My Market Australian Residential Property Outlook - 1st Quarter, 2018 - Ironfish
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My Market
Australian Residential Property Outlook
1st Quarter, 2018
Adelaide | Beijing | Box Hill | Brisbane | Burwood | Chengdu | Glen Waverley | Melbourne | Nanning | North Sydney | Perth | Shanghai | Shenzhen | South Yarra
1
Australia
Residential Property Market
Capital City Overview continued to move at rather subdued growth rate of 2.8% remains below the
rates despite strengthening business RBA’s forecasts of 3.25%.
The Sydney market is expected to
conditions. As such, it is expected that
continue to moderate throughout 2018. Business conditions continued to
interest rates will likely remain on hold
Whilst affordability will continue to be improve over the quarter with non-
throughout 2018 and into early 2019.
key, areas in close proximity to new mining business investment increasing
infrastructure projects are expected from the previous year. In terms of
to outperform the wider market. The consumer confidence, household
Melbourne market is continuing to
Housing Finance consumption still remains relatively
see huge population growth which APRA’s restrictions on housing credit slow, a trend that has been largely
will keep property in high demand have continued to temper growth driven by the aforementioned sluggish
but, like Sydney, addressing prevailing across heated markets. With Sydney growth in wages. The Wage Price
affordability issues will be key. With moderating, and Melbourne starting to Index recorded a 2.1% rise over the
housing now largely unaffordable, it is show similar signs - APRA has recently year despite the national economy
expected that more of the market will announced plans to remove its 10% producing a discernible rise in jobs
turn to apartments. Brisbane has seen investor loan growth benchmark from growth. Unemployment figures for
a dramatic decline in new apartment 1 July 2018, for those lenders who can March 2018 came in at 5.5% – a
supply with a recent JLL report citing satisfy certain assurance provisions. welcomed improvement from the
real possibilities of an undersupplied This is good news for investors as the previous year’s result of 5.9%.
market to materialise in coming years. finance space is expected to become Should jobs growth continue and the
Brisbane continues to see surges in more competitive, with loans being unemployment rate fall further, it is
interstate migration which has been easier to secure from certain banks, expected that stronger wages growth
driven by improved employment with lower interest rates expected to be will come in time.
fundamentals, lifestyle, and the relative introduced as major banks compete to
affordability compared to Sydney and win back market share.
Melbourne. In Adelaide, the property Australian Outlook
market continues to show signs of
Population growth remains strong
positive growth. Strong median rental
Building Activity although it is noted that an increasing
yields coupled with its present status
Residential construction numbers have number of residents are leaving New
as being the most affordable of the
continued to decline nationally, with South Wales with interstate migration
five major capital cities, means that it
figures down by 5.9% over the year to Queensland accelerating. In the near
is likely to be an attractive option for
to December 2017. Residential cranes term, Sydney is likely to remain flat as
investors seeking a blend of stable, long
have fallen by significant margins, with a whole. However, affordable price-
term growth and attractive yield. Perth
the Q1-2018 RLB Crane index recording pointed product is likely to move. The
continues to see signs of recovery with
a net decline of 57 cranes, bringing the demand for affordable product is also
improving vacancy rates and declining
total to 493 cranes. Of all major capital being felt in Melbourne. Adelaide and
average days to sell. The Perth market is
cities, Brisbane suffered the most Brisbane are expected to experience
shaping up to be an attractive option for
severe decline of 18 cranes - which positive momentum, whilst Perth will
countercyclical investors looking to get
represents a 30% decline compared to continue to move in its recovery phase
into a market prior to its next growth
previous figures. throughout 2018 and into early 2019.
phase.
In summary, with an infrastructure
boom happening across major capital
Australian Economy cities, and with strong population
Interest Rates growth coupled with limited supply,
The RBA maintained the cash rate at The economy grew by 0.4% during the
the outlook for Australian property
1.50% in March 2018. The RBA noted December 2017 quarter, and for the
remains positive in the medium to long
that economic conditions for the March past year, increased by 2.8%. This is a
term.
quarter were characterised by healthy marked improvement from the previous
jobs growth and strong economic years’ result of 1.8%. While a positive
performance. At the same time, wages result overall, the nation’s 2017 GDP
2Housing Market Apartment Market
Rental Market Rental Market
March 2017 - February 2018 March 2017 - February 2018
Houses Rental Yield Median Rent Houses Rental Yield Median Rent
Adelaide 4.60% $360 per week Adelaide 5.10% $310 per week
Brisbane 4.50% $415 per week Brisbane 5.20% $380 per week
Melbourne 3.10% $420 per week Melbourne 4.30% $400 per week
Perth 4.10% $360 per week Perth 4.50% $320 per week
Sydney 3.10% $545 per week Sydney 3.90% $530 per week
Annual Sales Volumes Annual Sales Volumes
March 2017 - February 2018 March 2017 - February 2018
55,944 38,109
48,368 -10.5% -12.6%
-9.7% 29,367
-11.5%
34,027 15,178
-7.0% -17.4%
24,490 7,359
20,183 -0.5% 5,501
+5.7%
+1.1% +2.8%
Melbourne
Melbourne
Brisbane
Brisbane
Adelaide
Adelaide
Sydney
Sydney
Perth
Perth
Capital Growth and Median Values Capital Growth and Median Values
March 2017 - February 2018 March 2017 - February 2018
Melbourne: Melbourne:
$835,251 $552,589
+15.7% +7.0%
Sydney: Sydney:
Melbourne:
$1,110,212 $774,951
+7.3% +4.8%
+1.69%
Adelaide: Adelaide: $345,543
Melbourne:
$465,093
+4.0% +4.7%
+1.69%
Brisbane: Brisbane:
$540,705 $389,445
+3.3% -1.3%
Perth: Perth:
$507,798 $405,615
-3.0% -4.9%
3Adelaide
Residential Property Market
Adelaide Economy 20,183 house sales over the year to recently forecasted South Australia to
February 2018. Building approvals for be Australia’s fastest-growing economy
South Australia’s economic growth houses totalled 6,743, trending 5.89% this financial year.
rate is up 16.8% compared to its higher the same time last year.
previous decade-annual averages. Adelaide’s status as the most
This is positive news for Australia’s affordable capital city, in conjunction
most affordable capital city. Innovative Adelaide Apartments with its high rental yields and relatively
energy policy and concerted efforts tight vacancy rate of 1.4%, means
Adelaide apartment prices grew
to invest in technology, innovation that it will continue to be an attractive
by 4.7% during the 12 months to
and infrastructure, has positioned market for property investment.
February 2018. The median apartment
Adelaide for solid economic growth price is now $345,543. Rental yields
for the future. A highlight of South have remained attractive over the past
Australia’s economic performance 12 months at 5.1%, with the median
has been record levels of residential rent being $310 per week, an increase
construction work done, which will of $10 per week from last year.
help to spur jobs creation. When Adelaide recorded the second highest
combined with Adelaide’s significant rental yield of the five major capital
investment in infrastructure across cities. Building approvals totalled 3,947 Housing Market Highlights
major projects - the economy is well over the year, trending 17.61% higher • Strong rental yield
positioned for the future. Adelaide’s than the same time last year – but is
increased defence spending, business • Tight vacancy rate
still relatively low when compared to
investment and noted improvements other capital cities. • Relative affordability to other
in the farming and agricultural sectors, major capital cities
has seen the city record its strongest
year of growth since the GFC. This Adelaide Outlook
has been matched by improved labour Adelaide has continued to report Apartment Market Highlights
market conditions. In the 12 months strong economic growth despite • 3rd highest growth city for the
to March 2018 jobs growth swelled by subdued population growth. The city’s 12 months to February 2018
2.2% with a massive 91% of these jobs negative net interstate migration has
being full time. This growth in jobs has been a drag on population numbers, • Positive support from
translated to a declining unemployment government policy
although strong net overseas migration
rate from a high of 7.2% for April 2017, has helped to stabilise growth. An • Strengthening rents, up $10 per
to a much healthier 5.6% for March analysis by local data company, Pernix, week
2018. reported that Adelaide is in prime
position to offer the world’s fastest and
Adelaide Houses cheapest internet service. This comes Market Strengths
on the back of Adelaide’s strategic
Adelaide house prices grew by 4.0% direction in becoming Australia’s • Solid growth with low volatility
during the 12 months to February own ‘San Francisco’ - a city fuelled • Strengthening economy with
2018. The median house price is by renewable energy, cutting edge promising innovation agenda
now $465,093. Rental yields are digital businesses and an effective
• Increased business investment
comparatively high across Adelaide, and pragmatic ‘cleantech’ society. As a
with average rental yield for houses result of major investment in this area,
being 4.6%, with a median rent of Adelaide has quickly established itself
$360 per week, an increase of $10 per Market Challenges
as a high-tech innovation hub and the
week from last year. Rental demand nation’s leader in green infrastructure • Addressing population growth
remains strong at a tight 1.4% vacancy and renewable energy adoption. To • Strengthening economic
rate for February 2018. There were this end, Deloitte Access Economics diversification
4Housing Market
Median House Value Capital Growth Annual Sales Building Approvals
February 2018 Mar 2017 - Feb 2018 Mar 2017 - Feb 2018 Mar 2017 - Feb 2018
$465,093 +4.0% 20,183 6,743
Annual Change +5.89%
Vacancy Rate Median Rental Yield
1.4% 4.6%
1 year ago it was $449,177 1 year ago it was 1.9% Annual Change +1.1% Median rent: $360 p.w.
(+$10 from last year)
20 Years of Growth
March 1998 - February 2008 (Residex), March 2008 - February 2018 (CoreLogic)
$800,000
$700,000
$600,000
$465,093
$500,000
$353,125
$400,000
$300,000
$345,543
$200,000 $125,260 $268,136
$100,000
$91,413
$90,642
$000,000
1998 2002 2007 2012 2018
+10.92% p.a. +11.36% p.a. +2.79% p.a. +2.57% p.a.
Apartment Market
Median Apartment Value Capital Growth Annual Sales Building Approvals
February 2018 Mar 2017 - Feb 2018 Mar 2017 - Feb 2018 Mar 2017 - Feb 2018
$345,543 +4.7% 7,359 3,947
Annual Change +17.61%
Vacancy Rate Median Rental Yield
1.4% 5.1%
1 year ago it was $327,606 1 year ago it was 1.9% Annual Change +5.7% Median rent: $310 p.w.
(+$10 from last year)
5Brisbane
Residential Property Market
Brisbane Economy 2018, there were 34,027 house sales. These forces have translated to
Building approvals for houses totalled Brisbane vacancy rates tightening to
For the 12 months to April 2018, 13,903 over the year, trending 15.13% 3.4% for February 2018 compared to
Queensland recorded economic growth higher the same time last year. the previous year (3.6%). In light of
rates roughly 20% above previous these trends, a recent report by JLL
decade-annual averages, according to noted that the Brisbane market is likely
the latest CommSec State of the States to move into a position of undersupply
report. Strengthening commodity Brisbane Apartments over the next few years. With demand
prices as well as increased demand for Brisbane apartment prices softened increasing from growing interstate
international education and tourism slightly by -1.3% during the 12 months migration and supply figures continuing
related services have each contributed ending February 2018. The median to fall, the outlook for Brisbane is
to this positive outcome. This is apartment price is now $389,445. positive.
evidenced by recent figures showing Rental yields are comparatively high
that annual export receipts recorded an across Brisbane, with the average
increase of 26% from the previous year. rental yield for apartments being 5.2%
In addition, the population exceeded 5 with the median rent being $380 per Housing Market Highlights
million - a major milestone which was week, a decrease of $10 per week
accelerated by significant increases from last year. Although rents have • Strong demand due to population
in interstate migration. According to growth with significant increase in
softened over the past 12 months,
the recent regional population figures, interstate migration
it is expected that they will not drop
interstate migration to the Sunshine further, and in time, start to strengthen. • Tightening vacancy rate with
state is up by a whopping 163% for This is a result of continued population attractive rental yield
September 2017, when compared growth which is driving demand, and
to September 2015. This upswing is • Relative affordability compared to
a significant reduction in the supply of Sydney and Melbourne
likely to have been driven by housing new apartment completions in 2018
affordability, lifestyle appeal and the and 2019, compared to 2017. For
state’s improving employment prospects Apartment Market Highlights
the year ended February 2018, there
with Queensland gaining 100,000 were 15,178 apartment sales. Building • Attractive rental yield
new jobs in 2017 alone. On top of this, approvals for apartments totalled
Brisbane’s four-year infrastructure • Apartment market likely to move
11,802 over the year, trending 11.62% into undersupply in coming years
pipeline which is currently valued at lower the same time last year.
$45 billion, will serve to strengthen jobs • Well positioned apartments to
growth and demand for property. With benefit from massive infrastructure
landmark projects such as the $3 billion pipeline
Queen’s Wharf Project, the $5.4 billion Brisbane Outlook
Cross River Rail, and the $350 million Concerns of a Brisbane apartment Market Strengths
Herston Quarter, Brisbane’s economic oversupply are fading away in the face
future is looking bright. • Strong demand fundamentals driven
of falling supply and strong population
by jobs and population growth
growth. This is likely to place pressure
on prices, with current forecasts • Strengthening economy with large
Brisbane Houses estimating that Greater Brisbane will infrastructure investment
Brisbane house prices grew by 3.3% grow by roughly 62,500 people per • Market remains undervalued given
during the 12 months ending February year over the next decade. On the historical averages
2018. The median house price is supply side of the market, Brisbane is
now $540,705. Rental yields are seeing dramatic declines in construction
Market Challenges
comparatively high across Brisbane, activity with the commencement
with the average rental yield for houses numbers declining severely. Latest • Accelerating the push towards
construction forecasts indicate that diversification in the state economy
being 4.5% with rent of $415 per week,
an increase of $5 per week from last 2019 completions will come in at 10 • Overcoming media narrative of
year. For the year ended February year lows. oversupply, although concerns are
now reducing
6Housing Market
Median House Value Capital Growth Annual Sales Building Approvals
February 2018 Mar 2017 - Feb 2018 Mar 2017 - Feb 2018 Mar 2017 - Feb 2018
$540,705 +3.3% 34,027 13,903
Annual Change +15.13%
Vacancy Rate Median Rental Yield
3.4% 4.5%
1 year ago it was $525,901 1 year ago it was 3.6% Annual Change -7.0% Median rent: $415 p.w.
(+$5 from last year)
20 Years of Growth
March 1998 - February 2008 (Residex), March 2008 - February 2018 (CoreLogic)
$800,000
$700,000
$540,705
$600,000
$432,403
$500,000
$400,000
$300,000 $389,445
$323,568
$141,826
$200,000
$100,000
$129,474
$000,000
1998 2002 2007 2012 2018
+11.79% p.a. +9.59% p.a. +2.26% p.a. +1.87% p.a.
Apartment Market
Median Apartment Value Capital Growth Annual Sales Building Approvals
February 2018 Mar 2017 - Feb 2018 Mar 2017 - Feb 2018 Mar 2017 - Feb 2018
$389,445 -1.3% 15,178 11,802
Annual Change -11.62%
Vacancy Rate Median Rental Yield
3.4% 5.2%
1 year ago it was $392,769 1 year ago it was 3.6% Annual Change -17.4% Median rent: $380 p.w.
(-$10 from last year)
7Melbourne
Residential Property Market
Melbourne Economy by 7.0% during the 12 months result, it is likely that the city’s rising
For the 12 months to April 2018, ending February 2018. The median population will underpin demand for
Victoria experienced an economic apartment price is now $552,589. apartments in coming years. This will
growth rate 26.4% higher than its Rental yields are comparatively high be further driven by the increased
decade-annual average level of output, across Melbourne, with the average unaffordability of higher price-pointed
according to the latest CommSec rental yield for apartments being 4.3% property - which is starting to show
State of the States report. This level of with the median rent being $400 per signs of slowing down. As a result,
productivity has come from a variety week, an increase of $10 per week it is expected that more affordable
of sectors including finance, transport, from last year. Rental demand remains property will be in high demand over
healthcare, education and tourism. strong with a tight 1.4% vacancy rate the short term.
The Victorian government noted the for February 2018. For the year ended
historically huge numbers of people February 2018, there were 29,367
moving to the state, particularly in apartment sales. Building approvals for
Melbourne, which expanded by more apartments totalled 33,158 over the
than 125,000 residents between year, trending 6.01% higher the same Housing Market Highlights
2016 and 2017, leading all major time last year.
• Strong capital growth
capital cities for population growth.
To coincide with Melbourne’s surging • Supply continues to struggle to
population growth, the Victorian Melbourne Outlook keep up with demand
government announced that it will As a result of strong capital growth, • House and land at affordable
spend $13.7 billion on roads, railways affordability is becoming an issue pricing becoming more limited
and other infrastructure ahead of within the Melbourne market. House
this year’s upcoming election. This and land packages, particularly those
translates into positive news for the on the fringe, are becoming more
Melbourne economy, which is set to
Apartment Market Highlights
unaffordable, and harder to come
benefit from a combination of strong by. With affordability pressures • Well positioned apartments set to
population growth and infrastructure building, there is likely to be an benefit from strong infrastructure
investment. increased demand for more affordable investment
product such as apartments. This
• Relative affordability compared
has been evidenced in recent data
Melbourne Houses which has shown the Melbourne
to housing and shifting living
preferences to benefit apartments
Melbourne house prices grew by market recording the highest capital
15.7% during the 12 months ending growth rate across all five major • Incredibly tight vacancy rates
February 2018. The median house capital cities for apartments. In light of 1.4% with attractive yields
price is now $835,251. Rental of the evidence, concerns of a ‘new especially in inner city areas
yields have remained steady across apartment oversupply’ in certain
Melbourne, with the average rental pockets of Melbourne have not
yield for houses being 3.1% with a eventuated. In reviewing key indicators Market Strengths
median rent of $420 per week, an for the market, typical measures of
• Continued strong population
increase of $21 per week from last an oversupply situation would include
growth
year. Rental demand remains strong falling rents and higher vacancies –
with a tight 1.4% vacancy rate for however, the opposite has been the • Massive infrastructure investment
February 2018. For the year ended case.
• Strong jobs growth
February 2018, there were 55,944 Well respected social commentator
house sales. Building approvals for and demographer Bernard Salt
houses totalled 28,019 over the year, forecasted that Melbourne’s Market Challenges
trending 5.94% higher the same time population would surge past five
last year. million by 2021 and past eight million • Limited supply is likely to place
by 2050. Remarkably, at current further pressure on pricing
rates, Melbourne is set to eclipse • The affordability issue will impact
Melbourne Apartments Sydney as Australia’s most populated potential growth of higher price-
Melbourne apartment prices grew capital by as early as 2030. As a pointed product
8Housing Market
Median House Value Capital Growth Annual Sales Building Approvals
February 2018 Mar 2017 - Feb 2018 Mar 2017 - Feb 2018 Mar 2017 - Feb 2018
$835,251 +15.7% 55,944 28,019
Annual Change +5.94%
Vacancy Rate Median Rental Yield
1.4% 3.1%
1 year ago it was $732,732 1 year ago it was 1.7% Annual Change -10.5% Median rent: $420 p.w.
(+$21 from last year)
20 Years of Growth
March 1998 - February 2008 (Residex), March 2008 - February 2018 (CoreLogic)
$1,200,000
$1,050,000
$835,251
$900,000
$750,000
$600,000 $479,760
$450,000 $552,589
$300,000 $163,953 $355,712
$150,000
$126,946
$000,000
1998 2002 2007 2012 2018
+11.33% p.a. +10.85% p.a. +5.70% p.a. +4.50% p.a.
Apartment Market
Median Apartment Value Capital Growth Annual Sales Building Approvals
February 2018 Mar 2017 - Feb 2018 Mar 2017 - Feb 2018 Mar 2017 - Feb 2018
$552,589 +7.0% 29,367 33,158
Annual Change +6.01%
Vacancy Rate Median Rental Yield
1.4% 4.3%
1 year ago it was $517,231 1 year ago it was 1.7% Annual Change -11.5% Median rent: $400 p.w.
(+$10 from last year)
9Perth
Residential Property Market
Perth Economy houses totalled 11,140 over the year, recorded for February 2018. Looking
trending 12.34% lower than the ahead, property market conditions
The recent WA Super–CCI Survey same time last year. are expected to steadily strengthen
revealed that business optimism throughout 2018.
levels for Perth are at their highest
levels since 2011. With global
growth picking up for key foreign Perth Apartments
trade and investment partners,
international demand for WA Perth apartment prices declined
commodities and resources is set by 4.9% during the 12 months
to strengthen. Current figures are ending February 2018. The median
already showing positive signs, with apartment price is now $405,615.
exports growing at a strong 5% over Rental yields are comparatively high
the past year. across Perth, with the average rental
yield for apartments being 4.5%
In the short term, the state economy Housing Market Highlights
and the median rent being $320 per
is set grow by a healthy 3.25% week, which is consistent with last • Market remains affordable
2019-2020, a welcome sign for the quarter’s result. For the year ended
economy. According to WA Budget • Increased first home buyer
February 2018, there were 5,501
Papers, this upswing in economic activity in March 2018 quarter,
apartment sales. Building approvals
growth, will be primarily driven by with the market recording a 5.7%
for apartments totalled 4,776 over
exports in LNG, iron ore, gold and increase in house sales in the
the year, trending 10.51% lower the
lithium. sub-$500,000 price range
same time last year.
At the same time, the WA • Positive signs that the market is
Government as well as the Federal past its bottom and moving into
Government have continued to recovery
pour billions of dollars into transport Perth Outlook
infrastructure. The recent WA
Recent data suggests that the market Apartment Market Highlights
Budget injected an additional
is building on the momentum seen
investment of $1.1 billion towards • Attractive rental yields
in the latter half of 2017, with March
the METRONET project. With rising
quarter results showing improved • Supply is dropping significantly
exports and a solid infrastructure
figures across major indicators such
pipeline in place, the Perth economy • Well positioned apartments
as vacancy rates, average selling
is set to strengthen throughout 2018 will benefit from infrastructure
days, and vendor discounting.
and into 2019. investment
The market’s acceleration through
its recovery is expected to be aided
by increased investor activity, with Market Strengths
Perth Houses local investors looking to time the
market, and interstate investors • FIRB stamp duty charges have
Perth house prices declined by seeing opportunities outside the been deferred unlike other states
3.0% during the 12 months ending relatively unaffordable markets of • Market remains affordable
February 2018. The median house Sydney and Melbourne. Perth has
price is now $507,798. Rental also seen a significant upswing in • Opportunities exist for
yields are comparatively high first home buyers, with the March countercyclical investors
across Perth, with average rental 2018 quarter recording a 5.7%
yield for houses being 4.1% with increase in house sales in the sub-
the median rent being $360 per $500,000 price range. Vacancy rate Market Challenges
week, which is consistent with last continues to decline for the past
quarter’s result. For the year ended • Sustaining economic growth
3 months with December 2017
February 2018, there were 24,490 recording 4.6% vacancy, January • Maintaining momentum into
house sales. Building approvals for 2018 recording 4.4%, and 4.1% recovery phase
10Housing Market
Median House Value Capital Growth Annual Sales Building Approvals
February 2018 Mar 2017 - Feb 2018 Mar 2017 - Feb 2018 Mar 2017 - Feb 2018
$507,798 -3.0% 24,490 11,140
Annual Change -12.34%
Vacancy Rate Median Rental Yield
4.1% 4.1%
1 year ago it was $522,803 1 year ago it was 4.4% Annual Change -0.5% Median rent: $360 p.w.
(-$19 from last year)
20 Years of Growth
March 1998 - February 2008 (Residex), March 2008 - February 2018 (CoreLogic)
$800,000
$700,000
$507,798
$600,000
$501,775
$500,000
$400,000
$382,449 $405,615
$300,000
$135,399
$200,000
$100,000
$118,515
$000,000
1998 2002 2007 2012 2018
+14.0% p.a. +12.43% p.a. +0.12% p.a. +0.59% p.a.
Apartment Market
Median Apartment Value Capital Growth Annual Sales Building Approvals
February 2018 Mar 2017 - Feb 2018 Mar 2017 - Feb 2018 Mar 2017 - Feb 2018
$405,615 -4.9% 5,501 4,776
Annual Change -10.51%
Vacancy Rate Median Rental Yield
4.1% 4.5%
1 year ago it was $423,815 1 year ago it was 4.4% Annual Change +2.8% Median rent: $320 p.w.
(-$23 from last year)
11Sydney
Residential Property Market
Sydney Economy for February 2018. For the year ended Australia’s number one economic city,
February 2018, there were 48,368 and with strong population growth,
Sydney continues to be the economic house sales. Building approvals for massive infrastructure investment
powerhouse of the nation. In the houses totalled 18,007 over the year, and an easing credit environment, the
latest Commsec State of the States trending 0.92% lower than the same long term outlook for Sydney remains
report, NSW again achieved first place, time last year. positive. In the short term, Sydney is
recording top marks across major expected to experience some softening
economic indicators. NSW reported at higher price points, whilst most
an annual economic growth rate of Sydney Apartments affordable product is expected to
6.7% last year, significantly above the continue to be in solid demand.
Sydney apartment prices grew by 4.8%
national average of 5.6%. On a per
during the 12 months ending February
capita basis, NSW has been the fastest
2018. The median apartment price
growing state economy over the past
is now $774,951. The average rental
three years. Further, positive growth
yield for apartments is 3.9% and the
across global and national economies Housing Market Highlights
median rent is $530 per week, an
is expected to boost exports, increase
increase of $10 per week from last year. • Solid demand fundamentals with
business investment, and stimulate
Rental demand remains strong at 2.3% population and jobs growth
further jobs growth.
vacancy rate for February 2018. For
• Market remains undersupplied in
The Western Parklands City: Sydney’s the year ended February 2018, there
many areas
surging population growth, economic were 38,109 apartment sales. Building
performance, and strong employment approvals for apartments totalled • Expensive end of the market is
fundamentals have placed increased 35,902 over the year, trending 13.52% softening
demand on existing infrastructure lower the same time last year.
and transport corridors for the Apartment Market Highlights
Sydney CBD and Parramatta CBD. As
such, the NSW government recently Sydney Outlook • Surge in first home buyer activity
announced a $20 billion commitment likely to support apartment price
Sydney achieved record population growth
into transport, health and education
growth in 2017 with 100,000
infrastructure into a new Western • Supply reducing due to planning
people moving into the city. This
Parklands City. This forms part of the and lending constraints
marks the first ever time that Sydney
wider Three Cities Strategy envisioned
has experienced growth in excess • Relative affordability compared
by the Greater Sydney Commission.
of 100,000. Some of the leading to housing and living preference
Progress in this area has been rapid,
destinations have been North West set to fuel increased demand
with the federal government and state
and South West Sydney regions.
government, along with eight Western
Sydney councils, signing a landmark As a whole, the Sydney property Market Strengths
Western Sydney City Deal, which seeks market softened in the March quarter, • Vacancy rates remain low
to deliver long-term economic growth recording slightly negative growth. The
for the region. decline has been most pronounced • Medium to long term outlook
at the more expensive end of the remains positive
market with the top 30% of the prices • Sydney continues to be the
Sydney Houses recording an average decline of -5.8%. nation’s number one economy
This pullback at the more expensive
Sydney house prices grew by 7.3%
end, dragged the overall performance
during the 12 months ending February Market Challenges
of the market. However, a closer look
2018. The median house price is now
at the data, reveals a vastly different • Affordability is still a key concern
$1,110,212. The average rental yield
picture with approximately 60%
for houses is 3.1% and the median rent • Lending restrictions have slowed
of Sydney dwelling values actually
is $545 per week, an increase of $26 investor growth, although these
recording a slight uptick in dwelling restrictions have begun to
per week from last year. Rental demand
prices, when averaged out for the year. unwind
remains strong with 2.3% vacancy rate
The fact remains that Sydney is still
12Housing Market
Median House Value Capital Growth Annual Sales Building Approvals
February 2018 Mar 2017 - Feb 2018 Mar 2017 - Feb 2018 Mar 2017 - Feb 2018
$1,110,212 +7.3% 48,368 18,007
Annual Change -0.92%
Vacancy Rate Median Rental Yield
2.3% 3.1%
1 year ago it was $1,045,253 1 year ago it was 1.8% Annual Change -9.7% Median rent: $545 p.w.
(+$26 from last year)
20 Years of Growth
March 1998 - February 2008 (Residex), March 2008 - February 2018 (CoreLogic)
$1,200,000
$1,110,212
$1,050,000
$900,000
$750,000
$584,641 $774,951
$600,000
$450,000
$273,833
$300,000 $400,667
$150,000
$206,958
$000,000
1998 2002 2007 2012 2018
+7.88% p.a. +6.83% p.a. +6.62% p.a. +6.82% p.a.
Apartment Market
Median Apartment Value Capital Growth Annual Sales Building Approvals
February 2018 Mar 2017 - Feb 2018 Mar 2017 - Feb 2018 Mar 2017 - Feb 2018
$774,951 +4.8% 38,109 35,902
Annual Change -13.52%
Vacancy Rate Median Rental Yield
2.3% 3.9%
1 year ago it was $743,435 1 year ago it was 1.8% Annual Change -12.6% Median rent: $530 p.w.
(+$10 from last year)
13Sources
Residential Property Market
• Australian Broadcasting • Domain • The Conversation
Corporation https://www.domain.com.au/ http://theconversation.com/au
http://www.abc.net.au/
• Focus Economics • The Urban Developer
• Australian Bureau of Statistics https://www.focus-economics. https://theurbandeveloper.com/
http://stat.abs.gov.au com/
• The West
• Australian Prudential • Greater Sydney Commission https://thewest.com.au/
Regulation Authority https://www.greater.sydney/
https://www.apra.gov.au • Transport NSW
• Investopedia https://thewest.com.au/
• Australian Financial Review https://www.investopedia.com/
https://www.afr.com/ • Urbis
• Jones Lang LaSalle https://urbis.com.au/
• Australian Government http://www.jll.com.au/australia/en-
https://www.australia.gov.au/ au • WA Today
https://www.watoday.com.au/
• Business Insider • Reserve Bank of Australia
https://www.businessinsider.com. https://www.rba.gov.au/
au/
• Roads Online
• CommSec http://roadsonline.com.au/
https://www.commsec.com.au/
stateofstates • Smart Company
https://www.smartcompany.com.
• CoreLogic au/
https://www.corelogic.com.au/
• Sydney Morning Herald
• Daily Telegraph https://www.smh.com.au/
https://www.dailytelegraph.com.
au/ • The Age
https://www.theage.com.au/
• Deloitte Access Economics
https://www2.deloitte.com/au/ • The Australian
en/services/economics.html https://www.theaustralian.com.au/
Disclaimer
The information contained in this document has been collected by Ironfish from various government, public and private sources, which may include
property developers, builders and other industry participants. Neither Ironfish nor any representative of Ironfish gives any warranty as to the
accuracy of the information contained in this document and expressly disclaims any liability for loss or damage which may arise from any person
acting or deciding not to act on the basis of any of the information contained in this document. This document is intended to provide Ironfish investors
with general information only and does not constitute an offer, contract or inducement to buy. Investors are expressly recommended to do their own
due diligence in relation to any residential property investment decision they make.
14Resources
Residential Property Market
My City Reports My Market Reports My Property Reports
Our My City reports are an annual Our Research team monitors Extensive due diligence and
series of educational, magazine style Australia’s 5 capital city property research is done by Ironfish’s
publications that are an essential markets and publishes a quarterly Property and Research division
guide for investors to understand review that incorporates the latest on the merits of each approved
each major capital city, their unique property data, market commentary property, with key project
qualities and fundamental property and fundamental analysis of issues information, demographics and
market drivers. impacting each market. market research presented in a
Property Report for investors.
Portfolio Approach Ironfish Seminars PPA Software
Our Portfolio Approach to investing Ironfish provides regular investor Our educational Ironfish PPA
is a simple yet powerful strategic educational seminars in English Portfolio software tool has
approach to build step by step a and Chinese around Australia. been customised to ensure our
diverse portfolio of different types They provide up to date property professional Strategists can help
and locations and hold onto it over a market information and effective investors understand firsthand
10-15 year period. investment strategies presented by how to cash flow an investment
many of Australia’s astute property property and build equity over
experts. time.
15RESEARCH NEGOTIATION TIME-SAVING
Knowledge is power Group buying will always In a busy world, it pays
when you invest in be more powerful than to have professionals
residential property. acting alone. working for you.
“It’s not what you buy now, but what you own in 10 or
20 years that will make you wealthy.” – Joseph Chou
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through smart portfolio investing. As an industry leader, with offices in 10 cities across
residential property research Australia and China, we support our investors in acquiring a diversified property portfolio,
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