Download - December 2008 Month In Review
dec
embe
r
We advise. You decide.
- Property Valuations
- Tax depreciation Schedules
- research reports and other services
The month in
2008
review
�
The month in review
Page Topic
3 Feature - The Year in review
4 Ten New Offices for Herron Todd White
5 - 6 QS corner - Tax depreciation
7 - 17 commercial - retail
18 - 32 residential
33 contacts
34 - 39 rural
40 - 56 market Indicators
contents
Peace of mind for your property decisions.
cON
TeN
TS
�
The month in review
There’s nothing like a bit of drama to bring out the cliché generator. Frankly, we are still waiting for someone to sex-up the current economic situation so we can drop it into everyday conversation like we all knew it was about to come upon us. “credit crunch” and “Global meltdown” are all fine but “readjustment of the fiscal position” seems too wordy and just a teensy bit of an understatement. What we really need is for a clever commentator to define the situation so we can move beyond the periphery of trying to describe the damn thing and get about the business of sorting it out.
The month In review readers are a savvy lot and do not reside under rocks so you pretty much know that there was a recent sharp right turn in the world’s money situation and there were plenty who had forgotten to strap on the safety harness and affix padded head gear. The dead cat didn’t just bounce - it fell in front of a thrasher just to make sure that kitty was well and truly pushing up the proverbials.
At the beginning of this annum, things were looking uneventful. Forecasts took on the sort of earth tone colour scheme and soft focus that says “Get comfy – we’re in a holding pattern and replaying the in-flight film. Nothing to see here folks”. Then all of a sudden someone put the whole thing in Technicolor with a Vivaldi soundtrack. The market became drama tinged with tragedy. Few have been spared unless you had a large mattress stuffed with cash in the spare room (hopefully all in U.S. dollars).
In this month’s issue, our Herron Todd White offices are bravely facing their demons. We sneakily asked their opinions in February as to what was likely to happen in 2008. Lulled into a false sense of fiscal security, they put their best feet forward and came up with some gems for the tuned in property investor. The sucker punch has now come because, it is fair to say, the sudden upheaval was mostly unpredictable. Our contributors are now courageously facing the music and telling you how their prophesies panned out so you can uncap the red pen and mark our performance.
In Herron Todd White’s defense I would like to point out that we did, on the whole, pretty well. The nuances for your particular market are contained within but as a group we surmised that rentals would continue well, secondary property is at risk, the prestige market had potential to turn pale and mining towns would bear up but should be viewed with caution. There were plenty of opportunities for buyers to land in some extremely hot water but if you followed our office musings, you probably aren’t feeling too much sting.
The upshot is that you can’t beat a winning blend of daily “on the ground” experience teamed with near scientific analysis when it comes to common sense on the nation’s property market – a combination Herron Todd White has in spades. call us and find out what’s been happening and where it’s going in your suburban centre of interest. We have a specialist who can make sure you avoid pain and have a very festive year’s end.
We would also like to take the opportunity to say merry christmas everyone and thank you for being a part of Herron Todd White in 2008. Safe travels, much happiness and good fortune to all for this season and into 2009.
Now to pop the cork and get the party started….
Kieran claircertified Practising Valuer1 december 2008
The Year in Review
FeAT
Ure
�
The month in review
STOP THE PRESSES!
Herron Todd White grows by 10 offices in december!
Herron Todd White continues to grow with an additional 10 new offices coming online in december 2008 bringing the total to some 54 offices.
The merges result in Herron Todd White offices in busselton and bunbury (South West WA), deniliquin (NSW), mildura, Swan Hill, echuca, Horsham, Sale, bairnsdale and Traralgon (Vic).
The mergers have occurred with firms previously known as;
riverlink Valuers (Vic and NSW),
Southern Independent Property Valuations (WA),
cleary Valuers (Vic, SA, NSW),
Select Property Valuers (Vic, SA, NSW),
boyd Law & Wood (Vic),
Franz J. Tursi & Associates (Vic), and
central Gippsland Valuations (Vic)
contact details for each office are as follows -
Office direcTOr PhOne fAX emAil
busselton Shane Greaves 08 9754 2982 08 9754 2989 [email protected]
bunbury Greg Hardey 08 9791 6204 08 9791 6205 [email protected]
Lee martin
Tim clark
robyn Wills
deniliquin John Henderson 03 5881 4947 03 5881 6010 [email protected]
mildura chris cleary 03 5021 0455 03 5021 0466 [email protected]
Shane Noonan
Graeme Whyte
Swan Hill Ian boyd-Law 03 5032 1620 03 5033 1620 [email protected]
echuca michael eason 03 5480 2601 03 5480 2602 [email protected]
edward mceniry
david Leed
Horsham Franz Tursi 03 5382 6541 03 5381 0460 [email protected]
Sale craig mcmillan 03 5143 1880 03 5143 2890 [email protected]
bairnsdale craig mcmillan 03 5152 6909 [email protected]
Traralgon craig mcmillan 03 5176 4300 [email protected]
•
•
•
•
•
•
•
Ten New Offices for Herron Todd White
TeN
NeW
OFF
Ic e
S
�
The month in review
REPlacEmEnT cOST ESTimaTES for insurance purposes
Under insurance of your house or building means you may have to raise additional finance or sell your property for whatever you can get, to rebuild or replace your house in the event of its total loss. You may not be able to afford to rebuild in the same location/suburb.
Over insurance means you will be paying for more in annual premiums than you need to and will still only receive from your insurer the amount it actually costs to rebuild/replace your house.
Under or over insurance results from the property owner failing to accurately estimate the total cost of replacing/rebuilding their house/premises.
How to estimate the total cost of replacing your house for insurance purposes?
Simple ‘ready reckoners’ are provided by insurers to allow clients to determine their house replacement costs. Unfortunately, a September 2005 report by the Australian Securities and Investments commission (ASIc) called “Getting Home Insurance right” found that despite help by insurers and use of the ready reckoners, owners frequently continued to either under insure or over insure to a significant level.
However, the same ASIc report correctly identified a properly qualified Quantity Surveyor as the best professional to accurately estimate a replacement cost for insurance purposes.
A replacement cost estimate (rce) for insurance purposes provides the cost of rebuilding a property in the event of partial or total destruction. It includes the costs of demolition, site clearance, rubbish removal, professional fees, compliance costs, etc, as well as the costs of reconstruction and can be adjusted for inflation. In a partial loss, careful demolition is required to save the remainder of the building and this can result in more complex and costly procedures.
A Quantity Surveyor has access to a construction cost database and estimating techniques necessary to determine the cost of construction which is the cost required for your insurance purpose. A market valuation as provided by a Valuer is not the same as the cost of construction and can vary considerably over or under the actual cost of construction.
What will it cost and how often do i need a replacement cost estimate?
The expense of a replacement cost estimate (rce) for a commercial or investment property is tax deductible for the owner. Unfortunately, it is not tax deductible for residential homes occupied by the owner.
The cost of obtaining an rce from a properly qualified Quantity Surveyor will vary from property to property and depends on many factors e.g. property location, size, age, design, construction method, materials, complexity etc.
However, the rce expense may be amortised over a number of years as in most cases rce need only be done every 3 to 5 years or more depending on the type of property and the economic situation or inflation.
consequently, the cost of an rce for most suburban/city residential homes could average less than a couple of hundred dollars a year but owners will need to obtain a quote from a properly qualified Quantity Surveyor.
QS
cOrN
er -
TAX
deP
recI
ATIO
N
QS cornerTax Depreciation
�
The month in review
Who are properly qualified Quantity Surveyors?
members of the Australian Institute of Quantity Surveyors (AIQS) are properly qualified to provide rce for insurance purposes. AIQS members are subject to the Institute’s high professional standards and code of conduct (ethics).
Herron Todd White qualified Quantity Surveyors specialise in Replacement cost Estimates.
To find out more contact Herron Todd White on 1300 880 489 or visit our website www.htw.com.au
established 40 years ago and now with 54 offices and over 550 staff nationwide you can be assured of
*source: Australian Institute of Quantity Surveyors – “House and Building Insurance – Getting the Right Level of Cover”
Month in Review November correction
Herron Todd White acknowledge the income tax rate used in our TdS example were partially incorrect at the time of publication, our apologies.
QS
cOrN
er -
TAX
deP
recI
ATIO
N
QS cornerTax Depreciation
Peace of mind for your property decisions.
�
The month in review
commercial Overview
The retail sector is one that is above all else driven by consumer confidence. by definition it relies on spending to keep the machine turning over so it is one market that will front the biggest impact from tighter household budgets. It appears that earlier this year, there were some cautionary observations about which direction the retail market would head in 2008 despite (or perhaps because of ) the sterling results of previous years. regardless, not many would have predicted the dramatic fall from grace for the U.S. economy and the subsequent collapse of other financial markets that has seen some dire warnings for the global economic future. In this month’s issue, our offices have had a look back at the retail market’s performance, particularly in light of recent events, and have come up with their observations on the fallout and current position for those in each of their regions. by looking at the past year, lessons will be learned that will keep retail participants in good stead for future markets, both positive and negative.
Sydney
Inflationary pressure and interest rate increases in early 2008 has led to an adverse impact on consumer discretionary spending. This is evident with the monthly reported Westpac consumer Sentiment Index showing consecutive decreases throughout the year.
The Westpac consumer Sentiment Index is an average of component indexes which reflect consumers’ evaluations of their household financial situation over the past year and the coming year, anticipated economic conditions over the coming year and buying conditions for major household items. consumers are also surveyed about their views on buying conditions for cars and dwellings and the wisest place for savings.
However, the index surprisingly rose by approximately 4% in November, probably spurred on by the large reductions in the official cash rate by the rbA. despite this rise, the Index is still down over 20% from this time last year.
The outlook for retailers from the commencement of 2008 has been one of caution with household wealth being adversely impacted by a stagnant housing market, volatile sharemarket, increasing petrol prices and higher credit costs, all contributing to a tightening of consumer spending. This remains the case despite the rbA’s recent and projected reductions in the cash rate due to the lack of consumer confidence and the projected increases in unemployment.
Talk of recession in the US, eU, british and Japanese economies has impacted on investment and hence the need for retail space. There are now reports of looming job losses throughout Australia (particularly in Sydney which is the hub of the financial and property sectors), as the economy slows. This will most certainly lead to a reduced demand for retail space.
retail turnover growth, going forward, appears to be limited. This limited growth means retailer’s margins are reduced therefore limiting their ability to absorb increased rents. rental growth will be limited with an overall subdued retail-spending forecast based on increasing unemployment, exchange rate fluctuations, petrol prices and the general rising cost of living.
despite these growing negative trends, demand for Sydney retail is still strong. depending on the retail premises’ location, exposure, lease profile and other factors, sales and rental rates tend to vary. A high number of purchasers are owner occupiers, which will normally buy in at lower yields than investors.
This is evident with recent sales of shop strip retail across metropolitan Sydney. A 35m² retail strata in Quay Street Haymarket recently sold reflecting a yield of 6.4%. A 444m² freehold retail building in St marys, leased to the National Australia bank, sold on a yield of 6.5%. A two level building with ground floor retail and upstairs residence in Normanhurst, sold on a yield of 4.2%. A fully leased retail building in chatswood also sold on a yield of 4.7%.
cOm
mer
cIA
L
�
The month in review
Wollongong
The Illawarra area comprises faces opportunities and threats in the next few years as the importance of the manufacturing and mining sectors wane and new sectors such as education, tourism, retail, property and business services emerge as more dominant players in the economic base of the region.
The Illawarra was set to embark on a retail boom with around $600m worth of investments planned for the region. Some of these have now been shelved or put on hold due to factors which may have something to do with the Global Financial crisis (GFc), as money becomes harder to get and at rates which may not see projects work.
GPT and Valad both had major developments planned in the area, and local developer belmorgan was set to commence its Gravity Project in corrimal Street.
The retail boom would have had many positive flow-on effects for the region’s economy, particularly the commercial and residential property sectors with research showing Wollongong’s cbd was more than capable of accommodating developments of this size.
The retail structure of the area is diverse, with several larger malls, then generally smaller neighbourhood centres dotting the suburbs. bulky goods and outlet strips have also developed, echoing a national trend.
Vacancy rates for smaller retail properties across the Illawarra have been low, and shops in high traffic locations were generally re-leased quickly. many owners have not refurbished for years and the quality of stock is average in many cases in strip locations. Staring at a national retail sales trend which is going south, it remains to be seen what the retail leasing and sales market is going to do in the next 12 months.
Yields on sales are weakening however with the interest rate hikes biting into demand and borrowing capacity. The recent falls have been welcomed, but have not yet flowed into confidence given the uncertainty ahead. We have also noted that credit departments at the banks are looking at deals more rigorously. All the boxes must be ticked now for lenders to proceed.
2009 will be a year of uncertainty and treading softly, not only for the retail property market, but industrial and office as well. If Australia is not too hard hit by international influences, and the reserve keeps rates low, we see stability for the next 12 months, but certainly not the buoyant conditions of the past three years.
central, North & West NSW
dUbbO
The retail property sector in dubbo has been flat throughout 2008. Locally the prolonged drought conditions throughout 2005 to 2007 impacted on retail spending, which in turn has filtered through to the retail property sector. Overall, rental rates appear to be holding some slightly downward pressure on yields between 0.25% to 0.5%. There has been very limited market activity in the last six months with vendors either choosing not to list, fearful their price expectations will not be met, or being of the opinion that there are alternative investments vehicles that are more attractive to invest than retail property.
Purchasers are also in a non-active mode as they are unsure of the cycle stage of the market and are waiting until 2009 to make investment decisions. There is some market opinion within the property sector indicating value levels may fall in 2009, and as such purchasers are delaying their investment decisions.
We are aware of a recent sale in macquarie Street that indicates value levels are holding; however there are insufficient sales at present to accurately determine where the market is currently sitting.
bATHUrST
development of a new shopping centre providing approximately 11,000m2 of new retail space in the central cbd location is nearing completion and will increase supply. This will most likely place pressure on vacancy rates and also rental rates, in the secondary retail precinct. Yields are under downward pressure and demand for new space is softening.
OrANGe
Traditionally, Orange has had a strong retail property sector which is tightly held with low yields. Significant construction of both retail and commercial space is now resulting in supply being ahead of demand. This combined with a softening outlook for the mining sector, which may affect the local cadia Operations, is resulting in a softening in demand. Again there have been very few market transactions in late 2008 as the process of realigning vendor’s expectations with purchasers new value levels continue.
In our first report for the year we indicated that there was potential downward pressure on yields as the market had enjoyed a period of three to four years of increasing value
cOm
mer
cIA
L
�
The month in review
levels. We indicated that purchasers may begin pricing in an increased risk element on their investments due to the potential fallout of the US subprime mortgage market. Whilst the economic crash was much larger than anticipated, the commercial/retail property market has softened, but the falls have not been as large as could have been expected. At time progresses and vendors are placed in a position of having to sell in 2009, the full impact of the current credit crisis on the regional commercial and retail property sector will become more evident.
...the market behaved as expected, particularly during the second half of this year....
Southern NSW & Northern Vic
ALbUrY/WOdONGA
As we predicted at the beginning of the year, commercial and industrial yields have softened. New office space is still in shortage as not all of the expected development occurred. The new medical centre has been completed and is a welcome addition to the cbd. As with the whole market, the commercial sector is very cautious due to the prevailing economic, and in particular, financial conditions. There has been more activity in the industrial sector with some large developments completed and some currently under construction. Overall, the market behaved as expected, particularly during the second half of this year.
WAGGA WAGGA
When looking back at the year just past no one could have predicted the turmoil that has occurred on the global economic front and this has also affected the regional NSW city of Wagga Wagga. due to a large amount of itinerate workers in the area servicing railway and highway extensions, a large expansion at the rAAF base which has seen a influx of defence personnel, plus the usual number of soldiers at Kapooka army base and the students at cSU, it was thought that the local retail market would strengthen throughout 2008 even despite the drought. This may have been the case early in 2008 but the back half of the year has told a different story. more shops are becoming vacant and these vacancies are taking longer to fill. With no end in sight to the global economic crisis, the downturn in the retail sector may get worse in the coming year.
canberra
The canberra retail market can be defined by the hierarchy of cbd, Town centres, Group centres and Local centres.
The areas are all subject to differing factors effecting value and performance, generally as an area decreases in significance, the prices decrease and risk increases.
The canberra centre
All markets have experienced a significant reduction in sales volumes. The larger centres are tightly held by the major players of QIc and Westfield, with smaller centres’ sales volumes being very low with sales rare. currently only one centre, a group centre known as the chisholm Shopping centre, is for sale by the owners Over Fifties management (OFm) with a number of unfilled vacancies after a large refurbishment/extension project was carried out over the past two years.
Westfield Woden
Overall, the performance of the retail market has remained stable within the AcT as a year to year increase of 3.1% (September 2007 to September 2008) and a quarterly decrease of 0.3% in trade. The decrease in trade has generally been attributed to the increases in interest rates stemming from late 2007 and into early 2008 with the current economic crisis still decreasing consumer confidence within the industry from the highs of may 2007 (Source: AcT Treasury.)
From a property perspective, the retail market remains dominated by the cbd and the town centres, which house large retail developments owned by Westfield, QIc and Leda Property. These areas have continued to function well and have a lower amount of risk associated with cash flows that come with better locations, improvements and tenure.
cOm
mer
cIA
L
10
The month in review
The cbd centre owned by the Queensland Investment corporation has finished its’ extensions and totals the largest retail area the AcT. The development has a large number of new tenancies of which a high number are tenanted to well known majors and mini majors as well as the supporting single branded outlets and mixed shop fronts and a large food court, cinema and restaurants.
Westfield belconnen
The town centres have continued regional dominance of there respective areas with the recent announcement of an extension to the Westfield Shopping mall in belconnen from 98,150m² to 125,810m² including a new bus station, car parking, and landscaping. The works are expected to begin in early 2009 and reach completion by the end of 2010.
The Gungahlin Town centre differs to the other retail trades areas and generally performance is considered to be lower than the other established areas with higher vacancy levels, tenancy turnover, higher incentive and lower rentals.
The town centres located to the south are Tuggeranong and Woden. These areas remain stable with low levels of vacancy and continuing trades from the local areas.
Overall the primary retail market has remained stable for 2008 with declines in consumer confidence affecting spending habits within the AcT. Some hope for recovery does exist with the AcT still enjoying a higher average ordinary weekly earning compared to the rest of the country with a year to year change of 3.8% and a quarterly increase of 1.3% from $1,315.90 to $1,332.60. The national average weekly earnings is $1,145.10 which has grown at a higher rate of 4.8% year to year. This higher growth still places wages well below the AcT average.
The group centres have remained popular with performance found to be stable in line with the needs of consumer, being based upon food sales around anchor tenants such as coles, IGA, Aldi and Woolworths.
Overall investment performance has formed part of an overall downturn in property prices within the AcT. Purchasers are reassessing their investments with a market sentiment to hold property instead of release
the property to the market where values achieved will be lower than those found at the peak of 2007. Yield movement is considered, in the order of 100 basis points, with investors reassessing risk and growth potential of retail investments. The opinion is beginning to emerge in the canberra market that an oversupply is a possibility within the marketplace especially if spending continues to stagnate and growth is low. The newest player within the retail market is the opening of the dFO (direct Factory Outlet) in the industrial suburb of Fyshwick, which features a large number of brand discount outlet stores. This facility does have the potential to directly affect the retail turnover of the higher priced cbd and Town centre locations as the AcT draws from a population of 320,000 people.
On a local centre basis the market is still location and then price driven. With the decreasing importance of local centres, the performance of the market overall is considered average with lower selling rates and higher investment yields in the range of 8% to 10% net to account for risk and lower rental returns in secondary locations. Smaller investors have shown a general disinterest in local centre locations.
Further changes await the retail market in the AcT during 2009 with the extension of the Westfield in belconnen and the commencement of the bulky goods development in Gungahlin adding further stick into a market with a high level of stock developed off the back of the growth the Australia economy has experienced over the past 10 years. The market outlook is cautious with lower levels of growth and uncertainty in the financial markets expected to continue.
melbourne
earlier in the year we discussed the impact that consumer spending and sentiment has on the retail market in melbourne. Our main concern was that an increase in unemployment would derail consumer sentiment. While consumer sentiment has dropped as feared, unemployment has not (yet) been the cause.
The market for this type of investment had previously been very strong particularly throughout the period of 2006, 2007 and early 2008. buyers had large appetites for quality retail investments with well regarded tenants and, at the strongest point in the market, which we consider to be at or about late 2007, buyers were paying yields in the order of 3.5% to 4.5% in the prime strips such as ‘bridge road, richmond’, ‘Glenferrie road, Hawthorn’, ‘burke road, camberwell’, and ‘chapel Street, South Yarra’.
Since then the global credit crises and associated fall out has affected sentiment in all property markets in Victoria. consumer confidence is down with retail spending showing limited growth. Seasonally adjusted retail spending figures for Victoria published by the Australia bureau of Statistics show growth for the year to September 2008 of only 0.5%.
cOm
mer
cIA
L
11
The month in review
...there are reports that larger, national retailers are becoming more aggressive with their negotiations...
For commercial property this change of sentiment has mainly manifested itself through a lack of sales with sales volumes dropping sharply from 2007, a boom year for property in this state. This is apparent in the melbourne retail market with limited sales occurring in the second half of the year.
However, given the slow nature of the market, the sales that have occurred recently are showing surprising strength in the prime retail strips. There is also speculation that investors may be driven back into prime, quality retail properties by the poorly performing share market. A recent example is the November 2008 sale of 54 Puckle St, moonee Ponds. This property is located in the prime retail section of the Puckle Street shopping strip and is currently rented for $72,000 p.a. net. The sale price of $1.77m reflects a strong yield in the current climate of 4.1%. A cbd retail sale occurred at the start of November with 27-31 Hardware Lane being sold at auction. The sale price of $2.68m reflected a yield of 5.65%. It would seem that secondary retail properties are more exposed to the current climate with yields appearing to soften. Our earlier prediction of a more obvious yield premium between prime and secondary retail premises may yet be realised.
caution rather than panic seems to be the sentiment with retailers in the central business district retail area. Vacancy levels continue to be constant with a noticeable trend towards retailers downsizing their tenancy. The cbd laneways offer smaller, cheaper shops still with sizable amounts of foot traffic and demand for these areas has increased as tenants looks to save money on their rental.
There are reports that larger, national retailers are becoming more aggressive with their negotiations and are expecting higher incentives to sign long term leases. cbd leases are still being concluded in quality retail sites with an example being four new leases signed by fashion retailers at 264-274 Little collins Street. These shops range from 143m² to 170m² and have rentals in the region of $300,000 p.a. net.
Adelaide
discussion of the retail property market echoes many of the thoughts expressed in the residential commentary. early on, our February predictions were looking pretty good but a wobble then a skid occurred late in the year. While a full rollover and burning wreck has been averted, there is plenty of anecdotal evidence to support the view that the retail sector has slowed significantly.
A general level of caution has crept into the market at this time as consumer spending, normally entering a peak in the pre christmas period, is below anticipated levels. A number of potential lessees have opted not to take up space for the moment, adopting a ‘wait and see’ approach.
In light of an increasing vacancy level, rental growth is expected to slow, possibly with some shrinkage in secondary locations. Given the lower level of sales activity generally, yields have settled and growth in property values has slowed accordingly. market sentiment appears to be relatively pessimistic about any positive change to the current scenario in the short to medium term.
brisbane
The 2008 calendar year has been a shaky year for all asset classes, and the retail property sector is no exception. The year has been characterised by multi-national companies failing, government bail-outs and major economies heading into a sharp decline. This economic crisis has significantly weakened consumer confidence and slowed consumer spending.
The growth of the retail property sector is directly linked to consumer spending. In march 2008, retail spending was growing in line with the trend witnessed over the past seven years, however, in the quarters to follow, retail spending declined in line with consumer sentiment.
Since march 2008 the property market, in line with the broader economy, has significantly weakened. The effect on the global economic conditions has had a varied affect on retail property. The end of the market most affected by the turmoil has been plus $10m properties, which are generally controlled by funds and trusts. This end of the market has seen yields soften significantly and in some classes, such as homemaker centres, have begun to witness the return of double digit yields. This end of the market has also been affected by the significant lack of acquisition activity of institutional investors which has created shortage of demand in an environment where funds are scrambling to bring liquidity to their portfolios.
cOm
mer
cIA
L
1�
The month in review
Feedback from real estate agents is that buyers are now much more conservative and cautious than before. enquiry level has reduced, and investors have hardened their views on yields. Furthermore, results from commercial property auctions during 2008 have indicated falling clearance rates and lacklustre interest from buyers.
One of the earlier sales of note that provided an indicator of softening yields was of the Waterford Plaza Shopping centre for $21.5m in may 2008 showing an analysed yield of 7.7%. The property stands on a 2.34Ha site and is anchored by coles.
A more recent sale that provides an indicator of yields in the latter part of this year is the ‘Q1 retail’ component under the Q1 apartment complex in Surfers Paradise.
The Q1, Surfers Paradise
It went under contract in October for $7.4m evidencing an analysed yield of 8.7%.
Yields for larger value retail properties have probably softened by 1% to 1.5%. Whilst for smaller quantum value properties, or those in strong business areas such as the beachside commercial precincts or the established main centres such as Surfers Paradise, Southport etc. the impact has been less severe, experiencing between 0.25% to 0.75%.
rental growth has generally been maintained at levels within the 4% to 5% range, whilst those tenants tied to cPI growth have endured a slightly higher increment.
Faltering consumer confidence has impacted on retailers as Herron Todd White have noticed a higher incidence of rental disputes as sitting tenants question their ability to pay landlords higher asking rates when their turnover has plateaued or reduced.
In conclusion, Herron Todd White anticipates that conditions in the commercial property market will remain sluggish for the foreseeable future.
cOm
mer
cIA
L
The lower end of the retail property market has also softened significantly. This has, however, been more in line with the general demand for a higher rate of return as investors begin to price greater risk into their investments. The sub-$5m bracket has generally seen yields soften by 50 basis points for prime stock and up to 150 basis points for secondary and other stock. However, this has been more inline with general market sentiment, conversely to the upper end of the market which has grinded to a halt due to the global economic crisis.
Generally, the retail property sector has been hit the hardest of all the property sectors throughout 2008. The global economic crisis has had a significant impact on retail spending and consumer confidence which has heightened the risk profile of retail assets. The outlook for retail property in the short to medium term would be a weakening in rental growth rates and a further reduction in yields to reflect the increase risk and the dampened rental growth. The 2008 calendar year has been a difficult year for the retail property sector, however, as the global economy begins to recover and consumer confidence rises, the retail property sector, in line with the broader property sector, will begin a steady road to recovery.
Gold coast & Tweed coast
GOLd cOAST
It’s always interesting looking back on what Herron Todd White wrote in previous articles!
Key points in our contribution in February 2008, included:
commercial property market had peaked in late 2007, with yield and value levels stabilising,
dark clouds on the horizon due to global credit crunch,
Anticipation that commercial market would ease throughout 2008.
So, what has happened in 2008?
Global economic turmoil increased, with greater than expected impact on the Australian economy,
difficult conditions peaked in fourth quarter 2008, prompting interest rate cuts to kick start market confidence,
Gold coast experienced several high profile corporate failures, notably that of the raptis Group,
commercial market conditions have been subdued with few transactions occurring.
It is difficult to report on the performance of not only the retail market, but the entire market as a whole. The reason for this is that there have been so few sales from which we can draw a trend or reach any worthwhile conclusions. Of course, that in itself is a conclusion.
•
•
•
•
•
•
•
1�
The month in review
Sunshine coast
Wow, what a year. It started off looking strong with occupancy levels strong throughout all locations after a somewhat slower 2007, however the macro economic change really hit in about march.
The first sign of this on the Sunshine coast was at an in house auction night held by one of the largest commercial agencies in the area, where they offered four-sub $1m, leased retail properties that received only one bid. This auction was held in April. Previously these types of properties would have been snapped up by either the sitting tenant or active local investors. All of these properties had reserve prices that were in the high 6% range and this seemed to be the first indicator that confidence in price growth had disappeared from this market.
Further auctions that were held demonstrated the retail market was showing signs of slowing with few sales noted apart from in extremely tightly held markets. even so, these sales also indicated that yield levels had softened.
We also started to notice other signs that the retail market was slow with several high profile restaurants forced to close their doors during the year. The majority of these have since been released at lower rentals to what the previous tenant was paying, however, one high profile space at mooloolaba remains vacant. In fact the mooloolaba retailing precinct noted its highest vacancy rates in the last five years during 2008 and previously achieved market peak rentals may not be maintained on reviews.
rental levels have also stabilised for the bulky goods sector after completion of several complexes during 2006 and 2007. The majority of vacancies have now been filled in these centres, though at rental levels that were below rather bullish initial estimates.
moving into 2009 we see the retail market as remaining relatively slow as it appears to be the market that is most affected by the macro economic conditions and the lull in consumer confidence that goes with it. Vacancy levels are increasing slightly across the Sunshine coast and rental levels will continue to be affected until the confidence tide has turned. Therefore yields are likely to either stay at current levels, which are around half to a full percent softer than peak yields recorded in 2007, or soften slightly if vendors are forced into sale decisions.
Finally we would like to thank all of our clients and wish all and sundry a merry christmas and Happy New Year. See you in 2009.
Southern Queensland
TOOWOOmbA
...tenants are harder to find and vacanies are starting to increase...
The retail market in Toowoomba is well serviced by a cbd retail strip, a couple of bulky goods precincts and a number of convenience and regional shopping centres. Historically, most investment activity in Toowoomba occurs in the retail strip/convenience centre sector.
Like with most property in Toowoomba, it is not easy to gauge the true status of the retail market in 2008. during the year we saw only a limited number of sales of retail property. The biggest sale was of a large retail warehouse leased to a strong national tenant, which reflected a 7.25% net yield. The rest of the activity occurring within the cbd retail strip, with most being owner-occupiers. The sentiment in the marketplace however, is that yields softened slightly in the third and fourth quarters of 2008.
Toowoomba also saw little in terms of retail development with few projects being undertaken. There are, however, a number of planned projects for 2009 including the new coles anchored shopping centre in Glenvale and a smaller convenience centre in Wilsonton Heights.
After a couple of years of strong growth, retail rents appear to have plateaued, with most landlords now concentrating on maintaining a strong tenant mix, secured with long tenure.
cOm
mer
cIA
L
1�
The month in review
central Queensland
rOcKHAmPTON
The commercial market across all sectors stood up well during 2008 with strong growth in industrial and retail but less positive contributions from the office sector.
The major activity still focuses around the major redevelopment underway at Stockland rockhampton with a $93m integration of the previous K-mart Plaza complex into the main centre with the addition of a larger K-mart store, coles supermarket and 70 speciality stores plus additional car parking. construction is well advanced with Stage 1 to open mid 2010 and finalisation 12 months later.
The redhill Homemaker centre has expanded with purpose designed, stand alone buildings for Australia Post and Sportscene.
The owners of Allenstown Plaza have been acquiring adjacent lands for future expansion.
A third shopping centre has been approved in emerald on the eastern side of the Nogoa river with potential to more than double existing retail space, however, at the time of writing, objections have been lodged by the owners of the other two centres in emerald.
While there have been few new sales to gauge investor sentiment and local economic conditions remain favourable, Herrron Todd White notice an increase in the number of tenants and landlords seeking expert resolution of rental impasses at time of review. 2010 should follow the lead set during 2009.
bUNdAberG
The retail market in bundaberg began the year full of promise. rental rates were on the increase and yield rates were in the 7.25% to 7.5% range for good quality property. during 2008, the market generally deteriorated firstly as a result of rising interest rates early in the year
and then as the global economic problems became more apparent. confidence or a lack of it is now impacting on the commercial market. Tenants are harder to find and vacancies are starting to increase. rental rates are considered to have levelled off and may reduce if vacancies escalate.
There have been very limited sales of retail buildings in bundaberg since mid 2008 to determine the current yield rates for retail property in bundaberg. There is a recent sale of a good quality retail building with strong tenants at a yield rate of 8.45%. This indicates an increase in the order of 1% to 1.25% from 2007. Against that, we are aware of a contract to purchase a vacant stratum titled retail lot at a rate per square metre in excess of 2007 levels.
HerVeY bAY
At the start of the year all signs were for continuing growth with yield rates to remain firm in the 7.25% to 7.75% range and occupancy levels low. As is the norm for Hervey bay, a lack of sales evidence makes it difficult to determine what impact the economic situation and interest rate fluctuation has had on values. The recent sale of the Hungry Jacks and KFc/Pizza Hut properties on 6.23% and 7.3% yields respectively is a definite kick in the trend.
General market comments are that buyers are now factoring in a higher risk allowance for vacant premises to ensure letting up allowances are covered. most still consider that rates will go lower, therefore are not committing to contract until they are sure they can obtain the lowest yield possible.
Lack of stock is still evident, however to turn a positive spin, leasing rates are slow and therefore there is little chance of a shortage or oversupply occurring. As was the case in march, we are still awaiting details as to whether the proposed developments of bay central, extensions to centro and the Supercentre are to proceed. There is concern, however, as to whether the location can support such an increase in retail space if they do. rental rates have steadied as affordability for tenants to pay rent has now become a key issue. As the slowdown in spending continues, the ability of tenants to meet lease payments may become difficult and may lead to higher vacancy rates. managers and owner/managers need to ensure arrears are maintained at acceptable levels.
mAcKAY
mackay retail has been generally resilient to the global crisis which has unwound throughout Australia over the past year. The 1:200 year flood earlier in the year caused some havoc for retailers but the high cash injection into retail businesses by 4,000 households replacing damaged goods has cushioned a general trend of reduced retail spending seen in other places.
As we suspected, the flooding does not appear to have had any effect on retail property values. earlier in the year we were anticipating yield levels would ease due to interest rates increasing, but the impact of interest rates in our market has been largely offset by the prospects of strong rental growth as leases become due for market reviews.
cOm
mer
cIA
L
1�
The month in review
At present there are minimal retail vacancies which have been underpinning retail property values.
However, with the recent announcement by Lend Lease retail of a planned expansion of canelands central Shopping centre from 42,500m² to 67,500m² (to include a myer department store), the additional competition could temper future rental growth and demand for space in the city as the retail market digests the flow on effect of a 58% increase in the major regional shopping centre.
cairns
The cairns retail market had been strengthening slowly and steadily for a number of years but this trend has faded out during 2008. However, it must be said that retail property sales in cairns are extremely sporadic and there have been no retail properties of significance changing hands for some time. most sales involving retail property have been of mixed use retail/office buildings or tenant buyouts of single premises.
Vacancy levels in the retail sector remain low, with high exposure cbd prime retail space near fully occupied and only limited vacancies in lesser exposure locations and/or on the cbd fringe. rents have stopped rising.
Yields for commercial properties in general have eased back by about 10% from the record low levels observed at the start of the year. Though true retail sales are rare in the cairns market, we believe yields for retail premises at present analyse into the 7.5% to 8% range, from the 6.75% to 7.25% range at the start of the year.
Townsville
The retail market in Townsville has continued its’ revolution throughout the year with expansions now underway in one major shopping centre, and another two major centres with expansions in the pipeline. existing vacancies within these centres are minimal.
This year has seen the arrival of many new retail franchises to Townsville, particularly in the homeware and furnishing sectors that have established themselves at domain central. domain central is an outdoor lifestyle and homemaker centre and was completed in early 2008. It comprises over 60 retailers including furniture, electrical and homewares; many of which are new to Townsville.
The residential property market has seen a slowdown in house and land sales over the past 6 to 12 months.
Historically, people would build or buy a new home and redecorate. This slowdown has had a flow on effect to many retail businesses, particularly those offering big ticket items such as furniture, with some retailers forced to close.
Property sales in Townsville’s retail market have remained infrequent over the past 12 months. Yields have softened to 7.5% to 8%. The most notably affected sector of the retail market at present is the suburban strip shopping complexes. This is as a result of weakening yields and the overall economic volatility.
...there has already been noticeable declines in sale prices, as risks associated with these kinds of investments have increased...
darwin
retail spending in the Territory continues to grow at a far greater rate than elsewhere in Australia. The Territory has now recorded 19 consecutive months of double digit year on year growth, with current price retail turnover increasing by 11.3% for the year to August 2008, compared to the national average of 6.2% over the same period. While heavily qualifying their predictions due to the international turmoil, Access economics still predicts the Territory’s GSP growth to be 4.3% for the five years to 2012-2013 (almost twice that of most states, and second only to Western Australia), and employment growth to be the highest of all.
However, unlike the office and industrial sectors, retail rents have not been responding to the increases in demand brought about by this higher spending. In the main, rents have been rising by cPI or even less.
Apart from important location factors, one reason given for this is that there is an oversupply of many types of retail outlets in darwin, so the oversupply areas are being filled in (also, in the cbd, some former retailing areas are now used to absorb the demand for offices instead). The
cOm
mer
cIA
L
1�
The month in review
retail spending powering this infill, together will other still rosy indicators for the Territory (such as ANZ job advertisements to October 2008 being plus 7.8% for the year compared to minus 14.3% nationwide) is attracting some major proposals for retail development in the year ahead.
Two of those proposals – extending well beyond next year - are the Harbour Town centre at berrimah, which will contain about 120 shops and possibly much else besides, and a 43,000m2 bulky goods development by Ticor at the darwin International Airport. In the cbd and its vicinity, several of the proposals at various stages of planning prior to development application also have significant retail components, as does the ongoing development of chinatown.
While darwin’s growth projections are strong, it is still only a town of 120,000 people, so it is reasonable to predict that if all developments on the drawing boards go ahead there will be serious losers as well as winners, with the losers not necessarily being the developers. established retailers such as casuarina Square and the Jape Homemaker centre will be determined to consolidate their positions (in Jape’s case they have already announced a $10m expansion). Other things being equal, classic location and other retailing determinants (marketing strategies etc.) will determine the victors, but other things may not be equal. With a worldwide derivatives house of cards three times larger than the combined value of the world’s real estate, stock, and bond markets, darwin will not be exempt from the serious pummelling predicted by many if the current teetering turns into the feared total collapse. However, Australia is arguably one of the better places to be in the world to endure the consequences, and by the traditionally reliable indicators, darwin will be one of the best places in Australia to do so.
The year ahead is impossible to predict accurately under such potentially tumultuous conditions. How to balance a robust micro situation against such a dangerous macro one? If we were down south we would be much more pessimistic, but in balance we consider that the retail
rentals here should see mainly positive rental growth, but nothing like the spectacular results that have been achieved in other commercial/industrial sectors here in the immediate past. Also, unless Access economics or similarly authoritative organisations radically revise their predictions, we expect a relative stability of retail investment yields.
Perth
Overall Perth’s retail market over the year has been tightly held with few properties traded on the market, except for small strata unit sales. despite current global financial instabilities, Western Australia’s economy is continuing to grow. Unemployment levels remain a low 2.5% and retail spending is still showing steady growth at 2.1% (compared with a national figure of 0.3%) for the quarter ending July 2008. In addition, net migration to Western Australia is the highest in the nation, showing an average of 697/week for the 12 months ending march 2008. With interest rates and fuel prices declining, consumer spending should rise. Approximately 60,000m2 of GLA has been added to Western Australia’s retail stock this year and approximately 78,000m2 is forecasted for 2009. The lack of sales provide insufficient evidence of movement in yields and as vacancies for cbd, regional and sub-regional centres remain low with rents rising there is possibly little motive for owners in the retail sector to sell their holdings.
The most recent regional centre sale was a 25% interest in Karrinyup Shopping centre in January 2008 at a yield of approximately 5.3%. more recently, currambine marketplace, a suburban shopping centre, was sold for $52.5m at a yield of approximately 6.5%. However, given the current volatilities in the financial markets, the economic uncertainties facing our trading partners, rental rates at unprecedented high levels, the lack of investment capital among major institutional investors, it seems very likely that yields will fall in the near future. In regards to the lower end of the retail market, such as the older neighbourhood shopping centres and strip shops, there has already been noticeable declines in sale prices, as risks associated with these kinds of investments have increased with their obsolescence and their overall desirability declines.
current developments in the Perth cbd, such as century city, raine Square and One40 are large projects and only one of these projects, namely century city, is due for completion in 2009 adding 13,000m2. Approximately another 65,000m2 of space is currently due for completion by 2009, ranging from sub-regional to neighbourhood developments. based on current trends it seems likely that this additional space will further stratify capitalisation rates and prices, between the lower end properties to higher end.
The only real surprise in the retail property market over the year has been its overall resilience in light of
cOm
mer
cIA
L
1�
The month in review
current global economic and financial conditions, and low overall business confidence. Generally, the negative impact of these external forces has been balanced out by high construction costs. The high cost of building has dampened new construction; therefore supply of new space has been lower than expected. commonly after such dramatic rises in a market, equally dramatic falls follow, however Perth’s lower than anticipated supply has balanced out any falls in demand. Last month our comments regarding the lack of institutional buyers in the office market is also true for the retail market. These investors may not be in a position to reverse this situation for some time as they would mostly be lacking sufficient equity for further acquisitions.
cOm
mer
cIA
L
1�
The month in review
It is the job of good advisors to take an informed position and provide advice with the best information available. At the start of 2008, Herron Todd White offices from around Australia gave you their hit predictions on markets to watch and to avoid so that you could get a heads up on the opportunities and pitfalls that dot the property landscape. In a dramatic illustration of how fast modern times move, few could have predicted that the gradual slowdown in the economy that began in late 2007 would result in a dramatic plummet by the end of this year.
As equities markets retreat in spectacular fashion, the population is becoming coy about exposure to any sort of investment and residential property is feeling some of the brunt. regions have had mixed results within their own markets this year and some sectors have seen more retreat than others. despite the doom and gloom, it appears that smart investors have still seen some improvement in their portfolio. As you read this month’s issue, its at least a little comforting to note that if you had followed the advice from our professionals in February, you would have, for the most part, avoided too many troubles this year.
Sydney
2008 has been a challenging and unpredictable year for those within the property profession, the property investment market and owner occupiers. midway through the year, we had anticipated a backlash from the sub-prime mortgage crisis. Only now are we witnessing the negative effects on the international and local level.
Over the past few years, interest rate rises and supply/demand issues has placed considerable pressure on the mortgage belt suburbs of Sydney which have experienced dramatic increases in the numbers of “mortgagee in
possession” properties and large shifts in value. The global market corrections will see a leveling of these markets with less finance available to those determined as being unsuitable purchasers along with the implementation of stricter credit controls.
The federal government has attempted to revive life back into the residential property market by introducing a boost to the first home owners grant, raising it from $7,000 to $14,000 for existing properties and $21,000 for new properties. The new Housing Affordability Fund initiated by the Housing Industry Association will look to help reduce cost of new properties. Properties under the $500,000 threshold will be the market to receive most benefit from these initiatives which will also help stimulate the building industry.
The prestige market in Sydney has been largely immune to recent interest rate increases. Purchasers of properties over $1m have traded off strong share portfolios and secure employment. As we move forward from recent global events, the prestige property market of Sydney appears to be the one under the most pressure. We are beginning to see good quality stock on the market with limited purchasers available. Local agents have good supply in some areas. However, sales are yet to be recorded which in turn will indicate how values are being tested.
The occurrence of two tier markets (especially in the cbd) have and will continue to “blow the bell curve” of property trends in the local market because of the influx of overseas interest, extensive marketing campaigns and legislation restricting overseas residents to purchase new properties. Particular examples of residential developments with two tier markets are 101 bathurst Street, Sydney and the “Trio” apartments in camperdown. Purchases within developments identified as ‘two tier’ markets will continue to be closely monitored by those within the property valuation community.
The continuing bright spot from an investor’s point of view is that the Sydney rental market has remained in line from our predictions earlier in the year. The rental market has shown no signs of easing its financial pain on current and prospective tenants with rental vacancies remaining
residential Overview
reSI
deN
TIA
L
1�
The month in review
historically low and an under supply of properties. This has continued to put upward pressure on rents. As the property market has slowed and stagnated, it is a general consensus that location, location, location plays a major key in holding the value of the property.
Overall, the 2008 market has been slow, but if one can look past the current market climate, the real benefits of property ownership will pay off in long term capital growth. We anticipate the market will remain soft in the short term and sourcing of finances to take advantage of this will be an issue for some property investors. We also note that for those in a position to purchase we anticipate that real opportunities will become available from the present market.
Wollongong
Needless to say, 2008 has been a turbulent year for the Australian property market and the economy as a whole.
In the February month in review, we looked at the year ahead and made some ‘hit predictions’ for 2008. Now that the year is almost over, what did we predict and did we hit the mark?
below is an extract from the February month in review:
So what is the hit prediction for 2008 in the Illawarra? Stability in the market place and a static trend throughout the residential market is our prediction, although the effects of the recent falling stock market may transfer to more funds into direct property and the markets may lift accordingly. Although a static market sounds rather dull, it is a welcome relief for those people who purchased properties in late 2003 through to 2004, and have spent the last few years watching their properties decline in value.
For the most part, this has been the case. Sure, some properties still experienced a bit of decline but as a generalisation, most of the market place in the Illawarra region seemed to hold fairly stable in terms of property values. The latest IrIS report shows that the median house price rose 0.8% to $387,500 over the year to June 2008 and the median unit price remained unchanged.
Although this data only takes in the first half of 2008, our ‘on the ground’ observations would indicate that there was little change in property values for the latter part of 2008.
So let’s take a closer look at a few of the things that have happened over the past year that have influenced the movements of the property market:
change of Government
Interest rate rises in the earlier part of the year and then declines in the latter part
Increase to government incentives for first home buyers
Forecasts of increasing unemployment rates
Petrol prices spiking significantly throughout most of the year, although there is some downward pressure on petrol prices at the moment
Slowing of new development
rising rents due to housing shortage
And the big one – the sub-prime fall out in America and talk of a looming recession
So with all the changes and turmoil of 2008, how did the property market in the Illawarra maintain some stability?
Firstly, a lot of these things tend to balance each other out. rates went up then rates went down. consumer confidence was down with the talk of the looming recession but this is then off set to some degree by the higher incentives being offered to first home buyers.
Furthermore, it is the nature of these factors to fluctuate (i.e. interest rates) and the property market is a fairly slow moving beast. So when things happen in the economy that can have a detrimental impact on the property market, it can take a while to filter through at a local level. Often by the time it does filter through, the issue may have already corrected itself, thus alleviating any downward pressure on the market.
Although property values seem to have held fairly stable throughout the year, there have been some effects felt from the current economic climate. The IrIS report shows that earlier in the year to June 2008, sales volumes fell by 3.7% for dwellings, 3.6% for units and 10.8% for land sales. So there are simply less people buying and selling property at the moment, which is likely to be a direct result of the lack of consumer confidence within the market place. When there is talk of a looming recession, the cost of living is on the rise (with interest rates and petrol going up, as they did in the earlier part of the year) and job security is somewhat uncertain with rising unemployment forecasted, then people tend to get scared when it comes to things like buying or selling property.
Interestingly enough though, the IrIS report shows that unemployment in the Illawarra is on the decline for the year to June 2008. The average unemployment rate was down by 0.7% from the year prior and the unemployment benefits received went from 8,645 to 7,212. So the general consensus of rising unemployment may be somewhat of a false insecurity.
•
•
•
•
•
•
•
•
reSI
deN
TIA
L
�0
The month in review
Last but not least, the rental market was predicted to rise throughout 2008 and this has defiantly been the case. Agents have been reporting that the rental market is still experiencing an upward trend and that vacancy rates are very low. It was only a few months ago that there was not a single property on the market for rent in Helensburgh, which further highlights the lack of housing supply in relation to the underlying demand. The most recent IrIS data reflects this sentiment, showing that the median rental price for houses rose by 9.1% in the year to June 2008.
central, North & West NSWdUbbO
The ongoing drought in central and western NSW has had a negative impact on rural and regional economies. dubbo is heavily reliant on the rural sector and the drought has had a major negative effect on the local economy. In addition to the drought, rising interest rates, fuel prices and living costs appear to have created a more hesitant market.
Overall there is a limited demand for rural residential properties, particularly those that do not have a permanent or reliable water source.
Value levels have stabilised in the low cost housing range (up to $200,000) and sales are occurring within normal selling periods. The buyers have predominantly been first home buyers and local investors.
The demand for homes in the mid cost range ($201,000 to $399,000) in dubbo has softened over the last 12 months. However there has been no obvious downturn in prices with the median sale price holding at $230,000, but the marketing period for these properties has lengthened due to the increase in the number properties for sale on the market.
Values and demand for high cost homes ( over $400,000) has also softened, most properties in this market segment will require extended selling periods.
Overall there is a limited demand for rural residential properties, particularly those that do not have a permanent or reliable water source.
From 2008 to date, the median vacant land price is $106,500 which has fallen from 2007’s median value of $110,000.
As expected dubbo’s rental market has continued to experience low vacancy rates throughout the year, with the latest statistics from the for the September 2008 quarter from the NSW Government for Housing, showing the median weekly rent for a three bedroom property at $230/week and a four bedroom property at $320/week.
mUdGee
All markets remained steady throughout 2008 with the middle to high cost housing performing the worst.
Sales in this price bracket ($350,000 to $600,000) started the year relatively slow and never gained any momentum throughout. Listings continue to rise and sales activity is still very slow.
Low to middle cost housing ($150,000 to $350,000) remained steady throughout the year and was probably the best performer. Sales were very consistent throughout and there was no drop in value evident.
We mentioned in February 2008 that Stocklands were to begin construction in mudgee towards the end of the year, however nothing has happened yet! Aldi supermarkets opened last week in the main street and so far has started well with locals flocking to the shop over the weekend.
All in all the year has gone quite well for the residential market in mudgee! Hopefully the market can hold its own throughout the early part of 2009 and hopefully start to make gains in the second part of next year.
bATHUrST
For the bathurst and Orange areas we predicted that there were no real driving factors that would provide any substantial growth or huge amounts of market activity through 2008. We identified a few projects approved and/or under construction that would lead to some general activity which have come to being with the construction of a new shopping centre in central bathurst which is looking to provide an increase in retail employment. Another has been approved, however appears to have been shelved for the short term, possible to gauge the tenant uptake and see what the community response will be.
While the first half of 2008 saw steady sales rates and limited capital value growth the second half has seem a distinct drop in residential activity/sales and vendors having to sharpen their pencils in regard to asking price to achieve a sale. building activity has been slow with very few investors willing to speculate on property given the larger picture with regard to the “global financial crisis”.
Orange has tended to remain a bit stronger than bathurst mainly due to the influence of mine employees who still require accommodation and are willing to pay relatively well for it.
reSI
deN
TIA
L
�1
The month in review
In general we predicted that there were no strong indicators of pending growth or large increases in activity. This proved to be quite accurate in the early portion of the year and as with most localities the later portion of the year has seen a slowdown as people have tended to be a lot more cautions. In more recent times we have seen an increase of people refinancing and looking to take advantage of the lowest interest rates seen in quite some years.
Newcastle
The real estate market throughout Newcastle, like most of the country, has certainly slowed throughout 2008 – courtesy of the “Global meltdown.” At the start of 2008, we suggested that the recent interest rate rises, together with the continuing talk of more to come, had seen the residential market weaken in some of the mortgage belt suburbs (some 15km from the cbd), it is now the fear of unemployment that is causing demand to weaken, however with increased rents and an increased first home buyers grant, we are seeing some activity in the sub $400,000 price bracket.
We suggested that the more centrally located suburbs located within 10km of the cbd, could continue to see moderate growth in median sale prices as they generally accommodate persons with higher disposable incomes (the higher incomes allow these people to escape the inflationary pressures that can trap those in the mortgage belt suburbs.) However, a global recession does not necessarily bode well for those in the higher income brackets and we have seen sales activity weaken in the $500,000+ price bracket. Suburbs, such as Adamstown, Hamilton, merewether and cooks Hill, have seen sale prices generally remaining flat or weakening a little, dependant on the vendor’s timeframe for sale. Such suburbs will, in the medium to long term, remain popular as people continue to chase that inner city lifestyle with proximity to beaches and restaurants most important.
...tight vacancies, economic recession, interest rates rising…obviously these were the hot topics in 2008...
To the west, the mining towns of Singleton and muswellbrook have continued to benefit from the mining boom with low vacancy rates seeing rental returns increase and sale prices hold up. As we suggested however, if the now current global slowdown were to slow demand for Australian commodities, then it could be that the mining boom could also slow and the residential market in these two towns could slow as demand for housing slows.
While some inflationary pressures remain active in the domestic market, (especially food prices) it is the growing threat of a deep global recession, which will lead to growing unemployment, that is currently causing a significant number of investors and high end property purchasers to withdraw from the market in 2008. Investors active throughout all real estate markets in our area have been hit by the weakness of the share market, many margin calls have been fielded and this has caused an amount of real estate to be put to the market to free up capital. We are now seeing a return of the traditional investor that is more interested in the current rental return on capital invested rather than the investor that was less concerned about rental return as they were expecting short term capital growth.
certainly the long term outlook for the greater city of Newcastle remains a very healthy one as house prices are generally seen as affordable for property located on the east coast and within 25km of beaches.
Southern NSW & Northern Vic
ALbUrY/WOdONGA
“Tight vacancies, economic recession, interest rates rising and cutting off, first home buyers grant…..” obviously these were the hot topics in 2008.
Locally speaking, the Albury/Wodonga housing market has cooled significantly in the first half of 2008 following a sustained period of higher interest rates and rising living costs. After the federal government’s recent boost to the first home buyer grant, it’s likely we’ll see more people entering the house market either through newly built homes or established homes below $400,000. Indeed initial anecdotal feedback from local real estate agents, mortgage brokers and lenders has been that they have seen a jump in enquiries from this group. No doubt, it is a buyer’s market in 2008 in Albury/Wodonga. buyers have more options to look in suburbs that have strong positive attributes i.e. overall appeal, good schools, close to arterials etc.
reSI
deN
TIA
L
��
The month in review
As for prices, we have not yet seen them go backwards, although there has not been much upward movement either! Some agents have been reporting a slight pull back whilst others claim that prices are steady. We predict (probably unwisely given the events of the last six months) that prices may start to come back over the coming few months, but who can tell!
In the last few weeks vacancy rates have opened up a little bit in the rental market, however, this is somewhat attributable to the university year ending, and the impending silly season. rental returns are still strong as predicted, due to the strong base of rAAF personnel, university students, and ag related industries.
We are looking forward to 2009 and all its surprises!
LeeTON
my forecast for the year was a “very steady one.” I admit like many others I have been unpleasantly surprised by just how steady the year has been. Steady would be an optimistic term. Slow, very slow in some segments, is how it was.
The property markets throughout the mIA region continued to soften because the rain did not fall, the water allocations did not come and the economy continued to hurt. The supply of properties relative to demand continued to rise and consequently prices fell, in some instances up to 15%, but overall, between 5% to 10%.
The market which experienced the most pain in 2008 was those properties in excess of $330,000. As the saying goes, “the bigger they are the harder they fall” and this was certainly the case in this market. The middle market around $250,000 experienced the most activity and properties under $220,000 were thinly traded as investors and first home buyers sat on the fence.
If there is a positive, it’s the fall in prices has put the dream of home ownership for first home buyers back within reach. In recent weeks, activity in this sector has increased slightly, but sales volumes have not been significant enough to get excited about just yet.
In summary, a very tough year, but perhaps it was the correction we had to have. Time will tell.
canberra
The canberra residential property market, as with the rest of the Australian property market, started off the year on a strong note and experienced some volatility towards mid-year. At the beginning of the year, canberra was the fourth most expensive city in Australia for homeowners, with a median price of approximately $455,000. demand was strong, while stock was limited. To address the issue of limited stock, the AcT government had land releases planned for 2008, involving over 1,500 residential blocks to increase supply. The prediction in early 2008 was for a weakening in the canberra residential property market due to the substantial land releases.
reSI
deN
TIA
L
reNTAL mArKeT
The demand for rental properties is outstripping supply in Albury/Wodonga. According to statistics of NSW department of Housing, over the period from September 2002 to early 2008 (the latest data available) median rents in Albury LGA for one bedroom dwellings increased by 43.8% from $80/week to $115/week; two bedroom dwellings increased by 29.2% from $120/week to $155/week; by 37.8% from $180/week to $250/week for three bedroom dwellings, and for four bedroom an increase of 32.6% from $230/week to $305/week. rental levels in Albury are the highest in this housing market and compared with corowa ($148/week for two bedroom, $235/week for three bedroom), deniliquin ($130/week for two bedroom, $178/week for three bedroom and $200/week for four bedroom) and Greater Hume ($160/week for three bedroom).
renters who are saving for a deposit to purchase a home will have less saving power, thus making a house purchase even more difficult, particularly for lower income earners in the border.
making the transition from renter to home owner is something most young adult Australians aspire to. cutting interest rates and increasing the first home buyer grant are definitely good news to the people who want to own their first home. However, is this good time to buy property? – If only we had a crystal ball to see the future…
WAGGA WAGGA
Wow, what an unusual year we have had - no rain (not that unusual!), low interest rates, a booster for first home owners, and plummeting share prices... I wonder if anyone could have predicted all of this!
We started 2008 expecting another relatively steady/slowish year with steady/minimal increases in house prices and strong rental returns, and for the first few months of the year this proved to be true. Then along came higher interest rates and the lower end of the residential market started to feel the stretch. The real estate section in the weekend paper stated to fill up with houses under $275,000, whilst the top end of the market stayed relatively strong. The last few months have seen the tables turn, with rejuvenated first home buyers buoyed by the extra ‘dosh’ strong on the hunt for anything under $300,000, and the top end of the market suddenly feeling the crunch and attempting to sell up.
��
The month in review
Toward mid-year, a weakening was evident in the canberra market. However, the cause of the slow down came from another unanticipated event – the global credit crunch. In the mid-year period, a drop in property values was evident especially in outer mid-range suburbs. There was even scattered evidence of properties bought late 2007 in the stronger market, re-selling below their original purchase price. Selling agents were reporting low interest at auctions and longer marketing periods.
The reaction of the federal government to the slowing economy was to cut interest rates from a high of 7.25% in march 2008 to a low of 5.25% in November 2008. coupled with initiatives such as the first homebuyers grant, the home buyers concession scheme (canberra) and the land rent scheme (canberra), the effective result of government policy was a resurgence of interest in the property market.
Sales volumes, however, seem to have picked up the past three months. Selling agents are reporting a growth in transactions at the lower end of the market (less than $400,000), where the first homebuyers grant would be most notably in effect. With mid-range properties ($400,000 to $600,000), selling agents are reporting steady values and selling periods for properties that are realistically priced by the vendors. Properties that are ambitiously priced in an attempt to achieve values seen at the beginning of the year are receiving little interest. This is a further indication that canberra is a small and educated market. Properties in the upper range seem to have weathered the storm with values remaining relatively stable in canberra’s exclusive suburbs.
There has been a considerable increase in the construction of new unit developments this year. In the belconnen area, to the north of canberra, eight major unit developments are either under construction or commencing construction this year. A new project that has attracted much interest is the New Acton, mixed use development located on marcus clarke Street to the west of canberra cbd. With its unique design and high quality inclusions, the development has set a benchmark for canberra. Units are selling at an approximate median of $800,000.
Overall, the canberra residential market has faired well compared to other cities due to strong fundamentals such as a historically low unemployment rate. despite the volatility that occurred in 2008 and the substantial land releases, the median price in canberra has remained relatively static, remaining at $455,000 for the November 2008 quarter.
melbourne
With the 2008 calendar wrapping up, melbourne’s residential property market was faced with what has been a very eventful and unforeseeable year.
Interest rates have finally peaked with the reserve bank cutting the official cash interest rate by 100 basis points in October and by a further 75 basis points in November.
This is on top of an earlier rate cut in September and is an unexpected boost to the economy and the property market, even though the full cuts were not passed on by the banks. This is welcome news for homeowners and investors, who will also now enjoy further incentives to purchase or construct new dwellings given the recent announcement to double and in some instances triple the first home buyer grant.
With the credit crunch in full swing, acquiring money has become more difficult and there has been a substantial tightening of financial conditions for any person taking out a loan. Lenders are simply less willing to take “risk”. This has meant that low documentation loans are more difficult to get through and some cases have been abolished by banks altogether. Lending approvals are generally taking longer.
Whilst the melbourne residential market softened in the first half of 2008, generally it has remained quite resilient in light of a very challenging global economic environment, rising inflation and higher petrol prices. With rates now on a downward trend, many agree that this should drive a lot of buyers back into the market, which may result in an increase in buyer confidence which means higher sales volumes and rising house prices. In saying this, many buyers have been cautious over the past few months waiting on more interest rate cuts which are expected late this year and early into 2009.
Of particular note is the first home buyer segment, which generally applies to properties in the $300,000 to $500,000 bracket. This segment has remained moderately healthy. A city agent has commented that of 12 listings they sold in October, all were first home buyers.
In light of the above and our forecast predictions for 2008, inner urban areas outperformed outer areas due in part to melbourne’s efficient public transport system, particularly with high petrol prices and rising cost of living. Key areas in and around the city like Southbank and docklands are particularly sought after for this very reason. Furthermore, outer areas such as Frankston and rowville have benefited, as we predicted, given the opening of the eastLink Tollway, which has eased pressure on peak traffic congestion.
reSI
deN
TIA
L
��
The month in review
In overview, many expected melbourne’s property market to be positive or at least remain stable into 2008 given completion of new infrastructure works and moderate demand fuelled by above average population growth. In hindsight, with the stock market meltdown, the Global slowdown and the credit crunch which have decreased buyer incentive within the property market, we have seen demand and property values weaken through 2008.
Adelaide
Predictions at the beginning of the year were of blue sky ahead, largely on the strength of the resources sector and expansion of mining operations in the north of the state. The market was being constrained through interest rate adjustments and we were beginning to focus on Australia’s medal prospects in the beijing Games later in the year!
during the mid and latter parts of the year however, unprecedented upheaval in the US economy dramatically altered global markets – the tremors being felt throughout Australia. While South Australia has historically experienced less severe peaks and troughs in the property market relative to the east coast, local markets have definitely been affected with a reduction in the volume of sales and also a general lengthening of selling periods evident for most property types.
Some markets are showing signs of becoming ‘segmented’ – a differentiation between various housing types being identified. This is noted in the Iron Triangle region where demand for older, smaller housing stock, previously favoured by interstate investors, is waning.
...who would have thought 2008 would turn out the way it has?...
The resources sector does not look as bullet proof as it did either, with a drop in commodity prices as the previously booming chinese economy tapers off. The level of interstate interest in local property markets too, appears to be declining as investors seek to manage their affairs closer to home. Interest rates have been repeatedly cut in an effort to stimulate economic activity and newspapers are full of reports of meetings, summits and the like as world leaders attempt to control the situation.
A general observation of the property market is that, while activity is continuing for the most part, players are putting plans ‘on hold’ until the economic situation becomes clearer. Similarly, property market observers admit that the future is unknown – and changes on a daily basis as world events unfold.
In conclusion, early predictions for 2008 were largely abandoned by the latter half of the year. There is no concrete evidence of any one sector of the local property market having been affected more than another rather there has been a general dampening of activity. The Global Financial crisis (GFc) is a hot topic – one that becomes more complex by the day.
brisbane
The tail end of ’07 saw the great South-east basking in a warm glow as we sprinted towards the finish line despite a bit of a slowdown some months earlier in reaction to the interest rate rises. We were all chuffed with the national psyche stating that if you are going to invest anywhere going into 2008, then brisbane was the spot.
With that in mind, we were due to see some consolidation in 2008 and our office’s conservative approach was to say capital growth will play its part albeit at a more subdued pace. Fundamentals remained strong with interstate immigrants continuing their trek north and industry boisterous about what a great place brisbane was proving to be.
So how did it shape up? Well mostly everything was going according to plan until about early mid year where some changes were in the wind before a little something happened in early October to realign reality.
Our call was that the inner city unit market had reached a solid floor price of $300,000 and was not likely to retreat any further and that $500,000 was as low as detached housing was likely to get within a reasonable distance of the cbd. Although not a startling “out-on-a-limb” prediction, these musings have proved true and it is fair to say that this inner city lower price bracket has proved the most resilient of all sectors going into the end of this year. There are buyers and they will jump when the price is right.
earlier this year the cashed up semi prestige buyers were rolling in dough and staying very active. Agents were noting that there were plenty of people with $1m+ to spend but even before the credit crunch (let’s just call that “cc” for brevity), the figures looked unsustainable. This has proved true and this piece of market pie is drying up like last year’s mistletoe. buyers are very coy and owners who had overstretched themselves to get into the good street and park their leased european car and wide screen high definition TV are now looking at a bleak 2008 cashflow position with plenty going on the market in an attempt to avoid mortgagee in possession pain. Our valuers in the know are now suggesting a retreat of between 5% and
reSI
deN
TIA
L
��
The month in review
10% in this market since last year depending on property type and location.
mid ring suburbs were our likely pick and we are proud to say that would have panned out well had it not been for the cc. Properties with a price tag of $280,000 for units and $390,000 for houses were probably the most resilient, particularly when well positioned in relation to transport and services.
It is also worth noting that, once again, the old cliché’s rung true this year. When markets slow, secondary property is always the hardest hit so no matter where you live, if you front a main road, rail track or high tension power line you may have a hard time sourcing buyers and until things get glowing again it’s probably a case of sit and wait.
Our pick suburbs of carina and Salisbury fared comparatively well. While we were hoping for more, a 3% to 4% rise in value seemed good enough for the year although we concede this is a general observation with some property types performing better than others. One of the areas hardest hit in the south has been has been Logan city with our boys and girls reporting too much stock and too little interest going into year’s end.
Our gun pick of redcliffe was a bit of a fizzer unfortunately. A great illustration of how this sector has reacted to the cc, older canal front blocks which represented good buying at $800,000 have ne’erly moved an inch while the number of transactions above $1.2m for the more prestige stuff has pretty much ground to a halt. It appears that these are the buyers and sellers most damaged when equities fall and borrowing becomes a bit tighter.
So overall, Herron Todd White brisbane has given itself a b+ on this year’s report card. If you followed our advice you may not have made your fortune, but you are certainly breathing a little easier than many others.
Gold coast & Tweed coast
GOLd cOAST
Who would have thought 2008 would turn out the way it has? We figured it had to slow (given the heights of 2007) but did not expect the crash we have seen. We did mention that inhibitors to growth would be rising interest rates and global uncertainty. These two factors did affect the market in different ways. The march interest rate rise was the first hurdle with demand for property softening significantly in the second quarter of 2008. Global uncertainty (which is a nice word for ‘market crash’) had a much more significant prolonged effect on the property market. The continual slide of the stock market and global economy in general had major flow on effects for the property market which will be seen for some time to come.
No one property sector on the Gold coast has been spared from the softening in values. The waterfront market appears to be one of the hardest hit, especially around the central locations of broadbeach Waters, bundall and Surfers Paradise. The market in these areas performed very strongly in 2007 with a broad capital growth increase of up to 30%. This growth has all but been eliminated where values currently being achieved are more reflective of market conditions in late 2006.
Sanctuary cove and Hope Island resort appear to be holding their own in the waterfront market. Their integrated resort status allowing resales to foreigners without FIrb intervention, means they have a world market. Agents advise that enquiries from ex-pats, earning US dollars and Pound Stirling, are increasing as they are effectively getting a 20% discount due to the current price of the Australian dollar.
Some of the prime beachside locations (currumbin, mermaid beach) did hold their ground for some time through the second quarter of 2008, however even these areas have now been affected. Agents within currumbin have been talking a drop of 10% in the last two to three months at the upper end of the market, say in excess of $1m. The beachfront market at mermaid beach has had its slowest year for some time with sales prices softening but to date there have been no ‘fire sales’. The softening in the prime property sector appears to have been a result of the crash we have seen on the share market in the last two to three months.
market values of rural/equine properties on the Gold coast and in the beaudesert Valley have been tightening in 2008 with very few sales occurring. Values could be down as much as 20% on what could have been achieved in 2007.
The Gold coast property market does rely quite heavily on the investors. With investors scarred from the market in early 2008 by interest rate rises and subsequently by other economic pressures, those areas on the Gold coast highly investor driven have suffered some significant losses. The northern corridor (between Oxenford and beenleigh) is considered to be an area dominated by rental properties. Whilst the rental market remained strong throughout 2008, house and land supply continued to increase with
reSI
deN
TIA
L
��
The month in review
the stall on turnover of stock. This has obviously had an affect on market values which have shown as much as a 10% to 20% drop.
The unit market on the Gold coast is investor driven. There is currently a good selection of high-rise units available for sale in broadbeach, Southport, coolangatta/Kirra and Surfers Paradise. A majority of the units currently available for sale include both developer stock and resale stock within new developments. A large proportion of the resale apartments are being offered for resale by distressed owners and hence have asking prices which reflect a reasonable discount on both their original sale price and also the price levels of the balance new apartment product in new unit projects. In this respect, it is very difficult to attract sales of new apartments given the more competitive pricing structure of the resale apartments. A large proportion of new apartment product on the Gold coast is sold to interstate and to a lessor extent, overseas investors at price levels which are considered to be in excess of local market values. It will take some time for these stock levels of units to be absorbed especially given the current soft market conditions. Some purchasers, who bought ‘off the plan’ 12 to 24 months ago, are foregoing their deposits before settlement on new product rather than absorbing the loss in market value on settlement.
There is currently a good selection of the property on the market with some vendors needing to sell. Vendors are being advised by their selling agent that if they do not need to sell they are ‘flooding’ the market with extra supply. Following an auction from the second week in November, properties at the lower end of the market, say less than $400,000, are still selling (whilst at a discount to what could have been achieved in 2007 or early 2008). Properties listed in excess of $400,000 and more so in excess of $1m, are showing limited interest from prospective purchasers. We are currently seeing some good buys across the board. Whether these properties appear to be good buys in six months time is an interesting quandary for purchasers. Purchasers’ hesitance to commit to some contracts has been frustrating for vendors and agents with a number of contracts falling over.
It appears there will be more pain to come however for how long and to what extent is difficult to predict. The property market of 2007 is a distant memory with current market values being more reflective of values achieved in 2006. The possibility of a recession and rising unemployment will put a further dampener on
confidence. On the upside, some investors may be lured back into the market by falling interest rates especially given low vacancy rates and the strong rental growth over the past 12 to18 months. The low vacancy rates however do apply more to houses than units. Another positive for the Gold coast is continued interstate migration. Population growth has been strong for many years and doesn’t look like receding.
TWeed HeAdS
Like the Gold coast, the Tweed coast has seen a downturn in demand for property since the start of the second quarter of 2008. We stopped short of making any bold predictions on growth in the Tweed coast property market in 2008. Given what has happened in the last eight months we are glad we didn’t.
In all market sectors there have been limited sales throughout 2008 to determine an accurate assessment of how far the market has softened. Some agents are reporting a drop of up to 70% in sales turnover. The areas dominated by owner occupiers; banora Point and Tweed Heads, especially houses, appear to be the areas less affected by the market slowdown. It is however, fair to say that owner occupiers are sometimes the most likely vendor not to sell in a falling market. They will generally “sit on their hands” and ride out the market turmoil. The most affected sector of the market is holiday units. Occupancies have not been great. This sector of the market was not performing even before the global economic/stock market problems. There is an oversupply of holiday units on the Tweed coast especially in the Kingscliff, Salt, and casuarina areas. developers have been offering cash backs, and furniture packages to lure prospective purchasers. There has been a very limited turnover of holiday unit stock in these areas in 2008 and we have seen significantly more forced sales than 2007.
The beachfront market has not been spared. The beachside estates of Salt and casuarina have seen very few house or land sales in 2008. There is a very good selection of property currently listed on the market with some vendors not necessarily prepared to meet the market to achieve a sale. both estates saw excellent growth in 2007 with record sales achieved especially on the beachfront. These sales now appear a distant memory with some recent sales showing up to 15% discounts on values achieved in 2007. Land is also slow to sell if not priced competitively, given the rise over the past 18 months in construction costs.
Given the current supply of property on the market, it will take some time before we see some “light at the end of the tunnel”. Also should there be any further negative press or problems in the global arena the tunnel may cave in. Further cuts to interest rates and the rise in the first home owners grant may fuel some buyer interest at the lower end of the market however prestige properties in excess of $1m won’t see any real benefit. Vendors not serious about selling are best to adopt a wait and see approach, however those who have to sell will have to meet the market to achieve a sale.
reSI
deN
TIA
L
��
The month in review
Sunshine coast
Well, who would want to go through the 2008 roller coaster ride again? Interest rates and petrol prices increased and are now on the way down, the share market halved in value and we have seen erosion in both consumer and business confidence to new lows. rarely do we see downturns in the equity and property markets together, but that’s our current reality.
In February we predicted the property market to bubble along reasonably well, however this was on the proviso that the economy remained relatively stable and that there was continued infrastructure spending on the Sunshine coast. The global financial crisis and in particular its knock on effects to the Australian economy,was not predicted, and the ensuing crisis of confidence has negatively impacted the coast’s property markets.
broadly, the position is that the adjustment to prices which had begun by mid 2008 will continue until confidence restores, probably in the second quarter of 2009. The affordability issue will be improved by eased prices and lower interest rates. The coast is not in stock oversupply, population growth continues (if a little more slowly than previously, but still strongly by national and Queensland comparisons) and rentals remain firm – so the fundamentals are in place.
We think that investors are likely to cycle back into property after enduring the volatility of the equity markets – at least up to long term averages.
Within this context we review each of the broad market sectors.
The market for homes up to $500,000 has been reasonably well traded with the least price volatility. Lowering interest rates as well as the increases to the first home owner grants and stamp duty reductions will put a floor under this market.
Homes in the $500,000 to $1m price range are where the majority of market volatility exists. These properties are quite often lifestyle/discretionary in nature and subsequently are more of a ‘want’ rather than a ‘need’. Vendors in this sector typically have to reduce asking prices to achieve sales. Some agents are asking their vendors to remove their property from the market if they are not serious about meeting it. There are buyers out there, but they will not commit unless they are seeing great value by purchasing below replacement cost.
Homes in the prestige sector are similarly, or even worse, affected with many of these owners exposed to the equity market. Holiday/beach homes are collateral which will need to be rationalised and we have seen significant reductions in sales volumes and enquiry.
Units did not see the same increases in prices and sales volumes as homes up to late 2007 with investor interest slower than for housing. There is some completed
developer stock in the market which is likely to be under pressure from funders for clearance and we are seeing price adjustments here, as well as in the above $500,000 market for existing product. The under $500,000 sector, particularly the $300,000 to $400,000 older stock close to the beach, is likely to see improved demand next year from first home buyers.
On the back of reduced volumes in unit sales and increased price competition from built product, there are a number of unit developments that are being postponed or cancelled.
The first half of 2008 saw demand for vacant land continue, with a number of new stages receiving good levels of uptake. The second half has seen the slowing housing market producing increased price competition from established homes, which, combined with ongoing increases in building costs, has affected the viability of house and land packages, which has lead to a reduction in sale volumes. Within the various estates, developers are now offering purchase incentives to increase sale rates. A continuing problem for developers is high development costs and infrastructure contributions being required by local authorities to provide these vacant allotments.
Long term the fundamentals for property on the Sunshine coast remain positive. A big challenge is that investment in infrastructure projects for the coast has to be continued for it to carry on being one of the best places in the world to live, as the lifestyle offering is great.
Southern Queensland
TOOWOOmbA
GrowthYear%2007 2008 Trend
Glenvale 10.7 -4.7 down 15.4
mount Lofty 14.3 -3.9 down 18.2
centenary Heights 8.2 -2.1 down 10.3
Harristown 7.6 0.7 down 6.9
east Toowoomba 19.2 1.7 down 17.4
rangeville 10.5 1.8 down 8.7
Newtown 12 2.7 down 9.3
Sth Toowoomba 8.8 3.1 down 5.7
middle range 5.8 2.2 down 3.3
Nth Toowoomba 10.9 6.5 down 4.4
Highfields 8.7 5.4 down 3.3
Harlaxton 16 10.7 down 5.3
Toowoomba city 9.6 10.5 up0.9
Average 10.9 2.7
Source: Property data Solutions
reSI
deN
TIA
L
��
The month in review
The above chart lists the percentage variation over the past 12 months for each Toowoomba suburb. Generally growth in 2008 has plateaued with some suburbs reflecting a slight downfall and sale volumes are down around half of that of 2007. A number of quick judgments could be easily constructed from the above percentages if the facts were not available, however Toowoomba overall has generally maintained a positive growth pattern where affordability has been the underpinning factor as predicted.
A mixture of results from our predictions in February have been distorted from the impact of the US sub-prime market, inflation and interest rates. Other major local impacts on the Toowoomba market this year have been the amalgamation of the regional councils, the water recycling debate and the lack of a domestic airline service.
As predicted, the market did show some good positive growth for property less than $250,000, which is highlighted in the suburbs of Harlaxton, Toowoomba city and North Toowoomba where there is a high proportion of established timber housing available in these areas.
Our eastern suburbs continued to show positive growth although east Toowoomba’s growth is limited. due to the strong demand for character homes in this suburb ,growth through 2007 was exceptional but has not slowed. We consider those areas close to amenities, such as the Toowoomba cbd, to be sound for investment purposes. The western suburbs were the worst performers appealing principally to a slowing investor market.
The mining and energy sector is no doubt having some influence on our market however it appears that the aforementioned local specific factors continue as major issues for Toowoomba. To put the impact of the mining and energy sector in perspective for our regional areas; dalby had 13.3% growth and Kingaroy had 21.1% for the year 2008.
...in the face of of the rapid decline in sales volumes, the median price of vacant land has remained strong...
The general perception last February was that the Toowoomba market was not overheating and there were signs of a more ‘bullish’ market ahead due to the our proximity to brisbane, our younger generation showing more interest in Toowoomba property rather than an older more conservative set and the general lack
of housing availability. Now, 12 months down the track we could say this is still apparent but is not shown in the statistics. When buyers regain confidence and vendors stop being over anxious, the only way should be up due to a number of factors which include; the increase in the first home buyer’s grants, low interest rates and low unemployment in the region, so hang on!
IPSWIcH
Since January, sales volumes for improved lots have decreased to levels below that of 2002. The median price has fluctuated between $300,000 and $315,000 on a monthly basis since January and sales volumes have reduced by approximately 50% from levels in 2007. Vacant land sales volumes have fallen to less than half of what was achieved in 2007. In particular, the months of may (54 sales) and June (42 sales), demonstrates the extent of the decrease in activity. In the face of the rapid decline in sales volumes, the median price of vacant land has remained strong at around $160,000.
Sales volumes of improved properties in Springfield peaked in may 2007 with a total of 76 sales. From June 2007, sales volumes have dwindled to levels of that in 2002 and in particular the months of April (30 sales), may (18 sales) and June (24 sales) demonstrate the rapid decline. The median price of improved lots has fluctuated between $375,000 and $390,000 monthly since January.
Vacant land sales in Springfield have not declined as drastically as improved lots, however levels have been volatile from month to month. November 2007 recorded 104 sales in total and January 2008 only 44 sales were recorded. April recorded the lowest volumes for the first half of the year with only 21 sales. may had a total of 76 sales and June recorded 34 sales. The median price of vacant land has fluctuated between $170,000 and $190,000 since January.
central Queensland
rOcKHAmPTON
In January this year, we were waiting for flood waters to come down the Fitzroy river. The floods provided significant recharges for the lagoons and grazing flood plains around the city but had only relatively minor effect on the built-up sections of rockhampton.
We then expected growth in the rockhampton and Yeppoon unit markets with a number of projects planned for Yeppoon and a growing interest in centrally located sites in rockhampton. It seems rising building costs have stalled a number of projects as profit margins eroded and the latter slowing of the residential market has further lessened the chance of these new projects commencing in the foreseeable future.
We also predicted the slowing investor activity was likely to continue due to interest rate pressure. Investor
reSI
deN
TIA
L
��
The month in review
activity has certainly slowed through 2008, initially due to interest rate rises but then because of the general market slowdown. Shopping centres expected at Gracemere and Parkhurst also appear to now be progressing at a much slower rate than initially predicted.
The recent increases in first home buyer assistance appears to have had a positive impact on the residential market with agents reporting increased interest in entry level houses with the greatest area of market activity in the sub $350,000 price range.
bUNdAberG
Well, another year has almost finished and what a year it has been. The year started with such promise in the bundaberg residential markets. demand was strong across all sectors, following on from the steady growth experienced through the later half of 2007. The first signs of things to come coincided with the interest rate rises in February and march, which effectively “turned the taps off” in bundaberg. demand eased and sales volumes reduced across the board however, property values held steady during this time. This pattern has been the norm for the last six months. Sales volumes are well down on previous peaks, although values appear to be holding up well. The recent interest rate reductions have helped to support increased activity. The maintenance of value levels can be attributed to bundaberg’s relatively lower house prices compared with most coastal centres in Queensland. even with the slow down, bundaberg is seen as affordable at current levels across most market sectors.
The sector which has felt the pinch more than others is residential units. demand for units in 2007, coupled with some town planning changes, saw many developers acquire sites for larger, better quality unit developments. The supply of residential units in bundaberg dramatically increased over the last 12 months. many of these complexes were either under construction or not yet commenced when the slow down began. Units were affected in two ways; firstly owner occupiers wishing to downsize were taking longer to sell their current dwellings, with contracts subject to sales of dwellings falling over, and secondly with the credit squeeze and general decline of the economy, investor numbers have declined.
HerVeY bAY
The start of the year was buzzing as four unit developments were completed the previous year, and a further six possibly starting construction and advertising for pre-sales. There was steady growth in land values and you were lucky to find a house for sale under $300,000.
The dwelling market has remained relatively steady throughout the year, however buyer activity is definitely down on past years. Although as noted above, earlier asking prices were above $300,000 but there are now a larger number of homes for sale at realistic prices which has reduced the buy-in level back into the first home buyer affordability range of $260,000 to $280,000.
At the time, alarm bells were ringing of oversupply in the unit market and this still remains the concern. Although values have remained relatively stable, a significant decline to nearly non existent rate of sale of new product
units has made little dent in the current stock levels. Until the current level of developed stock is reduced, values will be collared. As the slowdown continues, anxious vendors are likely to lower prices to meet what little market enquiry there is to try and attract a buyer. This is likely to have a negative impact on values. It is too early to see any results that the lowering of interest rates and additionally the increase in the first home buyers grant has had on activity. bargain hunters are the most active and there are definitely properties out there that offer good value for money.
Positive announcements over the year were Watpac being announced as the successful developer for the estimated $800m expansion and development of the marina and the $12m Water Park to be constructed at Pialba.
From all at Herron Todd White Hervey bay we would like to thank you for your support and wish you all a merry christmas.
mAcKAY
At the beginning of the year we predicted additional housing stock would assist with easing a tight rental vacancy situation. This has not occurred as demand has more than kept pace with supply. Additionally, the mackay floods of February 15 had the double edged effect of taking a large amount of housing stock out the market for several months and created an influx of tradespeople to assist with insurance works. Investors were noticeably absent from the market through most of the year and did not make any significant contribution, in relative terms, to increase the number of houses in the city’s rental pool. rental levels have stayed firm through the year.
We were correct in predicting that the value of housing in the better inner northern suburbs would stabilise and continue to appeal to owner occupiers.
We suggested values in the outer northern suburbs could be subject to minor fluctuation. One or two sales have shown a moderate decline in value in the past 12 months but losses have been nominal. Vacant land in these areas is proving difficult to move and this is reflective of investors losing their appetite for house and land packages. rising building costs through the year did not assist investor enthusiasm in this regard.
reSI
deN
TIA
L
�0
The month in review
expansion of the dalrymple bay coal terminal was scheduled for completion at the end of 2008 but this has been put back to April 2009. As we stated at the beginning of the year, increased export capacity should promote further expansion in the coal mining industry and will lead to further population growth. This is likely to occur but some miners may have difficulty with expansion plans against the backdrop of a miserable share market and the global credit crisis. We thought housing stock would be available to cope with another surge of population growth, however, it appears that a housing shortage could be looming in the first half of next year.
cairns
The cairns residential property market this year has experienced a much more distinct cooling in demand than what we had anticipated at the start of 2008. Volumes of property sales have reduced by about 30% to 50% since the start of the year, and the market has swung distinctly from a seller’s to a buyer’s market. Investors are no longer as active in the market as they used to be, and although locals are still scouting the market, they are very cautious about over-extending themselves in the current market environment and certainly in no rush to commit. The slowdown in demand has led to an increase in the number of properties on the market as properties take longer to sell. Nevertheless, correctly priced property is continuing to turn over, albeit at the slower rate.
despite our start of year prediction of moderate price growth in the market in 2008, residential property prices during the course of the year have more often levelled off or reduced. Houses in the mortgage belt areas of cairns have typically eased back in price by about 5% to 10%, whilst the more established areas have moved in price anywhere from -5% to +5%.
The median house sale price in cairns stood at $347,000 in September 2008, which represents a decrease of 7.5% over the preceding 12 months. The reduction in the
median sale price observed this year reflects a two-fold combination of prices easing for some properties as well as the downward impact of homebuyers lowering their sights to focus on more affordable properties.
Vacancy rates for rental property have increased in recent months as a result of a large supply of newly constructed properties entering the rental pool at the same time as a slowdown in demand. Vacancy rates have moved sharply from “tight” to the top end of the “balanced market” territory, a factor we would not have predicted at the start of the year.
Townsville
Over the course of this year, Townsville’s property market has shifted from a seller’s market, to very much a buyer’s market.
This shift in balance resulted from a number of factors including the increasing interest rates experienced in the earlier part of the year dampening the market. Then as a flow on, investors started leaving the market as a result of diminishing returns on investments as affordability, reduced returns and more pressing matters at home became an issue.
The residential market in Townsville is currently in a slow down phase, with sale volumes down some 30% on corresponding months of 2007. median house prices have also softened down approximately 4% on those 12 months ago.
The market has also seen the arrival of some big developers in the vacant land and residential unit market. This has seen an increase in supply levels in both these sectors.
Our most recent vacant land survey indicates over 580 residential lots currently on the market, with an additional 800 lots to be released over the next six months. Land sales are down by around 1/3 of that of the corresponding period in 2007. most noticeable is that builders who were previously buying stock to secure for future home construction, in case of land shortage, are now only acquiring sites as required. This may change over the next quarter as the increase to the FHOG appears to have kick started construction activity again.
The unit market has also experienced a decline in sale volumes and an increase in supply. Our most recent unit survey shows approximately 690 new units on the market across 21 developments with just 81 sales for the September quarter.
As developers of land and units struggle with the lack of buyers, we are seeing a return to incentive based contracts that might include cash backs, furniture or interest fee deals to name a few. All with a view to try and stimulate the market and move some product.
reSI
deN
TIA
L
�1
The month in review
...some of the rural and rural/residential locales have seen virtually no sales to report over the past six months...
Tasmania
HObArT
Hobart’s residential property market has slowed significantly over the past few months. This has primarily been due to uncertain and unstable domestic and global financial markets.
At the beginning of 2008, we predicted that the market would remain flat and possibly see signs of a downturn. Looks like we were correct, but no-one saw the severity of such a financial downturn coming. It was abrupt and the Hobart market has slumped. Prices have generally remained flat but we have seen as much as a 10% decrease in values in certain areas.
What do remain interesting are sales volumes. These are considerably lower than this time last year and some of the rural and rural/residential locales have seen virtually no sales to report over the past six months, let alone in 2008 itself. Investors, particularly from the mainland, are ever so cautious and have shied away from the small island.
mortgage stress is still a factor in our market. even with decreasing interest rates and as predicted little to no growth coupled with little equity to borrow against, it appears as if households are struggling to cope.
We did look into the crystal ball at the beginning of the year and mentioned that 2008 may prove to be the start of the bust in the property cycle. It appears as if our predictions may have been realised.
It has been an interesting year in the Hobart market and we look forward again to what lies ahead. We thank all of our clients for continued support and wish them well over the festive season. See you at constitution dock in late december!
LAUNceSTON
Well the crystal ball was almost working. Writing from our February 2008 article, we noted that more shock waves are expected from the sub-price crisis but in all honesty
we did not perceive what conditions would be like just 10 months later. Which call went right? Well, we nailed the West coast. This centre continues to out-perform the state as a whole with ongoing capital growth achieved during 2008. However, we are now noting a slowing in sales volumes which in part is due to unrealistic expectations by vendors.
Where did we go wrong? In a word – George Town. It is now expected that the pulp mill will not commence and as a result we are seeing market volatility in this region with some more anxious investors (particularly those who purchased sight unseen up to and during the peak pricing period) or those who are feeling the financial strain resultant of the sub-prime and stock market problems are seeking to withdraw from the market.
Some areas that performed below expectations during the year include the richings sub-division within the suburb of Youngtown. We saw slow sales volumes (only four during the calendar year to date) and only two above the $400,000 price bracket. At the time of writing, 15 properties above $400,000 are available for sale.
We also saw a significant softening of pricing levels for the lower priced Housing commission homes within the eastern suburb regions. This occurred despite strengthening gross yield levels and again is a resultant of investors leaving the market.
demand for inner city and adjacent suburb housing remains firm and we continue to see capital growth, increases in prices.
We wish you a Happy christmas and prosperous New Year and hope our crystal ball works a touch better in 2009.
Perth
Our predictions didn’t quite come to fruition but in the year of the credit crisis, share prices plummeting, margin calls, plunging commodity prices and a St Georges Terrace filled with stories of projects being pulled; it was always going to be very difficult to get predictions correct.
The year started cautiously in the lower and median price sectors with rising interest rates the talk of the town. Affordability was the catch phrase and values softened in response to the increasing supply.
Values in the Perth residential market have retreated throughout 2008, to a higher extent in some sectors than predicted, largely due to flow on effects resulting from the current world financial situation.
As predicted, stock levels continued to climb throughout the metropolitan area from a low of 4,900 in June 2006 to approximately 17,000 today with a peak of 17,600 in march.
reSI
deN
TIA
L
��
The month in review
Land values in outlying suburbs retreated throughout the year as predicted, with rebates offered through most land estates. Incentives started the year as landscaping and fencing packages and have finished with free cars and one developer offering a $50,000 cash rebate on selected, limited lots in the coastal suburb of Yanchep. The incentives were in response to a severe lack of demand resulting in decreasing land values due to oversupply, with severe oversupply in some areas.
The premium market appeared impervious to negative thoughts early in the year, with coastal and riverside localities maintaining and increasing in value. Then came the credit crisis. Funds dried up, share portfolios withered and margin calls created necessitous sellers. A recent example witnessed a property in South Perth sold for 19% or $350,000 less than what it transacted for in November 2007.
Prices have retreated across all residential sectors by 6%, according to the real estate Institute of Western Australia, from the all time highs experienced late in 2007. It is worth noting that there is the inherent possibility that these figures may be skewed by an increased volume of sales at the lower end of the value range and decreased sales in the prestige end of the market.
Our concerns at the start of the year regarding increasing supply were exacerbated by the sub prime crisis and values have decreased accordingly.
reSI
deN
TIA
L
��
The month in review
Office Phone email
Adelaide, SA 08 8231 6818 [email protected]/Wodonga, NSW/VIc 02 6041 1333 [email protected] bairnsdale, VIc 03 5152 6909 [email protected], NSW 02 6334 4650 [email protected] brisbane commercial, QLd 07 3002 0900 [email protected] brisbane residential Offices, QLd 07 3353 7500 [email protected] brisbane – rural Queensland, QLd 0417 753 446 [email protected], WA 08 9791 6204 [email protected]/Wide bay, QLd 07 4154 3355 [email protected] busselton, WA 08 9754 2982 [email protected], QLd 07 4057 0200 [email protected] canberra, AcT 02 6273 9888 [email protected] darwin, NT 08 8941 4833 [email protected] deniliquin, NSW 03 5881 4947 [email protected], NSW 02 6884 2999 [email protected] echuca, NSW 03 5480 2601 [email protected], QLd 07 4980 7738 [email protected] Gladstone, QLd 07 4972 3833 [email protected] Gold coast, QLd 07 5584 1600 [email protected] Goondiwindi, QLd 07 4671 5300 [email protected] Gosford, NSW 1300 489 825 [email protected] Griffith, NSW 02 6964 4222 [email protected] bay, QLd 07 4124 0047 [email protected], TAS 03 6244 6795 [email protected], VIc 03 5382 6541 [email protected], QLd 07 3282 9522 [email protected] Launceston, TAS 03 6334 4997 [email protected], NSW 02 6953 8007 [email protected], QLd 07 4957 7348 [email protected] melbourne, VIc 03 9642 2000 [email protected] mildura, VIc 03 5021 0455 [email protected], NSW 02 6372 7733 [email protected] Newcastle, NSW 02 4929 3800 [email protected], NSW 02 8882 7100 [email protected], WA 08 9388 9288 [email protected] Port macquarie, NSW 1300 489 825 [email protected], QLd 07 4927 4655 [email protected] roma, QLd 07 4622 6200 [email protected] Sale, VIc 03 5143 1880 [email protected] coast (mooloolaba), QLd 07 5444 7277 [email protected] Swan Hill, VIc 03 5032 1620 [email protected], NSW 02 9221 8911 [email protected] Tamworth, NSW 02 6766 9898 [email protected] Toowoomba, QLd 07 4639 7600 [email protected] Townsville, QLd 07 4724 2000 [email protected] Tralagon, VIc 03 5176 4300 [email protected] Heads, NSW 07 5523 2211 [email protected] Wagga Wagga, NSW 02 6921 9303 [email protected], QLd 07 4948 2157 [email protected], NSW 02 4221 0205 [email protected], NSW 02 6382 5921 [email protected]
Visit us at www.htw.com.au for past issues of this publication
contacts
The information contained in this report is provided in good faith and has been derived from sources believed to be reliable and accurate. However, the report is not intended to be comprehensive or render advice and neither Herron Todd White nor any persons involved in the preparation of this report, accepts any form of liability for its contents.
This report is copyright, and cannot be reproduced without written permission of Herron Todd White.
© Herron Todd White copyright 2008
cON
TAc
TS
��
The month in review
a brighter note, increased cash flows from bumper wheat crops should improve cash flow and hopefully market confidence in central NSW.
Frank Peacocke Ph: (08) 8941 4833
1 december 2008
NOrTHerN NSW
What a difference 12 months can make! For all those who wonder why valuers are loath to predict what property values might be in the future, the events of the last 12 months (since November 2007) are a classic illustration of why. We have seen grain (wheat) prices fall by over 25% after surging strongly in late 2007, the Australian dollar firstly appreciate by 11% to peak at US97.7 cents on 21 July 2008 and then depreciate by 35% to around US64 cents only four months later. crude oil prices rose by 40% to their peak of US$147 in July 2008 and have declined by about 63% to under US$55/barrel, four months later. The price of farm chemicals and fertilisers has been on a rollercoaster ride over the past year with heavy price declines now occurring. On top of this we have seen official interest rates in November 2007 at 6.75%, rise to 7.25% in march 2008 and fall to 5.25% in November 2008 with further significant falls highly likely. Over the year, many areas in the north west of NSW have gone from drought and scrambling to buy fodder at inflated prices to above average seasonal conditions 12 months later. What a year!
market sentiment started the year quite positively, particularly with the strong grain price outlook, increasing corporate purchases and generally sound fundamentals for global agriculture. by years end the global financial crisis has started to wash through the Australian economy, commodity prices have come under pressure and so has investor confidence.
The one bright spot in the market place has been the dairy industry which has experienced much improved seasonal conditions in our region and milk prices are now
In this final issue for 2008, our rural valuers reflect on a property market that began the year on a much more confident note than it looks like it will now finish. In February, the prospects for the rural property market were generally pretty good in most parts of the country. The cost of finance was reasonable, the $AUS was hovering high but our export markets could handle it, the seasons were looking promising with drought breaking rains over large areas, sales were still ticking over and there was a reasonable level of confidence in the market. but 2008 turned out to be a real roller coaster ride for rural property across Australia, and now as 2009 dawns, nearly all of our valuers are reporting an increasing unwillingness by the market to commit to major rural property investment in the current economic climate which hears constant whispers of a possible recession. This is particularly the case for higher risk or untested/developing rural markets.
The majority of our rural valuers report on an increased supply of rural properties for sale, particularly in North and central Queensland, central NSW and in the Northern Territory, however the number of properties selling appears to have stalled, nearly right across the country. Who can blame property owners and potential buyers for sitting tight as robin Gardiner (Northern NSW) reminds us that it has been very difficult for most in the market to make head or tale of likely future market direction. This is due to when commodity prices have followed an $AUS that has risen and fallen so dramatically over the last six months along with the price of oil and interest rates. Interestingly however, at this stage, none of the Herron Todd White offices have reported on any significant falls in rural property values despite the increased supply and inactivity in the market.
In this months rural overview, Shaun Hendy (Southern QLd) questions the logic of the Australian Governments water buy back plan, asking the question on everybody’s lips, “how are these prices being determined?” while down in the riverina, david Shuter reports on the highs and lows in an uncertain irrigation water market as well as the impact of the continuing dry conditions on cash flows which has stifled the dryland property market. On
rural – market directions
rUrA
L
��
The month in review
at above 50c/litre. With an estimated $1b to flow to dairy farmers as a result of the National Foods purchase of the dairy Farmers cooperative, the financial viability of many dairy farms is now on a much firmer footing, compared to 12 months ago.
At present, a sharply-lower Aussie dollar, declining fuel, fertiliser costs and interest rates, and generally good seasonal conditions in the north and north west (although a wet grain harvest is threatening in some areas) would normally suggest a return of investor confidence is just around the corner. However, we like most commentators on the broader economy, remain very cautious about the full impact of the global financial crisis on the rural property sector in the first half of 2009.
contact:
robin Gardiner Ph: (02) 6766 9898
SOUTHerN NSW
ALbUrY
As 2008 year draws to an end and on reflection as to the last 12 months, we see that rural properties production levels have been very volatile along with the current world financial crisis. 2008 in southern NSW and northern Victoria began with summer rains and optimism for a successful farming year. As 2008 progressed, most of these areas again experienced well below average rainfall which was reflected in poor pasture growth and low or no cropping yields.
The market movement for properties has slowed in the second half of the year, reflecting hesitation by investors into agriculture due to the continuing dry conditions and shortage of cash within the market caused by the global economic crisis.
There have been increases in murray Valley Storage levels over the past month with Lake Hume (31.7%) and dartmouth (20.7%) water storages as at 14th November 2008.
murrumbidgee Valley water storages have also increased slightly, with burrinjuck (48.4%) and blowering (42.9%) as at 14th November 2008.
WAGGA WAGGA
Last month we noted that three prestige properties had been placed on the market. In the past month the other half of “North Tahara” being “South Tahara” has also been placed on the market. “South Tahara” consists of 6,588 acres with 6.4km murrimbigee river frontage and water entitlements of 3,898mL. Improvements include a three storey, 14 bedroom, main prestige residence with caretaker’s cottage and 10Ha of gardens. The farm improvements include eight other dwellings, two machinery sheds, shearing shed, stock yards and eight hay sheds. With four large prestige properties on the
market at the one time it will be interesting in the present economic climate to see if any of these large properties sell.
Harvest is currently under way with most farmers getting some crops off but yields are far lower than what was expected a few months ago as the required rain to fill the crops did not arrive. To top it off, some parts surrounding Wagga are currently experiencing a Locust plague which we all hope will be brought under control as soon as possible.
LeeTON
There has been a significant decline in the number of rural sales since the beginning of the year. This has been due to ongoing severe drought conditions, uncertainty over irrigation water entitlements and the very obvious “world financial crisis”, impacting on the availability of credit.
The flurry of sales of irrigated holdings, which occurred in late 2007, did not continue. many of these properties were purchased for their irrigation water entitlements which were later stripped from the property and sold on the lucrative water market. This practice has led to many small horticultural holdings having little or no entitlements and facing an uncertain future as viable agricultural properties.
The land and water markets have further evolved over the past year and it has become quite obvious over the twelve months the pitfalls of refinancing on a rising water market only to face the downhill side of the equation as prices dropped as higher allocations were announced earlier in the 2008 season. In late 2007, water was trading for around $3,800/mL to $4,000/mL for high security entitlements. At present, this value has significantly decreased to around $2,800/mL.
dryland sales have been almost non-existent in the region. Sales which have occurred through the year have mainly been existing farmers buying neighbouring holdings. There are a number of properties listed for sale although buyers in this market are still reserved with insufficient cash or equity to fund the transaction.
This reduction in demand across the rural market is expected to remain until well into next year following the poor winter crop and restricted water allocations again going into this summer.
rUrA
L
��
The month in review
rUrA
L
Since mid 2008, the world’s economy has become much more depressed with recessions likely in some countries. This will have a bearing on market conditions in coming months. A drop in interest rates and the Australian dollar are positives; however the question is whether the money will be available to buy our commodities at prices that will result in a prosperous rural environment?
contact:
david Shuter Ph: (02) 6041 1333
ceNTrAL NSW
Good spring rainfall arrived too late to benefit the northern winter cereal areas and they are now into their harvesting. recent significant rainfalls of two to three inches throughout the coonamble and Walgett areas have seen all harvesting activities cease, however the pasture growth for summer should be average to above average. current indications from the harvest are that large areas of wheat are averaging over 2.5 tonnes/Ha, which would be considered above average for the northern wheat belt. Areas west of Walgett appear to be harvesting reduced yields of approximately 0.8 to 1.2 tonnes/Ha. Some fine weather will be needed to ensure protein levels are not impacted negatively and shot and sprung grain does not become a problem. despite the increase in cash flows for a majority of properties in the central West and North West, current market sentiment continues to be depressed. The general economic turmoil that exists within Australia at present has seen buyers become reluctant to commit to financial propositions. We feel this situation will continue until general confidence levels in the market increase. currently there are very few properties selling with an overwhelming majority of holdings put to the market withdrawn with minimal interest. Well presented properties in desirable areas are still attracting moderate levels of buyer interest. Should vendors of these withdrawn properties decide to meet the current market, we feel that these sales would indicate reduced/Ha rates. A recent offering to the market was a 309Ha property “Strathmore”, 30km from dubbo, located on the macquarie river with developed centre pivots in place and 4.4km frontage to the macquarie river. river and bore water included. Properties such as these would generally attract significant interest, however interest was moderate only. The property did pass in at auction with negotiations still underway.
Overall we have some conflicting influences in the market, however it appears the most dominant at present is the economic uncertainty and the reduced confidence levels that exist in the market at present. As such, we expect to see soft buyer interest in the short term.
...the question being regularly asked is ‘How are these prices being determined?’...
contact:
david Sullivan Ph: (02) 6334 4650
SOUTHerN QLd
back in August, Herron Todd White wrote about the Australian Government’s water buy back plan. In that discussion we raised the point about what potential vendors need to consider before they make a decision. These were:
How will it affect the remaining assets?
Will there be depreciation or obsolescence of the remaining irrigation infrastructure?
What will be the highest and best use of the land after the water has been removed?
There has been much publicity about the recent purchases of property from clyde Agriculture and water rights from Tandou. The figures being quoted on Tandou’s sale of water give little basis for comparison as they quote that the government has acquired 250GL (250,000mL) of supplementary water allocations. This volume is subject to meeting certain flow and storage conditions and the likelihood of this being available regularly is very low. The actual average annual yield may only be, say, less than 10%.
The question being regularly asked is how are these prices being determined? Is the government just acquiring these licenses with the objective of meeting their target or are they considering the market value?
How are vendors determining what they sell the water for? Is it based on the amount of debt they have or want to reduce? Are there any economic principles being applied at all to this process?
This all leads to the conclusion that the water trading system in Australia is not transparent and for a market to be effective, transparency is required to have informed vendors and buyers.
•
•
•
��
The month in review
We continue to encourage potential vendors and mortgagees to show caution when selling an asset such as water without being properly informed, the points above may come back and bite.
contact:
Shaun Hendy Ph: (07) 4671 5300,
doug Knight Ph: (07) 4339 2119
NOrTHerN QLd
The North Queensland grazing property market appears to be in two frames of mind. There is a large number of breeding properties on the market extending from the charters Towers, burdekin river districts north through to and including cape York. meanwhile the easier to operate mitchell Grass downs country has sold well (if the property has grass) throughout the year.
This should be considered as a positive. While the rest of the world is suffering from global credit issues and recessionary fears, the North Queensland grazing property market is showing its resilience.
Uncertainty exists as to what the next twelve months has in stall. How long the market takes to either absorb the current volume of property on the market begs to question? While life and investments have ups and downs, the positive ‘glass is half full’ attitude is certainly a winning approach. There are positives for the North Queensland grazing property market as christmas and the New Year approach:
The easing of interest rates is certainly a help in servicing debt and therefore may actually lead to aiding aspiring vendors to hold onto their investments. expectations are that the reserve bank may lower the cash rate by another full percentage point in december;
The wet season has started with the recent week’s scattered rain events. For some this has been a positive start to the wet season. The western and north western districts had a very dry year. A lot of cattle were trucked out of the western and north western district early this year when the dry took a grip;
Given that a good wet season results across North Queensland then heifer and breeder prices should benefit from strong demand for restocking and herd expansions.
These are just a few ‘upside’ comments that we look forward to reporting on as the New Year dawns on the North Queensland grazing industry. With positivity, opportunities are created – our best wishes for christmas and the New Year.
contact:
Peter Honnef Ph: (07) 4724 2000
1.
2.
3.
ceNTrAL QLd
Good rainfall was reported last week in the Springsure and emerald areas along with costal showers reaching some inland parts. Heavy skies threaten rain again this week however we have not yet enjoyed the same falls that have been received in some of the south east and south western parts of the state. driving through the dawson and callide Valley’s this week it seems the arrival of some summer storms will be welcomed with the country beginning to hay off as the mercury continues to rise above the 30ºc+ mark.
The property market remains static and with a slowing volume of sales noticed across the region, however listings have increased since the middle of the year. For now it appears that most are sitting tight as the year ends.
The direction of the rural property market in 2009 will largely be governed by the attitudes of finance institutions; serviceably rather equity a key point. The forecast continuation of falling interest rates may inspire those with borrowing capacity to enter the market and enjoy the cost of funds advantage.
“rainwell” about 30km from Springsure sold at auction this month for $3.2m and comprises about 4,850Ha (12,000 acres) leasehold tenure. This sale confirms that the market is holding however sales are generally scarce. Lasts months sale of “Greenacres” indicated that scrub values in the dawson Valley are remaining above the $1,000/acre benchmark for improved grazing country, however the market “premium” appears gone for now.
We anticipate the “Laglan Station” auction in december which will provide an indication of market direction and confidence in Australian rural investment as considerable interest is expected from offshore.
...perhaps if the global economic situation becomes clearer over the next six months buyer interest may improve...
contact:
Greg Williams Ph: (07) 4957 7348
Will mcLay Ph: (07) 4927 4655
rUrA
L
��
The month in review
NOrTHerN TerrITOrY
A recent flight back from a valuation in the Kimberley had me cruising above the magnificent cockburn ranges just west of Kununurra. Looking out the window, the peaks, troughs and plateaus of those mountains reminded me of the peaks, troughs and plateaus in the market line charts that dominate property market news every day (and yes, I definitely needed a beer). The mixed bag of market evidence over the past few months has most in the rural land market second guessing just where on this undulating scale their property value might be. Has the dollar value ($/km², $/Ha, bAV) hauled itself up the final steep slope of the mountain and onto the long plateau? Or are values looking down from the peak onto a lower lying saddle where they might sit for a while after a little drop? It’s very difficult to say at this stage. The recent mixture of evidence includes some very strong rural sales as well as a gradually stagnating lump of properties still sitting on the market and not looking like shifting any time soon. There has also been the odd bargain.
Here is what the market has thrown at us to analyse lately: A very strong sale last month saw the vendor of a small (1,072Ha) cattle/irrigation block in the douglas daly reach for the oxygen mask as his property sold for a notch over $3m, only 13 months after he had purchased the same property for $1.25m. making adjustments for improvements to the property between sales, the deal probably showed a $1.5m increase in value! reportedly it was a lifestyle buy.
Next were a few sales that probably represent a “plateau” in values; the recent sale of the 5,340Ha “rocktear Park” just south of Katherine for close to $5.5m to Victorian timber grower Willmott Forests Pty Ltd indicates that the premiums being paid for cleared farming land have been maintained at $2,500/Ha to $3,000/Ha. The same goes for Plantation Tropical Timbers recent purchase of “Kumbyechants” (5,511Ha) up in the douglas daly for around $5.9m and the deal has the potential to be a couple of million dollars more if additional clearing permits can be obtained within 12 months. “Jarradale” (2,603Ha and also near “rocktear Park”) sold for $2.8m, we understand for a traditional farming use, and also indicated that values for cleared farming country may have reached a plateau. but at the same time there are around five or six reasonable to good quality freehold rural blocks on
rUrA
L
the market in the Katherine region (and generally in a similar class to those properties above) that have failed to sell over the past three to six months. If the vendors are looking for a sale within the next few months, then asking prices may have to come back and depending on the price, that might signal a turn in the market, potentially a descent into a trough. However, we have still not seen any rural property sales at reduced value levels, although “Hodgson river Station” (1,110km² at $4.4m WIWO) last month did appear to be good buying.
Perhaps if the global economic situation becomes clearer over the next six months, and with the possible impact of the cheaper cost of finance, buyer interest may improve (although at the same time, lenders are becoming more risk averse and finance is becoming more difficult to access). A potential negative impact on Northern Territory and Kimberley pastoral property market could be an increased supply of western breeder blocks for sale in Queensland at prices that are more competitive to value levels in the Territory. While there are far more smaller to medium scale commercial cattle blocks presently on the market throughout Queensland’s cattle growing districts (compared to large breeder blocks with scale) Queensland buyers into the Territory have been a key component underpinning demand for Northern Territory pastoral leases (and also farming blocks) for at least the last six years. Territory land values have narrowed the gap somewhat over this period, and once the pros and cons of Queensland vs. Northern Territory country are weighed up (Territory leases are often of a much larger scale with more development potential, but are further from markets/higher operating costs), then the competitive edge that the Northern Territory has held over Queensland in recent years may be put to the test.
2008 PASTOrAL mArKeT WrAP
In 2007, the total number of pastoral leases changing hands was below average at around nine sales (four in the top end, three in central Australia and two in the Kimberley), the total value of the sold properties (bare) was around $80m (excluding the $57m (bare) Anthony Lagoon/eva downs sale, a late 2006 sale). The total on a WIWO basis was approximately $104m (excluding Anthony/eva in for $97m WIWO). For 2008 the story was similar, with three large cattle stations settling (Alroy/dalmore downs, Ucharonidge and Scott creek) and the transfer of two smaller blocks (Hodgson river and Providence). The WIWO value of these sales was around $130m or approximately $100m (bare). However, we are aware that there are three additional cattle stations that are reportedly in advanced stages of negotiation for sale or where a signed deal has been done. Should the three stations reach settlement prior to the end of 2008, their combined WIWO sale price would add around $150m to the total settled sales volume for 2008 as detailed above. If we include the couple of properties that are currently under negotiation for sale (but not yet sold), as well as those properties that are for sale via expressions of interest and for which we have applied the reported target price, there are 17 pastoral leases (including five in the Tipperary aggregation) that are for sale at a combined reported asking price, WIWO, of between $450m and $500m. In the Kimberley (Western Australia) “ruby Plains/Sturt creek” (7,957km², east Kimberley) is still on the market while “Kalyeeda” (1,226km² in the Fitzroy Valley) is for sale by expression of interest.
��
The month in review
rUrA
L
2008 FreeHOLd rUrAL LANd mArKeT WrAP
In 2007, the total number of sold freehold farming blocks (including improved pasture grazing, irrigated and dryland farming blocks) was around 10, with the total sale value (bare of stock, plant and equipment) of around $45m. The year to date has shown a similar level of market activity, with 13 properties having sold for a total of approximately $40.8m (bare). We note that there are currently about eleven freehold rural properties which are located between mataranka and darwin that are being advertised for sale with a combined WIWO asking price of approximately $43m.
contact:
Frank Peacocke Ph: (08) 8941 4833
�0
The month in review
mA
rKeT
INd
IcAT
OrS
Comparative Property Market Indicators - November 2008
Comparative Analysis of Capital City Property Markets
To discuss the applicability of the capital city indicators to individual properties or situations, contact your local Herron Todd White office:
Sydney (02) 9221 8911melbourne (03) 9642 2000brisbane commercial (07) 3002 0900brisbane residential (07) 3353 7500Adelaide (08) 8231 6818Perth (08) 9388 9288Hobart (03) 6244 6795darwin (08) 8941 4833canberra (02) 6273 9888
Comparative Analysis of New South Wales/ACT Property Markets
To discuss the applicability of the NSW/AcT indicators to individual proper-ties or situations, contact your local Herron Todd White office:
Albury (02) 6041 1333bathurst (02) 6334 4650canberra/Queanbeyan (02) 6273 9888dubbo (02) 6884 2999Gosford 1300 489 825Griffith (02) 6964 4222Leeton (02) 6953 8007mudgee (02) 6372 7733Newcastle/central coast (02) 4929 3800Norwest (02) 8882 7100Sydney (02) 9221 8911Port macquarie 1300 489 825Tamworth (02) 6766 9898Tweed coast (02) 5523 2211Wagga Wagga (02) 6921 9303Wollongong (02) 4221 0205Young (02) 6382 5921
Comparative Analysis of Victorian/Tasmanian Markets
To discuss the applicability of the Victorian/Tasmanian indicators to individual properties or situations, contact your local Herron Todd White office:
melbourne (03) 9642 2000Wodonga (02) 6041 1333Hobart (03) 6244 6795Launceston (03) 6334 4997
The following pages present a generalised overview of the state of property markets in capital city, New South Wales/AcT, Victoria/Tasmania, Queensland, South Australia/Northern Territory & Western Australia locations using financing risk-rating scales. They are not a guide to individual property assessments.
For further information contact rick carr, research director, Herron Todd White, on (07) 4057 0200, or by email on [email protected]
�1
The month in review
mA
rKeT
INd
IcAT
OrS
Comparative Analysis of Queensland Property Markets
To discuss the applicability of the Queensland indicators to individual properties or situations, contact your local Herron Todd White office:
brisbane commercial (07) 3002 0900brisbane residential (07) 3353 7500bundaberg/Wide bay (07) 4154 3355cairns (07) 4057 0200emerald (07) 4980 7738Gladstone (07) 4972 3833Gold coast (07) 5584 1600Hervey bay (07) 4124 0047Ipswich (07) 3282 9522mackay (07) 4957 7348rockhampton (07) 4927 4655Sunshine coast (mooloolaba) (07) 5444 7277Toowoomba (07) 4639 7600Townsville (07) 4724 2000Whitsunday (07) 4948 2157
Comparative Property Market Indicators - November 2008
Herron Todd White acknowledges the assistance of Countrywide Valuers (Bendigo), Riverlink Valuers (Echuca), Ridge Valuers (Geelong), Cleary Partners (Mildura), CJA Lee Property (Gippsland), Roger Cussen Property Specialist (Warrnambool), Valuation Partners (Western Australia) Pty Ltd (South West WA) and Valwest Pty Ltd (Geraldton WA) in compiling these pages.
Comparative Analysis of South Australia/Northern Territory/Western Australian Property Markets
To discuss the applicability of the South Australian/Northern Territory and Western Australian indicators to individual properties or situations, contact your local Herron Todd White office:
Adelaide (08) 8231 6818Perth (08) 9388 9288darwin (08) 8941 4833
The following pages present a generalised overview of the state of property markets in capital city, New South Wales/AcT, Victoria/Tasmania, Queensland, South Australia/Northern Territory & Western Australia locations using financing risk-rating scales. They are not a guide to individual property assessments.
For further information contact rick carr, research director, Herron Todd White, on (07) 4057 0200, or by email on [email protected]
© Herron Todd White Copyright 2008No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.
markeT iNdiCaTors
The month in review
Capital City Property Market Indicators as at November 2008 – Houses
42
Capital City Property Market Indicators as at November 2008 – Houses Factor Sydney Melbourne Brisbane Adelaide Perth Hobart Darwin Canberra
Rental Vacancy Situation Shortage of available property relative to demand
Shortage of available property relative to demand
Shortage of available property relative to demand
Shortage of available property relative to demand
Balanced market Shortage of available property relative to demand
Severe shortage of available property relative to demand
Balanced market
Rental Vacancy Trend Tightening Tightening Steady Steady Tightening Steady Steady Steady
Demand for New Houses Fair Soft Soft Fair Fair Fair Strong Fair
Trend in New House Construction Steady Declining Declining Steady Increasing Steady Steady Steady
Volume of House Sales Declining Steady - Declining Declining significantly
Declining Increasing Increasing Declining Declining
Stage of Property Cycle Declining market Declining market Declining market Declining market Declining market Start of recovery Peak of market Bottom of market
Are New Properties Sold at Prices Exceeding Their Potential Resale Value
Occasionally Almost never - Occasionally
Occasionally Occasionally Frequently Occasionally Occasionally Occasionally
Red entries indicate change from previous month to a higher risk-rating Blue entries indicate change from previous month to a lower risk-rating
Rental Vacancy Trend
Sydney
MelbourneBrisbane
AdelaidePerth
HobartDarwin
Canberra
TighteningSharply
Tightening
Steady
Increasing
IncreasingSharply
TighteningSharply
Tightening
Steady
Increasing
IncreasingSharply
Stage of Property Cycle
Sydney
MelbourneBrisbane
AdelaidePerth
HobartDarwin
Canberra
Start ofRecovery
Bottom ofMarket
RisingMarket
Peak ofMarket
DecliningMarket
Start ofRecovery
Bottom ofMarket
RisingMarket
Peak ofMarket
DecliningMarket
Demand for New Houses
Sydney
MelbourneBrisbane
AdelaidePerth
HobartDarwin
Canberra
Very Strong
Strong
Fair
Soft
Very Soft
Very Strong
Strong
Fair
Soft
Very Soft
© Herron Todd White Copyright 2008No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.
markeT iNdiCaTors
The month in review
Capital City Property Market Indicators as at November 2008 – Units
43
Capital City Property Market Indicators as at November 2008 – Units Factor Sydney Melbourne Brisbane Adelaide Perth Hobart Darwin Canberra
Rental Vacancy Situation Shortage of available property relative to demand
Shortage of available property relative to demand
Shortage of available property relative to demand
Shortage of available property relative to demand
Shortage of available property relative to demand
Shortage of available property relative to demand
Shortage of available property relative to demand
Balanced market
Rental Vacancy Trend Tightening Tightening Steady Steady Tightening Steady Steady Steady
Demand for New Units Fair Soft Soft Fair Fair Fair Strong Fair
Trend in New Unit Construction Steady Declining Declining Steady Declining Steady Steady Steady
Volume of Unit Sales Declining Steady - Declining Declining significantly
Declining Steady Steady Declining Declining
Stage of Property Cycle Declining market Declining market Declining market Declining market Declining market Bottom of market Peak of market Bottom of market
Are New Properties Sold at Prices Exceeding Their Potential Resale Value
Frequently Almost never - Occasionally
Occasionally Occasionally Occasionally Occasionally Occasionally Occasionally
Red entries indicate change from previous month to a higher risk-rating Blue entries indicate change from previous month to a lower risk-rating
Rental Vacancy Trend
Sydney
MelbourneBrisbane
AdelaidePerth
HobartDarwin
Canberra
TighteningSharply
Tightening
Steady
Increasing
IncreasingSharply
TighteningSharply
Tightening
Steady
Increasing
IncreasingSharply
Stage of Property Cycle
Start ofRecovery
Bottom ofMarket
RisingMarket
Peak ofMarket
DecliningMarket
Start ofRecovery
Bottom ofMarket
RisingMarket
Peak ofMarket
DecliningMarket
Sydney
MelbourneBrisbane
AdelaidePerth
HobartDarwin
Canberra
Demand for New Units
Sydney
MelbourneBrisbane
AdelaidePerth
HobartDarwin
Canberra
Very Strong
Strong
Fair
Soft
Very Soft
Very Strong
Strong
Fair
Soft
Very Soft
© Herron Todd White Copyright 2008No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.
markeT iNdiCaTors
The month in review
1
Capital City Property Market Indicators as at November 2008 – Retail
44
Capital City Property Market Indicators as at November 2008 – Retail Premises Factor Sydney Melbourne Brisbane Adelaide Perth Hobart Darwin Canberra
Rental Vacancy Situation Over-supply of available property relative to demand
Balanced market Balanced market Balanced market Balanced market Balanced market Balanced market Shortage of available property relative to demand
Rental Vacancy Trend Increasing Steady Increasing Steady Steady Tightening Tightening Increasing
Rental Rate Trend Declining Stable - Declining Stable Stable Stable Stable Stable Stable
Volume of Property Sales Declining Steady - Declining Declining Declining Declining Declining Steady Declining
Stage of Property Cycle Declining market Peak of market - Declining market
Declining market Peak of market Declining market Declining market Rising market Declining market
Local Economic Situation Contraction Contraction Contraction Contraction Steady growth Steady growth High growth Flat
Value Difference between Quality Properties with National Tenants, and Comparable Properties with Local Tenants
Significant Small - Significant Small - Significant Small Significant Small Significant Small
Red entries indicate change from 3 months ago to a higher risk-rating Blue entries indicate change from 3 months ago to a lower risk-rating
Rental Vacancy Trend
Sydney
MelbourneBrisbane
AdelaidePerth
HobartDarwin
Canberra
TighteningSharply
Tightening
Steady
Increasing
IncreasingSharply
TighteningSharply
Tightening
Steady
Increasing
IncreasingSharply
Stage of Property Cycle
Sydney
MelbourneBrisbane
AdelaidePerth
HobartDarwin
Canberra
Start ofRecovery
Bottom ofMarket
RisingMarket
Peak ofMarket
DecliningMarket
Start ofRecovery
Bottom ofMarket
RisingMarket
Peak ofMarket
DecliningMarket
Local Economic Situation
Sydney
MelbourneBrisbane
AdelaidePerth
HobartDarwin
Canberra
StrongGrowth
SteadyGrowth
Flat
Contraction
SevereContraction
StrongGrowth
SteadyGrowth
Flat
Contraction
SevereContraction
© Herron Todd White Copyright 2008No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.
markeT iNdiCaTors
The month in review
New South Wales Property Market Indicators as at November 2008 – Houses
45
New South Wales Property Market Indicators as at November 2008 – Houses
Factor Albury BathurstCan-berra/ Q’beyan
Central Coast Dubbo Griffith Mudgee New-
castle Orange Sydney Tam-worth
Tweed Coast
Wagga Wagga
Wollon-gong
Rental Vacancy Situation Balanced market
Balanced market
Balanced market
Balanced market
Balanced market
Balanced market
Balanced market
Severe shortage - Shortage of available property relative to demand
Severe shortage - Shortage of available property relative to demand
Shortage of available property relative to demand
Balanced market
Shortage of available property relative to demand
Balanced market
Shortage of available property relative to demand
Rental Vacancy Trend Tightening Steady Steady Steady Tightening Steady Steady Tightening Tightening sharply
Tightening Tightening - Steady
Tightening Increasing Tightening
Demand for New Houses Fair - Strong
Very soft - Soft
Fair Soft Soft Soft Soft Soft Soft - Fair Fair Soft Soft Soft Soft
Trend in New House Construction Increasing Declining significant-ly - Declining
Steady Declining Declining significant-ly
Steady Declining Declining Declining - Steady
Steady Declining - Steady
Steady Declining Declining
Volume of House Sales Increasing Declining - Declining significant-ly
Declining Increasing Steady Increasing Steady Declining Declining Declining Declining Declining Steady Declining
Stage of Property Cycle Start of recovery
Bottom of market
Bottom of market
Bottom of market
Start of recovery
Bottom of market
Declining market
Declining market
Bottom of market
Declining market
Peak of market - Declining market
Declining market
Peak of market - Declining market
Bottom of market
Are New Properties Sold at Prices Exceeding Their Potential Resale Value
Occasion-ally
Occasion-ally
Occasion-ally
Almost never
Occasion-ally
Almost never
Almost never
Almost never
Occasion-ally
Occasion-ally
Occasion-ally
Frequently Occasion-ally
Occasion-ally
Red entries indicate change from previous month to a higher risk-rating Blue entries indicate change from previous month to a lower risk-rating
Rental Vacancy Trend
TighteningSharply
Tightening
Steady
Increasing
IncreasingSharply
TighteningSharply
Tightening
Steady
Increasing
IncreasingSharply
Albury
Bathurs
t
C'berra
/ Q'be
yan
Centra
l Coa
stDub
boGriff
ithMud
gee
Newca
stle
Orange
Sydne
yTa
mworth
Twee
d Coast
Wag
gaW
agga
Woll
ongo
ng
Stage of Property Cycle
Albury
Bathurs
t
C'berra
/ Q'be
yan
Centra
l Coa
stDub
boGriff
ithMud
gee
Newca
stle
Orange
Sydne
yTa
mworth
Twee
d Coast
Wag
gaW
agga
Woll
ongo
ng
Start ofRecovery
Bottom ofMarket
RisingMarket
Peak ofMarket
DecliningMarket
Start ofRecovery
Bottom ofMarket
RisingMarket
Peak ofMarket
DecliningMarket
Demand for New Houses
Very Strong
Strong
Fair
Soft
Very Soft
Very Strong
Strong
Fair
Soft
Very Soft
Albury
Bathu
rst
C'berra
/ Q'be
yan
Centra
l Coa
stDub
boGriff
ithMud
gee
Newca
stle
Orange
Sydn
eyTa
mworth
Twee
d Coast
Wag
gaW
agga
Woll
ongo
ng
© Herron Todd White Copyright 2008No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.
markeT iNdiCaTors
The month in review
New South Wales Property Market Indicators as at November 2008 – Units
46
New South Wales Property Market Indicators as at November 2008 – Units
Factor Albury BathurstCan-berra/ Q’beyan
Central Coast Dubbo Griffith Mudgee New-
castle Orange Sydney Tam-worth
Tweed Coast
Wagga Wagga
Wollon-gong
Rental Vacancy Situation Balanced market
Balanced market
Balanced market
Balanced market
Balanced market
Balanced market
Balanced market
Balanced market
Severe shortage of available property relative to demand
Shortage of available property relative to demand
Balanced market
Balanced market
Over-supply of available property relative to demand
Shortage of available property relative to demand
Rental Vacancy Trend Tightening Steady Steady Steady Tightening Steady Steady Steady Tightening sharply
Tightening Steady Steady Increasing Tightening
Demand for New Units Fair - Strong
Very soft - Soft
Fair Soft Soft Soft Soft Very soft - Soft
Soft - Fair Fair Soft Very soft Soft Soft
Trend in New Unit Construction Increasing Declining significant-ly - Declining
Steady Declining Declining significant-ly
Declining Declining Declining Declining - Steady
Steady Steady Steady Declining Declining
Volume of Unit Sales Increasing Declining - Declining significant-ly
Declining Steady Steady Steady Steady Declining - Declining significant-ly
Declining Declining Declining Declining significant-ly
Steady Declining
Stage of Property Cycle Start of recovery
Bottom of market
Bottom of market
Bottom of market
Start of recovery
Bottom of market
Declining market
Declining market
Bottom of market
Declining market
Peak of market - Declining market
Declining market
Peak of market - Declining market
Bottom of market
Are New Properties Sold at Prices Exceeding Their Potential Resale Value
Occasion-ally
Occasion-ally
Occasion-ally
Almost never
Occasion-ally
Almost never
Almost never
Almost never
Occasion-ally
Frequently Occasion-ally
Very frequently
Occasion-ally
Occasion-ally
Red entries indicate change from previous month to a higher risk-rating Blue entries indicate change from previous month to a lower risk-rating
Rental Vacancy Trend
TighteningSharply
Tightening
Steady
Increasing
IncreasingSharply
TighteningSharply
Tightening
Steady
Increasing
IncreasingSharply
Albury
Bathurs
t
C'berra
/ Q'be
yan
Centra
l Coa
stDub
boGriff
ithMud
gee
Newca
stle
Orange
Sydne
yTa
mworth
Twee
d Coast
Wag
gaW
agga
Woll
ongo
ng
Stage of Property Cycle
Albury
Bathu
rst
C'berra
/ Q'be
yan
Centra
l Coa
stDub
boGriff
ithMud
gee
Newca
stle
Orange
Sydn
eyTa
mworth
Twee
d Coast
Wag
gaW
agga
Woll
ongo
ng
Start ofRecovery
Bottom ofMarket
RisingMarket
Peak ofMarket
DecliningMarket
Start ofRecovery
Bottom ofMarket
RisingMarket
Peak ofMarket
DecliningMarket
Demand for New Units
Very Strong
Strong
Fair
Soft
Very Soft
Very Strong
Strong
Fair
Soft
Very Soft
Albury
Bathu
rst
C'berra
/ Q'be
yan
Centra
l Coa
stDub
boGriff
ithMud
gee
Newca
stle
Orange
Sydn
eyTa
mworth
Twee
d Coast
Wag
gaW
agga
Woll
ongo
ng
© Herron Todd White Copyright 2008No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.
markeT iNdiCaTors
The month in review
New South Wales Property Market Indicators as at November 2008 – Retail
47
New South Wales Property Market Indicators as at November 2008 – Retail Premises
Factor Albury BathurstCan-berra/ Q’beyan
Central Coast Dubbo Griffith Mudgee New-
castle Orange Sydney Tam-worth
Tweed Coast
Wagga Wagga
Wollon-gong
Rental Vacancy Situation Balanced market
Over-supply of available property relative to demand
Shortage of available property relative to demand
Over-supply of available property relative to demand
Balanced market
Over-supply of available property relative to demand
Balanced market
Over-supply of available property relative to demand
Balanced market
Over-supply of available property relative to demand
Balanced market
Balanced market
Balanced market - Over-supply of available property relative to demand
Balanced market
Rental Vacancy Trend Steady Increasing Increasing Increasing Increasing Increasing Steady Increasing Steady Increasing Increasing Steady Steady - Increasing
Steady
Rental Rate Trend Increasing Stable Stable Stable Stable Stable - Declining
Stable Declining Stable Declining Stable Stable Stable Stable
Volume of Property Sales Declining Declining Declining Declining Declining Steady Declining Steady Declining Declining Declining Declining significant-ly
Steady - Declining
Declining
Stage of Property Cycle Declining market
Declining market
Declining market
Declining market
Declining market
Bottom of market
Declining market
Declining market
Declining market
Declining market
Peak of market
Declining market
Peak of market - Declining market
Declining market
Local Economic Situation Contrac-tion
Contrac-tion
Flat Flat Flat Severe contraction
Contrac-tion
Contrac-tion
Steady growth - Flat
Contrac-tion
Steady growth
Flat Flat - Contrac-tion
Steady growth - Flat
Value Difference between Quality Properties with National Tenants, and Comparable Properties with Local Tenants
Significant Significant Small Small Significant Large Significant Significant Significant Significant Significant Significant Significant Small
Red entries indicate change from 3 months ago to a higher risk-rating Blue entries indicate change from 3 months ago to a lower risk-rating
Rental Vacancy Trend
TighteningSharply
Tightening
Steady
Increasing
IncreasingSharply
TighteningSharply
Tightening
Steady
Increasing
IncreasingSharply
Albury
Bathurs
tC'be
rra/Q
'beya
nCen
tral C
oast
Dubbo
Griffith
Mudge
eNew
castl
eOran
geSyd
ney
Tamwort
hTw
eed Coa
stW
agga
Wag
gaW
ollon
gong
Stage of Property Cycle
Albury
Bathu
rstC'be
rra/Q
'beya
nCen
tral C
oast
Dubbo
Griffith
Mudge
eNew
castl
eOran
geSy
dney
Tamwort
hTw
eed Coa
stW
agga
Wag
gaW
ollon
gong
Start ofRecovery
Bottom ofMarket
RisingMarket
Peak ofMarket
DecliningMarket
Start ofRecovery
Bottom ofMarket
RisingMarket
Peak ofMarket
DecliningMarket
Local Economic Situation
StrongGrowth
SteadyGrowth
Flat
Contraction
SevereContraction
StrongGrowth
SteadyGrowth
Flat
Contraction
SevereContraction
Albury
Bathu
rstC'be
rra/Q
'beya
nCen
tral C
oast
Dubbo
Griffith
Mudge
eNew
castl
eOran
geSy
dney
Tamwort
hTw
eed Coa
stW
agga
Wag
gaW
ollon
gong
The month in review
© Herron Todd White Copyright 2008No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.
markeT iNdiCaTors
Victoria/Tasmania Property Market Indicators as at November 2008 – Houses
48
Victorian and Tasmanian Property Market Indicators as at November 2008 – Houses
Factor Bendigo Echuca Geelong Latrobe Valley
Mel-bourne Mildura Wanga-
ratta Warrnam-bool Wodonga
Burnie -Devon-port
Hobart Laun-ceston
Rental Vacancy Situation Balanced market
Over-supply of available property relative to demand
Shortage of available property relative to demand
Shortage of available property relative to demand
Shortage of available property relative to demand
Balanced market
Balanced market
Balanced market
Balanced market
Shortage of available property relative to demand
Shortage of available property relative to demand
Shortage of available property relative to demand
Rental Vacancy Trend Steady Steady Steady Steady Tightening Steady Steady Steady Steady Steady Steady Steady
Demand for New Houses Very soft Soft Fair Fair Soft Soft Fair - Strong Soft - Fair Fair - Strong Fair Fair Fair
Trend in New House Construction Declining significantly
Steady Steady Steady Declining Steady Increasing Declining - Steady
Increasing Steady Steady Steady
Volume of House Sales Declining significantly
Increasing Steady Steady - Declining
Steady - Declining
Steady Increasing Declining Increasing Increasing Increasing Increasing
Stage of Property Cycle Declining market
Bottom of market
Peak of market - Declining market
Declining market
Declining market
Bottom of market
Start of recovery
Peak of market - Declining market
Start of recovery
Start of recovery
Start of recovery
Start of recovery
Are New Properties Sold at Prices Exceeding Their Potential Resale Value
Almost never
Almost never
Almost never - Occasionally
Occasionally Almost never - Occasionally
Almost never
Occasionally Almost never
Occasionally Occasionally Occasionally Occasionally
Red entries indicate change from previous month to a higher risk-rating Blue entries indicate change from previous month to a lower risk-rating
Rental Vacancy Trend
Bendig
o
Echuc
a
Geelon
g
Latro
beValle
y
Melbou
rne
Mildura
Wangara
tta
Warrnam
bool
Wodong
a
Burnie-
Devon
port
Hobart
Laun
cesto
n
TighteningSharply
Tightening
Steady
Increasing
IncreasingSharply
TighteningSharply
Tightening
Steady
Increasing
IncreasingSharply
Stage of Property Cycle
Bendig
o
Echuc
a
Geelon
g
Latro
beValle
y
Melbou
rne
Mildura
Wangara
tta
Warrnam
bool
Wodong
a
Burnie-
Devon
port
Hobart
Laun
cesto
n
Start ofRecovery
Bottom ofMarket
RisingMarket
Peak ofMarket
DecliningMarket
Start ofRecovery
Bottom ofMarket
RisingMarket
Peak ofMarket
DecliningMarket
Demand for New Houses
Bendig
o
Echuca
Geelon
g
Latro
beValle
y
Melbourn
e
Mildura
Wangara
tta
Warrnam
bool
Wodon
ga
Burnie-
Devonp
ort
Hobart
Launc
eston
Very Strong
Strong
Fair
Soft
Very Soft
Very Strong
Strong
Fair
Soft
Very Soft
© Herron Todd White Copyright 2008No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.
markeT iNdiCaTors
The month in review
Victoria/Tasmania Property Market Indicators as at November 2008 – Units
49
Victorian and Tasmanian Property Market Indicators as at November 2008 – Units
Factor Bendigo Echuca Geelong Latrobe Valley
Mel-bourne Mildura Wanga-
ratta Warrnam-bool Wodonga
Burnie -Devon-port
Hobart Laun-ceston
Rental Vacancy Situation Balanced market
Over-supply of available property relative to demand
Shortage of available property relative to demand
Shortage of available property relative to demand
Shortage of available property relative to demand
Balanced market
Balanced market
Balanced market
Balanced market
Shortage of available property relative to demand
Shortage of available property relative to demand
Shortage of available property relative to demand
Rental Vacancy Trend Steady Steady Steady Steady Tightening Steady Steady Steady Steady Steady Steady Steady
Demand for New Units Very soft Soft Fair Fair Soft Soft Fair - Strong Soft - Fair Fair - Strong Fair Fair Fair
Trend in New Unit Construction Declining significantly
Steady Steady Steady Declining Steady Increasing Declining - Steady
Increasing Steady Steady Steady
Volume of Unit Sales Declining significantly
Steady Steady Steady - Declining
Steady - Declining
Steady Increasing Declining Increasing Steady Steady Steady
Stage of Property Cycle Declining market
Bottom of market
Peak of market - Declining market
Declining market
Declining market
Bottom of market
Start of recovery
Peak of market - Declining market
Start of recovery
Bottom of market
Bottom of market
Bottom of market
Are New Properties Sold at Prices Exceeding Their Potential Resale Value
Almost never
Almost never
Almost never - Occasionally
Occasionally Almost never - Occasionally
Occasionally Occasionally Almost never
Occasionally Occasionally Occasionally Occasionally
Red entries indicate change from previous month to a higher risk-rating Blue entries indicate change from previous month to a lower risk-rating
Rental Vacancy Trend
Bendig
o
Echuc
a
Geelon
g
Latro
beValle
y
Melbou
rne
Mildura
Wangara
tta
Warrnam
bool
Wodong
a
Burnie-
Devon
port
Hobart
Laun
cesto
n
TighteningSharply
Tightening
Steady
Increasing
IncreasingSharply
TighteningSharply
Tightening
Steady
Increasing
IncreasingSharply
Stage of Property Cycle
Bendig
o
Echuca
Geelon
g
Latro
beValle
y
Melbourn
e
Mildura
Wangara
tta
Warrnam
bool
Wodon
ga
Burnie-
Devonp
ort
Hobart
Launc
eston
Start ofRecovery
Bottom ofMarket
RisingMarket
Peak ofMarket
DecliningMarket
Start ofRecovery
Bottom ofMarket
RisingMarket
Peak ofMarket
DecliningMarket
Demand for New Units
Bendig
o
Echuca
Geelon
g
Latro
beValle
y
Melbourn
e
Mildura
Wangara
tta
Warrnam
bool
Wodon
ga
Burnie-
Devonp
ort
Hobart
Launc
eston
Very Strong
Strong
Fair
Soft
Very Soft
Very Strong
Strong
Fair
Soft
Very Soft
© Herron Todd White Copyright 2008No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.
markeT iNdiCaTors
The month in review
Victoria/Tasmania Property Market Indicators as at November 2008 – Retail
50
Victorian and Tasmanian Property Market Indicators as at November 2008 – Retail Premises
Factor Bendigo Echuca Geelong Latrobe Valley
Mel-bourne Mildura Wanga-
ratta Warrnam-bool Wodonga
Burnie -Devon-port
Hobart Laun-ceston
Rental Vacancy Situation Balanced market
Balanced market
Balanced market - Over-supply of available property relative to demand
Balanced market - Over-supply of available property relative to demand
Balanced market
Balanced market
Balanced market
Balanced market
Balanced market
Balanced market
Balanced market
Balanced market
Rental Vacancy Trend Steady Steady Steady - Increasing
Steady - Increasing
Steady Steady Steady Steady Steady Tightening Tightening Tightening
Rental Rate Trend Stable Stable Stable - Declining
Stable Stable - Declining
Stable Increasing Stable Increasing Stable Stable Stable
Volume of Property Sales Declining Declining Steady - Declining
Declining Steady - Declining
Declining Declining Steady - Declining
Declining Declining Declining Declining
Stage of Property Cycle Peak of market
Declining market
Declining market
Declining market
Peak of market - Declining market
Declining market
Declining market
Peak of market
Declining market
Declining market
Declining market
Declining market
Local Economic Situation Flat Contraction Flat - Contraction
Flat Contraction Severe contraction
Contraction Flat - Contraction
Contraction Steady growth
Steady growth
Steady growth
Value Difference between Quality Properties with National Tenants, and Comparable Properties with Local Tenants
Significant Small Small Small Small - Significant
Small Significant Small Significant Small Small Small
Red entries indicate change from 3 months ago to a higher risk-rating Blue entries indicate change from 3 months ago to a lower risk-rating
Rental Vacancy Trend
Bendigo
Echuca
Geelong
Latrobe Valley
Melbourne
Mildura
Wangaratta
Warrnambool
Wodonga
Burnie-Devonport
Hobart
Launcesto
n
TighteningSharply
Tightening
Steady
Increasing
IncreasingSharply
TighteningSharply
Tightening
Steady
Increasing
IncreasingSharply
Stage of Property Cycle
Bendigo
Echuca
Geelong
Latrobe Valley
Melbourne
Mildura
Wangaratta
Warrnambool
Wodonga
Burnie-Devo
nport
Hobart
Launcesto
n
Start ofRecovery
Bottom ofMarket
RisingMarket
Peak ofMarket
DecliningMarket
Start ofRecovery
Bottom ofMarket
RisingMarket
Peak ofMarket
DecliningMarket
Local Economic Situation
Bendigo
Echuca
Geelong
Latrobe Valley
Melbourne
Mildura
Wangaratta
Warrnambool
Wodonga
Burnie-Devo
nport
Hobart
Launcesto
n
StrongGrowth
SteadyGrowth
Flat
Contraction
SevereContraction
StrongGrowth
SteadyGrowth
Flat
Contraction
SevereContraction
© Herron Todd White Copyright 2008No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.
markeT iNdiCaTors
The month in review
Queensland Property Market Indicators as at November 2008 – Houses
51
Queensland Property Market Indicators as at November 2008 – Houses
Factor Cairns Towns-ville
Whit-sunday Mackay Rock-
hampton Emerald Glad–stone
Bunda-berg
Hervey Bay
Sun-shine Coast
Brisbane Gold Coast Ipswich Too-
woombaRental Vacancy Situation Balanced
market Balanced market
Over-supply of available property relative to demand
Shortage of available property relative to demand
Balanced market
Shortage of available property relative to demand
Balanced market
Balanced market
Shortage of available property relative to demand - Balanced market
Balanced market
Shortage of available property relative to demand
Shortage of available property relative to demand
Balanced market
Shortage of available property relative to demand
Rental Vacancy Trend Increasing Steady Increasing Steady Increasing Tightening Steady Steady - Increasing
Steady Steady Steady Tightening Steady Tightening
Demand for New Houses Soft - Fair Fair Fair Fair Fair Fair Soft Soft - Fair Soft - Fair Soft Soft Soft Soft Fair
Trend in New House Construction
Declining Declining Declining Steady Steady Steady Declining Declining Declining - Steady
Declining Declining Steady Declining Declining
Volume of House Sales Declining Declining Declining Declining Steady Increasing Declining Steady - Declining
Declining Declining significantly
Declining significantly
Declining Declining Steady - Declining
Stage of Property Cycle Declining market
Declining market
Peak of market
Peak of market
Declining market
Declining market
Declining market
Peak of market
Peak of market - Declining market
Declining market
Declining market
Declining market
Declining market
Bottom of market
Are New Properties Sold at Prices Exceeding Their Potential Resale Value
Occasion-ally
Occasion-ally
Almost never
Occasion-ally
Occasion-ally
Occasion-ally
Almost never
Occasion-ally
Occasion-ally
Occasion-ally
Occasion-ally
Frequently Occasion-ally
Occasion-ally
Red entries indicate change from previous month to a higher risk-rating Blue entries indicate change from previous month to a lower risk-rating
Rental Vacancy Trend
TighteningSharply
Tightening
Steady
Increasing
IncreasingSharply
TighteningSharply
Tightening
Steady
Increasing
IncreasingSharply
Cairns
Towns
ville
Whit
sund
ayMac
kay
Rockh
ampto
nEmera
ldGlad
stone
Bund
aberg
Hervey
BaySun
shine
Coast
Brisba
neGold
Coast
Ipswich
Toow
oomba
Stage of Property Cycle
Start ofRecovery
Bottom ofMarket
RisingMarket
Peak ofMarket
DecliningMarket
Start ofRecovery
Bottom ofMarket
RisingMarket
Peak ofMarket
DecliningMarket
Cairns
Towns
ville
Whit
sund
ayMac
kay
Rockh
ampto
nEm
erald
Gladsto
neBu
ndab
erg
Herve
y Bay
Suns
hine Co
ast
Brisb
ane
GoldCoa
stIps
wichTo
owoo
mba
Demand for New Houses
Very Strong
Strong
Fair
Soft
Very Soft
Very Strong
Strong
Fair
Soft
Very Soft
Cairns
Towns
ville
Whit
sund
ayMac
kay
Rockh
ampto
nEm
erald
Gladsto
neBu
ndab
erg
Herve
y Bay
Suns
hine Co
ast
Brisb
ane
GoldCoa
stIps
wichTo
owoo
mba
© Herron Todd White Copyright 2008No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.
markeT iNdiCaTors
The month in review
Queensland Property Market Indicators as at November 2008 – Units
52
Queensland Property Market Indicators as at November 2008 – Units
Factor Cairns Towns-ville
Whit-sunday Mackay Rock-
hampton Emerald Glad-stone
Bunda-berg
Hervey Bay
Sun-shine Coast
Brisbane Gold Coast Ipswich Too-
woombaRental Vacancy Situation Balanced
market Balanced market
Balanced market
Shortage of available property relative to demand
Shortage of available property relative to demand
Shortage of available property relative to demand
Balanced market
Balanced market - Over-supply of available property relative to demand
Shortage of available property relative to demand - Balanced market
Balanced market
Shortage of available property relative to demand
Balanced market
Balanced market
Shortage of available property relative to demand
Rental Vacancy Trend Increasing Steady Increasing Steady Increasing Tightening Steady Steady - Increasing
Steady Steady Steady Steady Steady Tightening
Demand for New Units Soft - Fair Fair Fair Fair Fair Fair Soft Soft - Fair Soft Soft Soft Very soft Soft Fair
Trend in New Unit Construction
Declining Declining Declining Steady Steady Steady Declining Declining significantly
Declining significantly - Declining
Declining Declining Steady Declining Declining
Volume of Unit Sales Declining Declining Declining Declining Steady Increasing Declining Declining Declining - Declining significantly
Declining significantly
Declining significantly
Declining significantly
Declining Steady - Declining
Stage of Property Cycle Declining market
Declining market
Peak of market
Peak of market
Declining market
Declining market
Declining market
Peak of market - Declining market
Peak of market - Declining market
Declining market
Declining market
Declining market
Declining market
Bottom of market
Are New Properties Sold at Prices Exceeding Their Potential Resale Value
Occasion-ally
Occasion-ally
Almost never
Occasion-ally
Almost never
Occasion-ally
Almost never
Occasion-ally
Occasion-ally
Occasion-ally
Occasion-ally
Very frequently
Occasion-ally
Occasion-ally
Red entries indicate change from previous month to a higher risk-rating Blue entries indicate change from previous month to a lower risk-rating
Rental Vacancy Trend
Cairns
Towns
ville
Whit
sund
ayMac
kay
Rockh
ampto
nEmera
ldGlad
stone
Bund
aberg
Hervey
BaySun
shine
Coast
Brisba
neGold
Coast
Ipswich
Toow
oomba
TighteningSharply
Tightening
Steady
Increasing
IncreasingSharply
TighteningSharply
Tightening
Steady
Increasing
IncreasingSharply
Stage of Property Cycle
Cairns
Towns
ville
Whit
sund
ayMac
kay
Rockh
ampto
nEm
erald
Gladsto
neBu
ndab
erg
Herve
y BaySu
nshin
e Coast
Brisb
ane
GoldCoa
stIps
wichTo
owoo
mba
Start ofRecovery
Bottom ofMarket
RisingMarket
Peak ofMarket
DecliningMarket
Start ofRecovery
Bottom ofMarket
RisingMarket
Peak ofMarket
DecliningMarket
Demand for New Units
Cairns
Towns
ville
Whit
sund
ayMac
kay
Rockh
ampto
nEm
erald
Gladsto
neBu
ndab
erg
Herve
y BaySu
nshin
e Coast
Brisb
ane
GoldCoa
stIps
wichTo
owoo
mba
Very Strong
Strong
Fair
Soft
Very Soft
Very Strong
Strong
Fair
Soft
Very Soft
© Herron Todd White Copyright 2008No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.
markeT iNdiCaTors
The month in review
Queensland Property Market Indicators as at November 2008 – Retail
53
Queensland Property Market Indicators as at November 2008 – Retail Premises Factor Cairns Townsville Mackay Rock-
hampton Gladstone Bundaberg Hervey Bay
Sunshine Coast Brisbane Gold Coast Too-
woomba Rental Vacancy Situation Balanced
market Balanced market
Shortage of available property relative to demand - Balanced market
Balanced market
Shortage of available property relative to demand
Balanced market - Over-supply of available property relative to demand
Balanced market
Balanced market - Over-supply of available property relative to demand
Balanced market
Balanced market - Over-supply of available property relative to demand
Balanced market
Rental Vacancy Trend Steady Steady Steady Steady Steady Steady - Increasing
Steady - Increasing
Steady - Increasing
Increasing Steady - Increasing
Steady - Increasing
Rental Rate Trend Stable Stable Increasing - Stable
Increasing - Stable
Stable Stable Stable - Declining
Stable - Declining
Stable Stable - Declining
Stable
Volume of Property Sales Steady Declining Steady Steady Steady Steady - Declining
Steady Steady - Declining
Declining Declining - Declining significantly
Declining
Stage of Property Cycle Declining market
Declining market
Peak of market Rising market -Peak of market
Peak of market Peak of market Peak of market Peak of market - Declining market
Declining market
Declining market
Peak of market - Declining market
Local Economic Situation Steady growth - Flat
Flat Steady growth Steady growth - Flat
Flat Flat - Contrac-tion
Flat Steady growth - Flat
Contraction Flat - Contrac-tion
Flat
Value Difference between Quality Properties with National Tenants, and Comparable Properties with Local Tenants
Small Significant Small Small - Significant
Small Small - Significant
Small - Significant
Small - Significant
Small - Significant
Significant - Large
Small - Significant
Red entries indicate change from 3 months ago to a higher risk-rating Blue entries indicate change from 3 months ago to a lower risk-rating
Rental Vacancy Trend
TighteningSharply
Tightening
Steady
Increasing
IncreasingSharply
TighteningSharply
Tightening
Steady
Increasing
IncreasingSharply
Cairns
Townsville
Mackay
Rockhampton
Gladstone
Bundaberg
Hervey Bay
Sunshine Coast
Brisbane
Gold Coast
Toowoomba
Stage of Property Cycle
Cairns
Towns
ville
Whit
sund
ayMac
kay
Rockh
ampto
nEm
erald
Gladsto
neBu
ndab
erg
Herve
y BaySu
nshin
e Coast
Brisb
ane
GoldCoa
stIps
wichTo
owoo
mba
Start ofRecovery
Bottom ofMarket
RisingMarket
Peak ofMarket
DecliningMarket
Start ofRecovery
Bottom ofMarket
RisingMarket
Peak ofMarket
DecliningMarket
Local Economic Situation
StrongGrowth
SteadyGrowth
Flat
Contraction
SevereContraction
StrongGrowth
SteadyGrowth
Flat
Contraction
SevereContraction
Cairns
Townsville
Mackay
Rockhampton
Gladstone
Bundaberg
Hervey Bay
Sunshine Coast
Brisbane
Gold Coast
Toowoomba
The month in review
© Herron Todd White Copyright 2008No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.
markeT iNdiCaTors
Northern Territory, South Australia & Western Australia Property Market Indicators as at November 2008 – Houses
54
SA, NT and WA Property Market Indicators as at November 2008 – Houses Factor Adelaide Adelaide
Hills Barossa Valley
Iron Triangle
Alice Springs Darwin Bunbury Busselton Duns-
borough Geraldton Perth
Rental Vacancy Situation Shortage of available property relative to demand
Shortage of available property relative to demand
Balanced market
Shortage of available property relative to demand - Balanced market
Shortage of available property relative to demand
Severe shortage of available property relative to demand
Over-supply of available property relative to demand
Balanced market
Shortage of available property relative to demand
Balanced market
Balanced market
Rental Vacancy Trend Steady Steady Steady Tightening Steady Steady Steady Tightening Tightening Steady Tightening
Demand for New Houses Fair Fair Fair Fair Fair Strong Soft Soft Soft Soft Fair
Trend in New House Construction Steady Steady Declining Steady Steady Steady Declining Declining Declining Steady Increasing
Volume of House Sales Declining Declining Declining Declining Steady Declining Declining Declining Declining Declining Increasing
Stage of Property Cycle Declining market
Declining market
Declining market
Peak of market
Peak of market
Peak of market
Declining market
Declining market
Declining market
Declining market
Declining market
Are New Properties Sold at Prices Exceeding Their Potential Resale Value
Occasionally Occasionally Occasionally Occasionally Occasionally Occasionally Almost never Occasionally Occasionally Almost never Frequently
Red entries indicate change from 3 months ago to a higher risk-rating Blue entries indicate change from 3 months ago to a lower risk-rating
Rental Vacancy Trend
TighteningSharply
Tightening
Steady
Increasing
IncreasingSharply
TighteningSharply
Tightening
Steady
Increasing
IncreasingSharply
Adelaide
Adelaide Hills
BarossaValley
Iron Tria
ngle
AliceSprings
Darwin
Bunbury
Busselton
Dunsborough
GeraldtonPerth
Stage of Property Cycle
Start ofRecovery
Bottom ofMarket
RisingMarket
Peak ofMarket
DecliningMarket
Start ofRecovery
Bottom ofMarket
RisingMarket
Peak ofMarket
DecliningMarket
Adelaide
Adelaide Hills
BarossaValley
Iron Tria
ngle
AliceSprin
gsDarwin
Bunbury
Busselton
Dunsborough
GeraldtonPerth
Demand for New Houses
Very Strong
Strong
Fair
Soft
Very Soft
Very Strong
Strong
Fair
Soft
Very Soft
Adelaide
Adelaide Hills
BarossaValley
Iron Tria
ngle
AliceSprings
Darwin
Bunbury
Busselton
Dunsborough
GeraldtonPerth
© Herron Todd White Copyright 2008No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.
markeT iNdiCaTors
The month in review
Northern Territory, South Australia & Western Australia Property Market Indicators as at November 2008 – Units
55
SA, NT and WA Property Market Indicators as at November 2008 – Units Factor Adelaide Adelaide
Hills Barossa Valley
Iron Triangle
Alice Springs Darwin Bunbury Busselton Duns-
borough Geraldton Perth
Rental Vacancy Situation Shortage of available property relative to demand
Shortage of available property relative to demand
Balanced market
Balanced market - Over-supply of available property relative to demand
Balanced market
Shortage of available property relative to demand
Over-supply of available property relative to demand
Balanced market
Shortage of available property relative to demand
Shortage of available property relative to demand
Shortage of available property relative to demand
Rental Vacancy Trend Steady Steady Steady Steady - Increasing
Steady Steady Steady Tightening Tightening Steady Tightening
Demand for New Units Fair Fair Fair Fair Fair Strong Soft Soft Soft Fair Fair
Trend in New Unit Construction Steady Steady Declining Steady Steady Steady Declining Declining Declining Steady Declining
Volume of Unit Sales Declining Declining Declining Declining Steady Declining Declining Declining Declining Steady Steady
Stage of Property Cycle Declining market
Declining market
Declining market
Peak of market - Declining market
Peak of market
Peak of market
Declining market
Declining market
Declining market
Declining market
Declining market
Are New Properties Sold at Prices Exceeding Their Potential Resale Value
Occasionally Occasionally Occasionally Occasionally Occasionally Occasionally Almost never Occasionally Occasionally Almost never Occasionally
Red entries indicate change from 3 months ago to a higher risk-rating Blue entries indicate change from 3 months ago to a lower risk-rating
Rental Vacancy Trend
TighteningSharply
Tightening
Steady
Increasing
IncreasingSharply
TighteningSharply
Tightening
Steady
Increasing
IncreasingSharply
Adelaide
Adelaide Hills
BarossaValley
Iron Tria
ngle
AliceSprings
Darwin
Bunbury
Busselton
Dunsborough
GeraldtonPerth
Stage of Property Cycle
Start ofRecovery
Bottom ofMarket
RisingMarket
Peak ofMarket
DecliningMarket
Start ofRecovery
Bottom ofMarket
RisingMarket
Peak ofMarket
DecliningMarket
Adelaide
Adelaide Hills
BarossaValley
Iron Tria
ngle
AliceSprings
Darwin
Bunbury
Busselton
Dunsborough
GeraldtonPerth
Demand for New Units
Very Strong
Strong
Fair
Soft
Very Soft
Very Strong
Strong
Fair
Soft
Very Soft
Adelaide
Adelaide Hills
BarossaValley
Iron Tria
ngle
AliceSprings
Darwin
Bunbury
Busselton
Dunsborough
GeraldtonPerth
© Herron Todd White Copyright 2008No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.
markeT iNdiCaTors
The month in review
Northern Territory, South Australia & Western Australia Property Market Indicators as at November 2008 – Retail
56
SA, NT and WA Property Market Indicators as at November 2008 – Retail Premises Factor Adelaide Adelaide Hills Barossa
Valley Iron Triangle Alice Springs Darwin South West WA Geraldton Perth
Rental Vacancy Situation Balanced market Balanced market - Over-supply of available property relative to demand
Balanced market - Over-supply of available property relative to demand
Balanced market Balanced market Balanced market Balanced market Shortage of available property relative to demand
Balanced market
Rental Vacancy Trend Steady Steady Steady Steady Steady Tightening Steady Tightening Steady
Rental Rate Trend Stable Stable Stable Stable Stable Stable Stable Increasing Stable
Volume of Property Sales Declining Declining Declining Declining Steady Steady Steady Increasing Declining
Stage of Property Cycle Peak of market Peak of market Peak of market Peak of market Peak of market Rising market Declining market Rising market - Peak of market
Declining market
Local Economic Situation Contraction Flat Steady growth - Flat
Flat Steady growth High growth Flat Steady growth Steady growth
Value Difference between Quality Properties with National Tenants, and Comparable Properties with Local Tenants
Small Small Small Small Small Significant Nil Nil Significant
Rental Vacancy Trend
TighteningSharply
Tightening
Steady
Increasing
IncreasingSharply
TighteningSharply
Tightening
Steady
Increasing
IncreasingSharply
Adelaide
Adelaide Hills
Barossa Valley
Iron Triangle
Alice SpringsDarwin
South West WA
GeraldtonPerth
Stage of Property Cycle
Start ofRecovery
Bottom ofMarket
RisingMarket
Peak ofMarket
DecliningMarket
Start ofRecovery
Bottom ofMarket
RisingMarket
Peak ofMarket
DecliningMarket
Adelaide
Adelaide Hills
Barossa Valley
Iron Triangle
Alice SpringsDarwin
South West WA
GeraldtonPerth
Local Economic Situation
StrongGrowth
SteadyGrowth
Flat
Contraction
SevereContraction
StrongGrowth
SteadyGrowth
Flat
Contraction
SevereContraction
Adelaide
Adelaide Hills
Barossa Valley
Iron Triangle
Alice SpringsDarwin
South West WA
GeraldtonPerth
