Australian property shows 8% growth in 2009

National property values jumped by almost 2 per cent in August in the largest monthly movement since the RP Data-Rismark Home Value Indices began in January 2005.

Using the rpdata.com (ASX: RPX) property database, which is Australia’s largest and includes over 170,000 sales during the first eight months of 2009, Australia’s housing recovery solidified during the month of August with strong capital gains registered across the country despite evidence of slightly decreasing first home buyer numbers.

Home values in Australia rose by an exceptional 1.9 per cent during the month of August. This brings cumulative capital growth in the first eight months of 2009 to a better than expected 7.9 per cent. According to rpdata.com research director, Tim Lawless, the August results surprised on the upside and are indicative of very high levels of buyer confidence combined with low levels of property available on the market.

“These buoyant conditions sit in striking contrast to the same time last year when values were falling in some states, less than half of the auctions held cleared and sales volumes were at rock bottom. We are now seeing home values rising at a solid rate, almost 80 per cent of auctions are clearing, and sales volumes have bounced back significantly”, Mr Lawless said.


Rismark International managing director, Christopher Joye, added, “Australia’s housing market is being underpinned by the strongest population growth since 1971, record housing shortages, historically low mortgage rates, better than expected employment outcomes, and one of the world’s most profitable banking systems.”

Australian home values have now risen 3.8 per cent past their February 2008 peak. This rebound followed peak-to-trough falls in national home values of just 3.8 per cent in 2008, which compares exceptionally well with the 15 per cent and 30 per cent house price declines seen in the UK and US, respectively.

Dispelling concerns that the recovery is limited to first home buyers Mr Joye commented, “In contrast to claims that this is a first time buyer bubble, the cheapest 20 per cent of suburbs in Australia have actually underperformed both the mid-priced market and Australia’s 20 per cent most expensive suburbs since the housing market bottomed in December 2008.”

“As recently noted by the RBA, all major lenders now require a minimum 10 per cent deposit and are applying the strictest credit standards we’ve seen in over a decade. Australian housing credit growth has also been running at levels that are extremely low by historical standards and noticeably less than the growth experienced in the 1991 recession,” Mr Joye said.

Rpdata.com’s Tim Lawless concurred with Mr Joye and said that over the last three months the premium residential market increased in value by 4.5 per cent compared with a 3.4 per cent gain in the middle market and a 2.8 per cent improvement at the cheapest end.
“Despite the strong gains, the bounce in the premium sector has not been enough to offset the peak to trough fall of 9.9 per cent between February 2008 and January 2009.Prices in Australia’s most expensive markets are still 1.1 per cent lower than at their peak.”

Mr Joye added, “While the resounding recovery in Australia’s housing market confirms our forecasts, we expect medium term growth rates to be more measured as mortgage rates normalise back to between 7-8 per cent. This would bring the cost of housing finance back in line with its 2000-01 levels, which is notably well below the searing 9.6% highs endured by borrowers in August 2008 care of the RBA.”

In closing Tim Lawless said that the upward momentum in Australian house prices is a critical economic signal from the market to builders and developers to encourage them to reinvest in producing new housing supply. This was a message reinforced by the RBA’s Dr Anthony Richards in a speech to CEDA yesterday: policymakers need to facilitate significant new investment in housing supply to alleviate Australia’s growing housing shortage, which ANZ and Westpac estimate has risen to around 200,000 homes.


“This price growth will also go a long way to comforting risk-averse lenders to start providing credit again to developers, which has been one of the main bottlenecks on the supply-side. And it will stimulate the reallocation of resources away from other sectors of the economy into much-needed housing investment.” Mr Lawless said.

Other key findings from the August RP Data-Rismark Index results:

Unit values (+2.1 per cent) have marginally outperformed house values (+1.8 per cent) in the month of August. Over the course of 2009, units (+8.5 per cent) have also generated slightly higher capital growth than houses (+7.7 per cent).

Most capital cities recorded robust gains in the month of August with every single city experiencing rises in home values during the first eight months of 2009.

After several years of subdued growth following the end of Australia’s last housing boom in 2003, which saw Australia’s “house price-to-income ratio” fall by nearly 20 per cent through to December 2008, home values in the two major capital cities, Melbourne and Sydney, have led the recovery in 2009 with total capital gains of 11.6 per cent and 8.6 per cent, respectively.

Following Melbourne, Darwin has been the next best performing capital city with growth of 9.7 per cent in 2009. Interestingly, Darwin also continues to deliver the highest rental yields, implying that the market may have room for further growth.

Home values in Canberra (+6.7 per cent), Brisbane (+5.2 per cent), Perth (+4.1 per cent) and Adelaide (+3.1 per cent) have also realised sustained gains in 2009.

As RP Data-Rismark correctly anticipated, residential real estate in Perth has experienced a recovery in 2009 after a period of falling prices since September 2007. While Perth dwellings have recorded 4.1 per cent growth in the first eight months of the year they still remain 3.6 per cent below their September 2007 peak.

National rental yields have softened slightly given the strong capital growth with the gross annualised rental yield for units being 5.1 per cent while house rental yields are slightly lower at 4.3 per cent.

If you are looking for a well performing residential or commercial investment property, an addition to your existing property portfolio or a home to live in, we guarantee to save you money on your next real estate purchase. Go to http://www.directnegotiations.com.au/ or call the team on +61 (0)8 84631997

FIRST- HOME BUYER’S BOOST TO BE PHASED OUT.

From 1 October 2009 the First Home Owners Boost payment, as part of the Federal Government Stimulus Package will be cut in half.
During 1 October – 31 December 2009 an eligible applicant who signs a contract to purchase an existing home will receive an extra $3,500, as opposed to the $7,000 previously. While signing a contract to purchase or construct a new home during the same period will provide an additional $7,000, instead of the $14,000 offered before the 1 October 2009. After 31 December 2009 the Boost payment will cease and only the standard First-Home Owner’s Grant will apply.
Consequently, there is likely to be a ‘Rush’ of first-home buyers entering the market to capitalize on the additional funds before the Boost expires at end of the year. It is likely that during this period there will be hyper-inflated prices in some entry-level properties as increased demand and limited stock availability pushes up prices. Therefore, buyers need to be very cautious of the true value of properties targeted at first-home buyers during this period.


Auctions, especially are going to be difficult to gauge during this time of high emotions with the effective application of real estate marketing methods by experienced sales agents and auctioneers playing on the under researched and/or vulnerable. The best advice is to become market-educated, understand your target areas and the true value of properties without the hype. It is always recommended to get professional advice on building and pest inspections to ensure a sound structure and independent advice from a property professional. If you think you may be eligible for the First-Home Owner’s Grant and wish to capitalize on the Boost then please contact a team member at Direct Negotiations for a free, no-obligation discussion on your options.
Written by Chris Nicolas at Direct Negotiations



If you are looking for a well performing residential or commercial investment property, an addition to your existing property portfolio or a home to live in, we guarantee to save you money on your next real estate purchase. Go to http://www.directnegotiations.com.au/ or call the team on +61 (0)8 84631997

Le Fevre Peninsula in high demand.

With so many choices for investment, identifying quality investment property locations can be a challenging job for current investors. Project marketers and seminar spruikers push suburbs where they have teamed up with developers, offering far from un-biased opinions on Adelaide’s future ‘hot-spots.’ Helpful relations at weekend barbecues too will offer their ‘expert’ opinions on where you should or should not direct your capital or potential Self Managed Super Fund. One such client, confused and seeking independant advice recently asked our opinion on a western coastal suburb... Osborne.
In terms of investment potential, the Port’s redevelopment and the long-term defence contracts at Osborne will drive property investment throughout most Le Fevre peninsula suburbs.
Semaphore, Exeter, Ethelton, Glanville and Peterhead are particularly in demand in the expectation they will outperform other suburbs, according to UniSA property lecturer Peter Koulizos. These five suburbs were also named by Australian Property Investor magazine recently in a list of the top 100 property hotspots in Australia. My opinion is the entire area will lift as a whole so we are then able to focus on stand out opportunities in the broader Le Fevre area.
Key drivers for growth in the area are the ongoing Port Adelaide regeneration and the $10 billion+ defence projects for the construction of submarines and air warship destroyers on the Port River.
Techport Australia, the evolving naval industry hub based at Osborne in the Port Adelaide area, is home to naval shipbuilder ASC and it's where three Air Warfare Destroyer vessels will be built for the navy at a cost of $8bn, to be followed by a $15bn (some reports say $30bn) enterprise to create 12 new submarines. The facility has state government backing, in the form of $300 million worth of state-owned infrastructure. The supplier precinct for naval defence and related businesses covers 35ha initially, but there are 500ha available for long-term development.
The $8bn project to create three major vessels for the navy is under way, with ships to be delivered in 2014, 2016 and 2017 (with possibly a fourth destroyer to follow). Next in line is the submarine construction venture, Australia's largest defence project. Techport is already home to the Collins submarine support program, a 25-year contract. Outside Techport, but in the Port Adelaide area, new port infrastructure is to be developed by BHP Billiton to support its massive expansion of the Olympic Dam mine at Roxby Downs. Already awarded are a $40m contract with BAE Systems Australia (satellite communications), a $10m project with Babcock Strachan & Henshaw (torpedo launch tubes) and a $40m deal with Raytheon Missile Systems.

Much of the defence work at Osborne will require skilled workers and many of them will come from overseas. The state government expects the naval defence work to lift the state's defence workforce from 16,000 to 28,000 within three or four years. As most people generally want to live close to where they work, suburbs in and around Osborne will be in high demand.

So in summary, the factors suggest this area will perform positively. We encourage all of our clients to remain logical and seek independant unbiased advice before committing to major property investment. For advice on what opportunities we currently see arising in the Adelaide market, call Ben Ottewill at Direct Negotiations for a no-obligation chat.

If you are looking for a well performing residential or commercial investment property, an addition to your existing property portfolio or a home to live in, we guarantee to save you money on your next real estate purchase. Go to http://www.directnegotiations.com.au/ or call the team on +61 (0)8 84631997