Property Market Update July 2009

Australian property growth forecast to continue as interest rates remain low and our population growth continues.  Undersupply set to continue as developers shelve apartment plans due to the financial crises.  NSW Stamp Duty savings announced for new property.  For those looking to invest in property in Sydney & Melbourne, our fundaments are looking very positive.

Excerpts taken from our Priority Investors Update in July 2009.  Subsrcribe now to receive the latest market updates.

Dear Investor

It’s a been a little while since our last update.  For those who have joined us since then, a very warm welcome to you.
Please find following:

A brief update on our soon to be released, new off plan projects in Sydney & Melbourne.
A Market Update including news of new Sydney stamp duty savings and lastly,
An overview of John’s picks of our currently available properties, the best of our available 1 & 2 bedroom options (including limited one beders available in a small Brunswick project) plus a completed Sydney Commercial Property option with a 8% net yields (tenants in place) from $300,000.

Upcoming Stock:

Sydney:

Home Port Investors to receive access prior to public launch!

We will be launching a brand new project and expect that it will be available on our Investors website on Monday the 13th of July.  It will be off plan with an expected completion time in late 2010, early 2011.  This will make this project eligible for the NSW state Governments 50% Stamp Duty discount (see further information below in our Market update section).  The project has very good price points and an excellent mix of 1 & 2 bedroom apartments.  It is located in Sydney’s north west, around 18kms from Sydney CBD.  This will be stage one of a multi-stage project, high quality apartments will be built above a brand new shopping complex (which will be completed prior to apartments completing), close to transport.  Due to the elevated site, many apartments will have excellent aspects including views back to the Sydney city skyline or looking towards the mountains.

We expect to have our usual rental guarantee and other exclusive investor benefits in place.  As soon as we have information on this project, we will send out a specific email.  Our investors will have access to this project prior to its public launch.
As we have said previously, we expect to be focussing on Sydney & Melbourne over the next 12 months, as that is where we feel the best investment potential is.  Having said that, it is very difficult to find good quality projects that are well located and priced well in the current market.  Having knocked back many Sydney projects in the last few months, we are very excited about this project, as it meets all of our criteria.

Melbourne:

We expect to have  3 new off plan projects, all within the next 3 to 4 weeks.  Once the developers are ready to move we will have these projects for our investors, they are just waiting n final approvals etc.  Like Sydney, it has been very frustrating given that there is a real lack of available stock (which is one of the key reasons that now is a great time to invest)  and we have  knocked back several projects over the last few months, which other agents have launched, as we have felt that they do not stack up given their price, location, quality of build etc.  But, we are very confident that the projects that we will be bringing to our investors over the coming weeks will offer excellent opportunities, good price points, full off plan stamp duty savings, rental guarantees and most importantly, excellent investment potential.   As soon these projects are ready, we will send you full information.

As always, all of our projects will be available to local and non resident investors and also those looking to owner occupy.

Market Update:

A few things to report, though in one sense not much new at all.  Throughout this year we have been suggesting that Australia is well placed given the world financial turmoil, that prices will steadily climb, that population growth is set to continue at record levels, that vacancy rates are low and set to continue to be at record lows – leading to rental increases, that we have an undersupply of properties and that developers are finding it hard to secure financing – putting further pressure on prices due to demand exceeding supply.  The only real change now is that the above is all being  reported in the media , price growth, low vacancies, lack of stock, population growth etc etc.  The figures are starting to come through to support what we have been suggesting since earlier this year.

Here are  some of the headings and first paragraphs of just a few of the articles that I have looked at that relate to the property market, particularly in Sydney & Melbourne over the last few months, just so that you can get a feel for the market etc.  They are listed in chronological order.

Australia In Good Shape To Face Slump (The Australian)  April 20th:
“The era of financial deregulation left Australian consumers in good shape to deal with the downturn, contrary to widespread opinion.  Although households are carrying higher debt, they have substantially greater wealth, income and savings than they did a decade ago.”


House Price Rise Bucks Global Trend
(Tribune) April 30th:
“The value of Australian homes increased in the first quarter, bucking a global trend downwards, according to a report issued today.”

$2 Billion In Inner City Flats Put Off  (The Age)  28th May 09:
“PLANNED apartments worth more than $2 billion have been shelved or abandoned in inner Melbourne because of the financial crisis.”

Melbourne’s Apartment Market Set For Solid Recovery (Your Mortgage)  28th May:
“Investors who can look pass the current downturn are set to reap around 30% increase property value in Melbourne’s inner city apartment market between 2009 and 2014, according to an expert.
Angie Zigomanis, senior project manager at BIS Shrapnel said the global financial crisis is setting the scene for the next upturn in the inner Melbourne apartment market.”

Property Values Surge in 2009 (Money) 29th May:
“Property prices surged in the first part of 2009, erasing last year’s losses and bucking the global trend.”
I love this quote from Craig James, Chief Economist from Comsec:
“Australia has been called the ‘wonder from down under’ because our home prices are not falling at 20 per cent annual rates like in the US and UK,” he said. “However the situation is far from remarkable. Population is rising at the fastest rate in 40 years, interest rates are super-low and we have a very tight rental market. It is simple demand and supply – demand is outstripping the supply of homes, putting upward pressure on prices.”

Property Could Get a Boost (Herald Sun)  June 15th Herald Sun :
“HOUSE prices in Melbourne and Sydney could rise by as much as 19 per cent over the next three years with a leading economic forecaster tipping that “conditions are ripe” for a sustained recovery in the property market.”


Fewer Aussies to Lose Jobs
(News) June 25th 2009 :
“FEWER Australians are likely to lose their jobs over the next year than previously thought, as the economy performs 10 times better than other advanced countries.”

Rental Vacancy Rates Slide Across NSW (Brisbane Times) June 25th:
“Rental vacancy rates across NSW have dropped even further, with Sydney recording its lowest rate in 12 months, Real Estate Institute figures show”

Stalled developments threaten Sydney’s housing boom June 29th Daily Telegraph:
“HOUSING in Sydney is more affordable than it has been for two decades, allowing more people into the market than ever.
Stagnant inflation, low interest rates, rising incomes and soft prices mean that affordability has improved by 40 per cent during the past year.  But stalled developments threaten to ruin the real estate honeymoon as NSW experiences a historic slump in development approvals, according to quarterly data by independent research firm Property Insight.
If we don’t start building more, prices are going to go through the roof,” researcher Rob Ellis”

Melbourne’s Population Surge (The Melbourne Age) July 1st:
“Melbourne will add 70,000 residents each year for the next five years making it the highest urban growth area in Australia.
The population rise means Melbourne will need 29,000 new homes a year for the next five years – especially alternative housing such as houses on smaller lots, townhouses, villas and apartments. “

Melbourne in housing recovery (Melbourne Age July 1st) :
“A five-month surge in Melbourne house prices has undone the damage to the property market wrought by the global financial crisis, pushing the median house price to $469,357 and the median unit price to $377,077 — both record highs.
So far this year, Melbourne prices have soared the fastest in the nation, jumping 6.1 per cent in five months to eclipse 5 per cent-plus gains in Sydney and Darwin. Only Perth prices continued to fall.”

As you can see, the fundamentals for property investment are very strong and with our low interest rates and low vacancy rates, now is an excellent time to be investing in property in Melbourne & Sydney.

In other news:

NSW Stamp Duty Savings:

Part of the latest NSW State Government Budget included the “NSW Housing Construction Acceleration Plan”
From 1 July 2009, the NSW Government has introduced a housing stimulus for people outside the first home buyer market (this includes investors, both resident and non resident), cutting stamp duty by 50 per cent for people buying newly constructed properties with a value not exceeding $600,000.   This includes off plan purchases, as long as the project completes by June 2011.

Here are the full details: http://www.osr.nsw.gov.au/

This will mean a saving of $6,745 on a $400,000 purchase, a saving of $10,120 on a $550,000 purchase.

John’s Picks from our Current Properties

Melbourne:

One bedroom Apartments:

One beders are in very limited supply at the moment.  They have sold out very quickly in all of our major project releases over the last few months.

What we do have is a small project in Brunswick, just 21 apartments in the block, there are just a few one bedroom apartments available, priced from $289,950.  Just 5.5kms from the CBD and due to complete in mid 2010.

Two Bedroom Apartments:

Sales have continued to be very strong on our existing projects.  But there are still some excellent  opportunities:

St Kilda East- $515,000.  2 bedroom, 2 bathroom apartments.  Late 2010 completion.  Very nice boutique project.  These two apartments are on level 2 (top floor) excellent natural light, privacy and great aspects.

Brunswick:  Apartment 307 at $535,000 or apartment 406 at $546,000.  Both have large balconies, 2 bathrooms.  Good location, just 5kms from the CBD, close to Melbourne University & Royal Melbourne Hospital.

Sydney Commercial Property: a business estate in Alexandria, just 4.5kms from the Sydney CBD and just 4.5kms from Sydney Airport.  Priced from $300,000 to $1,015,000.  This project is complete now, secure tenants are in place and investors returns are around 8% net, with long term leases in place with include periodic rental increases.

More information on the above properties:

All of the above projects are listed on our Investors website, access via user name and password.  If you are not a subscriber, just complete your details in our Priority Investor section and you can then gain full access to all of our current projects.  In addition you will receive email advise on new projects as they launch.

Regards

John

The above update is part of our July 2009 Priority Investors Update.  If you would like to receive regular market updates and news on our latest release off plan properties, please complete your Priority Investor details .