A snapshot of markets of interest

Posted on 7/06/2007  

The May 2007 edition of The Month in Review by valuation firm Herron Todd White provides an interesting snapshot of the state of play in key residential property markets around the country.


Here’s snapshot of some of the locations of interest …


Mackay, Qld: “Demand for residential property in Mackay has continued to ease, with supply now greater than demand. This has resulted in value levels easing from a peak in the third quarter of 2006. Any future increase in interest rates in this market climate could see value levels come off quickly.”


Gladstone, Qld: “The market continues to strengthen. Key drivers include 30-year low unemployment rates, high income levels and positive investor sentiment as a result of over $20 billion worth of projects under construction, recently completed or under investigation in the Gladstone region.”


Hervey Bay, Qld: “Investors have become active in the market as rental vacancy rates are low and rents are rising.”


Ipswich, Qld: “There has been an increase in the number of first-home buyers entering the market in the past six months. Rents have increased significantly over the past six months to a point where renters believe they are better off repaying a mortgage than paying rent. The investor market has been strong in Ipswich due to the yields which are achievable in comparison to other areas.”


Darwin, NT: “It is more likely going to be an over-supply of generic-style residential units in Darwin and a corresponding rise in vacancy rates that could force investors to quit the market.”


Canberra, ACT: “In the past 12 months lower-end properties in the north and north-west suburbs of Gungahlin and Belconnen have experienced strong demand leading to an increase in property values of units, townhouses and basic single dwellings.


Sydney, North Shore: “The upper north shore apartment sector is feeling the pressure from the overstocking of investment quality apartments. This is set to worsen in coming years, as apartment numbers increase as a result of the State Government removing planning powers from Ku-Ring-Gai council.


Sydney, Eastern Suburbs: “During 2006 the housing market recorded its highest median price ever - $1,025,000, up 7%. However, the rise in values does not tell the whole story. During 2006 the market slowed considerably, with the number of transactions falling from a two-year average of 3,059 to 2,407 – representing a six-year low.”


Sydney, western suburbs: “The west has been in a downturn stage since the end of 2003, with housing values falling 4.7%. There has been an alarming rate of mortgagee sales which, due to the high number, are placing downward pressure on property values. As a result of the declining interest in investment quality apartments, many new apartments are being forced to discount their sale price.”


Tamworth, NSW: “The market remains a little fragile, with an increase in listings over the past six months. With the region’s drought still prevailing and only 13 months’ of water left in the city’s main water supply, Chaffey Dam, another interest rate rise, coupled with lessening job security in some drought-affected rural industry sectors, would lead to fewer first and second home buyers in the market.”


Perth, WA: “The concern is for those purchasers who entered the market towards the end of the boom, with a high lending ratio and little room for movement in repayments if interest rates begin to rise. The market in the Perth metropolitan area peaked in August-September 2006. Supply has increased significantly from 4,000 homes for sale in June 2006 to 13,800 in March 2007. This has resulted in a flattening of values, particularly in the price range below the current median house price of $470,000.”


Hobart, Tas: “The market appears poised on a knife edge and has done so for some time, waiting for a trigger to tip it a little or a lot. The outer suburbs’ mid-to-high-priced stock is proving the most difficult to sell. Another sector to be careful about is the rural residential market or the small village on the outer edge of reasonable commuter distance. Fuel prices have crept back up and these areas are becoming harder to sell. Watch what happens if you throw a couple of interest rate rises on top.”



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