
record low in the past four weeks, according to new
data from SQM Research.
Nationally there are now only 55,124 properties
available for rent.
Sydney recorded the biggest drop in listings of 5.7% to
16,142 – the lowest level in five years, while Melbourne
listings fell by 3.6% to 14,666 which is a three-year low.
SQM Managing director Louis Christopher says the
shrinking pool of available properties coupled with
increasing demand from returning international
students has led to a sharp drop in vacancy rates in
CBD markets.
CBD vacancy rates soared during Covid, but Sydney’s
is now 3.4%, Melbourne 2% and Brisbane 2.2%.
“With the falls in CBD rental vacancy rates to well
below average, we have evidence that the rise in
overseas arrivals is starting to put some additional
demand pressure in certain pockets of the rental
market,” Christopher says.
“We will wait to see if the increased immigration
demand creates pressure elsewhere.”

Overseas Workers Put Pressure On Rents
While the return of overseas workers and international
students has put pressure on capital city rental
markets, some regional markets are easing.
SQM Research data shows vacancies increased in
areas such as Wollongong and the Central Coast in
July.
Despite the easing in those locations, the national
vacancy rate remained steady at 1% in July.
Managing director Louis Christopher says rents in
capital cities are also on the rise, up by 1.2% over the
30 days to August 12, resulting in a 17.4% increase in
the past 12 months.
Rents for houses in capital cities increased 15.1% over
the same period while unit rents were up by 16.2%.
But average rents decreased slightly in Hobart,
Darwin and Canberra in the past month, he says.
“The rental market by and large remains very tight,”
Christopher says. “We have evidence that the rise in
overseas arrivals is starting to put some additional
demand pressure in certain pockets of the rental
market.”

Quote Of The Week

“Interest rates are on the move and prices are slowing but at a suburb level we
are yet to see much evidence of widespread declines in prices.”
Real estate economist Nerida Conisbee

Real estate economist Nerida Conisbee

Few Suburbs Experience Price Decline
Analysts may be predicting property price drops but
new data shows only 1.5% of Australian capital city
suburbs have recorded a price decline in the past 12
months.
The analysis by real estate economist Nerida
Conisbee shows Melbourne and Sydney have the
most suburbs with price drops.
“Interest rates are on the move, prices are slowing
but at a suburb level we are yet to see much evidence
of widespread declines in prices,” she says.
Her analysis shows it is the wealthiest suburbs that
have been affected most by declining property prices.
In Sydney a higher proportion of very expensive
suburbs ($3 million plus median) and more affordable
(less than $1 million median) experienced price drops.
In Melbourne and Adelaide, a higher proportion of
expensive suburbs recorded drops in prices.
“Elsewhere around Australia, it is the cheaper suburbs
(those under $1 million), perhaps reflecting the first
home buyer pull back, as well as fewer investors.
Higher price point suburbs are either holding steady,
or alternatively still recording increases.”

Auctions Stabilise -Clearances Improve
While auction clearance rates remain below the lofty
levels achieved in 2021, they have increased for the
third week in a row despite a rise in listings.
CoreLogic figures show the national preliminary
clearance rate last week was 62% based on 1,603
properties listed for auction.
That is 2 percentage points higher than the
previous week and the first time since June that the
preliminary rate has been higher than 60%.
Listings in Sydney increased by almost 30%
compared with the previous week, while its auction
clearance rate was 60%.
According to CoreLogic, Melbourne achieved 66%
last weekend, its highest preliminary clearance rate
since May.
A group auction of 21 properties occurred on the
Gold Coast last week, with 60% sold under the
hammer including a five-bedroom home which sold
on the day for $6.68 million.
Auctioneer Mitch Palmer believes there is still
enough depth in the prestige market to warrant
taking homes to auction.

Australia Leads On Waterfront Value
Australian waterfront properties sell at a huge premium,
with five cities making it into the top ten of the International
Waterfront Index.
The index which measures the potential value uplift for prime
homes on the water compared with similar homes not on the
water, ranked Sydney number one.
The Gold Coast ranked third, followed by Perth in fourth place,
Brisbane sixth and Melbourne tenth.
The index found a Sydney waterfront property with views of the
Harbour attracts an average premium of 121% on an equivalent
home away from the water.
Across the ditch, Auckland in New Zealand is second on the international list with a premium of 76% while
the Gold Coast has a premium of 71% and Perth 69%.
The report says the average international premium for a waterfront property compared with a non-waterfront
home was 40% in the second quarter of 2022.
Michelle Ciesielski of Knight Frank Australia says beachfront property is the most sought-after location.