Brisbane Canal-front land sales update Sales of new canal-front blocks on the Gold Coast have slowed, however according to research prices have not decreased.

The average canal-front block costs between $700,000 and $1 million on the Gold Coast.

Over the long term waterfront land on the Gold Coast has increased in value at about 15% per annum.

The value of waterfront land should not go any lower due to its scarcity and will probably increase further. Source: (AFR Pg. 58)

Sydney rental growth update Rental growth over the year to March 2011 for Sydney is 7.5% (two and four bedroom dwellings).

The largest increase in median rents was recorded for the outer-ring suburbs for two bedroom dwellings which rose by 9.4%.

The local government areas that recorded the largest increases in median rents for two bedroom flats/units were Botany Bay (35.1%), Ku-ring-gai (14.6%), Mosman and Campbelltown (12.5%) and Sutherland and Pittwater (11.1%).

For one-bedroom apartments, some of the biggest increases in median rents were recorded in Liverpool (23.1%), Leichhardt and Woollahra (12.5%) and Gosford (25.7%).

Two-bedroom houses recorded large increases in Rockdale (15.5%) and the Blue Mountains (11.5%).

Source: (AFR Pg. 48)

The importance of the development of West Dapto is highlighted by a recent report :

Population is expected to increase by approximately 59,000 people over the next 25 years, driven largely by migration from the Sydney basin" The key issue is how to provide up to 33,000 dwellings over this period when a number of current release areas are rearing completion and there are limited opportunities for new release areas - West Dapto is one of the last areas with this potential. Increased densities within existing centres will need to be encouraged to meet the demand for housing and the need for increased housing choice.

Department of Infrastructure Planning and Natural Resources Illawarra and South Coast Regional Strategies, Background Paper

Delfin to launch record number of projects Delfin Lend Lease is gearing up for a busy 12 months, launching a record number of residential community projects.

Delfin Lend Lease, which is part of global property group Lend Lease, specialises in developing master-planned residential communities and has 60,000 lots under management.

This year the company is launching seven, maybe eight, new projects which is unprecedented in Delfin Lend Lease’s history.

This means an additional 45,000 homes will be available across Australia as these projects are completed over the next 30 years.

One of the projects is the Alkimos master-planned community in Western Australia, which will comprise 10,000 dwellings on completion. The initial 224-hectare stage, which Delfin Lend Lease is to begin work on this year, is expected to be valued at $400 million.

In Victoria, the developer has also been selected by the Melton Shire Council as the preferred developer for the $1.2 billion Toolern master-planned community project.

In NSW the concept plan for the 4,800-home Calderwood master-planned community project in the Illawarra region has been approved by the NSW government.

 SOURCE: (AFR Pg. 49)

JOBS

The ABS recently released its January unemployment data. This data is relevant to investors because jobs being one of the biggest drivers of property prices.

ABS jobs data recorded Australia's unemployment at 5% which is very good when comparing to most of the Western World (e.g. unemployment in the States is still hovering around 10%).

However, a closer look at the numbers suggests that everything isn't quite as good as it may seem. This is because although the unemployment rate remained unchanged, the economy actually shed 8,000 full time jobs and grew 32,000 part time jobs.

Lenders don't view a part time job as favourably as a full time job which could mean less demand due to difficulties in financing. In other words, the employment slippage actually points to further evidence of a lull in the property market.

Momentum is a very powerful force, and investors need to bear in mind that the economic effect of the floods, cyclones and bush fires is still to flow through the economy and as such, one should assume property prices are set to stagnate for some time to come.

BUILDING APPROVALS

Building approvals for apartments lifted by more than a third in December 2010 from the same time the previous year, according to figures released this week by the Australian Bureau of Statistics.

The total number of residential building approvals rose by 8.7 per cent in December 2010 to be up by 1.8 per cent over the previous quarter. The figure remains 3.4 per cent lower than in the same quarter of 2009.

The improvement was driven by the increase in the number of private sector `other' dwellings, which rose by 21.3 per cent, to be 37.9 per cent higher than in December 2009. Private sector houses remained flat in December, to be down by 16 per cent over the course of 2010. New South Wales recorded the highest number of approvals with a 16.7 per cent rise (seasonally adjusted) although this follows a 12.0 per cent decline in November. 

Increases were recorded in Victoria (up by 11.4 per cent), South Australia (up by 1.1 per cent) and Tasmania (up by 9.9 per cent).  Falls were reported in Queensland (down by 5.7 per cent) and Western Australia (down by 4.2 per cent).  In trend terms approvals in the ACT were up by 7.5 per cent while Northern Territory approvals fell by 12.0 per cent.    

SOURCE: ABS, RESIDEX

The major banks are now reviewing the Gold Coast million plus market.

The Banks major concerns would be the three large developments  ( Oracle, Hilton and Soul) coming to finalisation now and over the next 12 months that will see approximately 800 $1millon+ apartments hit the Gold Coast market. This level of new stock may take many years to absorb under current market conditions.

Pre-sale contract values in some cases will be years old and significantly greater than the current realistic market value. Settlement risk is a major issue for developer ( vendor) financiers as is purchaser funding risk given the market value diminution.

We expect some fire sales, and the top tier of the apartment market will be worried about the immediate future. If you are currently looking to purchase a premium apartment on the Gold Coast make sure you do your due diligence and purchase wisely in the current environment.

Property markets around Australia have finally felt the effects of the RBA's (more-so the banks) successive interest rate rises and economic unpredictability, with virtually no growth in housing median values during the three months to the end of October. However our capital city populations are still increasing at the highest rates in the Western world - over, 150,000 new Australian households are formed and each of them needs a home.  

Residex figures show that median rents rose in nearly 75% of our capital suburbs, many increasing by up to 25% and some as high as 33% or more. During the last three months, over 50% of our capital city suburbs experienced rent increases, and they occurred in all capital cities.

Melbourne house price growth for 2011

Melbourne house prices could grow 3% or more during 2011. Research shows that the Melbourne real estate market had outperformed other markets consistently for the past few years. It had been supported by a state economy and labour market that has remained robust, even without the resource-sector boost delivered in other states.  

Rental vacancy was 1.4% in September 2010, well below the long-term average of 3%. Victoria’s economy is expected to grow at between 3 and 3.5% over the next few years. As a result, it is expected household incomes will retain enough capacity to support dwelling purchases and mortgages.  

Research predicts a 3.4% growth in house prices in 2011, just above inflation.

SOURCE: (AFR Pg. 44 - Friday 7th Jan)

Cairns apartment sales update    

Receivership sales dominate in Cairns in every sector – apartments, residential land, industrial, commercial and even rural properties.

At the same time there is a significant over supply, with an estimated 650 new apartments to be sold across the north Queensland city – about four times the number of units sold this year with prices dropping significantly.

There has been discounting of up to 50 per cent with an average drop of between 25 per cent and 30 on original price according to research.

When credit was cheap and plentiful and tourism was strong, up to 700 apartments were being sold off the plan a year.

Defence Housing Australia has bought land in Ermington for $8.8 million at auction. The 1.57 hectare property is located near the corner of Victoria and Marsden Roads. The property includes the Riverview Nursery and the childhood residence of Olympic great Betty Cuthbert – a single storey heritage listed Federation style house. The site already has in place development approval for the construction of 47 multi-unit dwellings comprising 40 three-bedroom townhouses and seven two-bedroom townhouses. Each dwelling includes a courtyard and a carpark.

 (AFR Pg. 57)

REAL estate agents are buoyed by the interest in Ipswich homes after a sluggish start to 2010.

Springfield Lakes and Redbank Plains were strong performers in the first half of the year despite sales being their lowest for the Ipswich region since 2000.

Professionals Thornton principal Charlotte Thornton said Springfield Lakes and Redbank Plains were genuine property hot spots because of high levels of development and from November’s market activity expected buyer demand to increase Ipswich’s sales. ‘‘There is pent-up buyer demand and as buyer awareness of the favourable conditions continues to build, we will without a doubt see increased activity,” she said.