Property Market Update December 2009

Rents rising, residential property stock extremely low and population growth on the rise. As we have suggested all year, it’s been a very positive year for property investors and we expect the good news will continue for 2010.

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

Dear Investor

As Christmas draws near I just wanted to send out a brief update and also take this opportunity to wish all of our Investors a Merry Christmas and Prosperous New Year.   

The Market:

The story hasn’t really changed all year and it is much of the same for the foreseeable future.  You may like to have a look at our various market updates throughout this year, they are in the Investors Room section of our website. We have spoken all year about a lack of supply due to low building starts, and an increase in demand due to rising population and suggested that these two factors would lead to increased property prices and increasing rentals.  And they have!

We expect more of the same in to 2010.  Bis Shrapnel just recently released their “Residential Property Prospects, 2009 to 2012” some of the key points of that report included:

·    Rents predicted to rise over the next 3 years at an average 5% or more in Melbourne, Sydney & Brisbane.  Rental growth forecast for 2010 to 2012, the top 3 growth cities are Sydney 7.1%, Melbourne 5.6% & Brisbane 5%.

·    About 30,700 medium to high density apartments will be started this year , a fall of 30% on 2008 and the lowest level of starts since the recession of 1991.

·    Demand remains strong with net overseas migration in 2008-09 estimated at a record high 300,000 people.

The general mood is certainly a very positive one in Australia.  The National Australia Bank just released details of it’s latest monthly Business Survey and it shows that business confidence is at it’s highest level since May 2002.

The Reserve Bank certainly seems to agree.  In a speech given by Deputy Reserve Bank Governor Ric Battellino in late November he suggested that Australia can look forward to years of brisk economic growth built on booming resource investment, rapid population growth and rising household incomes.

As regards whether our housing prices are sustainable Mr Battellino suggested that whilst Australian housing prices relative to incomes did seem high, compared to say the U.S., he saw good reasons for this, including the fact that Australian households spend less of their incomes on non-housing consumption than Americans and tended to pay off their debts quicker. 

2009 has been an excellent year, given where we were at  this time last year most had not expected such a strong property market with solid capital and rental growth throughout the year.

Our focus for 2010 will remain on Melbourne & Sydney, with some Brisbane projects also likely.  We are currently working with developers on a number of new off  plan projects and we expect to be able to offer our investors some excellent options in the New Year.

We have had the pleasure of launching some excellent projects this year and giving our Investors first pick of the crop on most of those projects, as well as exclusive investor benefits.   We expect that those projects will perform very well.

We have had a number of projects settle this year.  CVU apartments in Port Melbourne have just recently settled, most of our clients already have tenants in place and the actual rents are above the projected rents in most cases.  The Rosso apartments in Melbourne’s Carlton completed in May this year.  They rented out very quickly, most at a higher amount than the projected rentals.  We are aware of a resale a few months ago for a one bedroom apartment that was $45,000 above the original sale price.  Rosso just recently won the “High Density Award for 2009” from the Urban Development Institute of Australia. 

With property prices and rents on the rise it’s been a great year.  In fact one of our investors who has had two properties settle this year, which they had purchased through us off plan,  just recently sent me the following email:
 “Hi John,
 Hope you are well!  All our purchases have now settled and we have tenants – all cash positive!
 We are interested in…”     Clients are now looking for their next property.

We have at times in 2009 been a little low on stock.  The reality is that there is very limited stock available, for the reasons highlighted above.  As we see every year there is also a lot of rubbish on the market and plenty of overpriced stock  and we do literally knock back more projects than we move forward with.  Whilst it is always tempting to list property and offer our investors a broad choice we have and will continue to only list projects which we feel offer excellent investment potential. 

It’s our goal to do everything that we can to ensure an excellent investment, which is why so many of our investors are repeat buyers.   It is interesting to note that we have had staff members buy in several of our projects released this year and we are aware of several of our projects where the developers staff have invested in those projects.  Many of our 2009 projects have sold out in record time once publicly released. 

In 2010 we will continue to concentrate on quality rather than quantity.

We look forward to bringing you our latest projects in the New Year.  We again expect to be able to offer very early access and exclusive investor benefits such as rental guarantees on our 2010 projects.

We would like to take this opportunity to wish you and your families a very Merry Christmas and Prosperous New Year.

Regards

John

The above update is part of our December 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.