SQM Research Weekly Residential Newsletter 9 July 2019

SQM Research Newsletter - Tuesday 9 July 2019

Black Dragon's
Words for the Week

"Life isn't about finding yourself. Life is about creating yourself."

George Bernard Shaw

Real Estate Realities

Build to rent could shake up real estate but won't take off without major tax changes

In the wake of slumping demand for apartment building, it’s little wonder the multi-unit housing industry has been eagerly eyeing a possible new residential product: “build-to-rent”.

In fact, the latest figures show that apartment-building construction starts were down 36% in 2018 from 2016. But how much will this little-known type of housing solve our housing problems?

Build-to-rent won’t be a silver bullet solution for Australia’s housing affordability stress, but it does have potential to tick the box on several important public policy objectives. These include widened housing diversity, enhanced build standards, and a better-managed, more secure form of private rental housing.

But for this to happen, Australia’s tax settings need adjustment.

What is ‘build-to-rent’?

This refers to apartment blocks built specifically to be rented, usually at market rates, and held in single ownership as long-term income-generating assets.

The enduring owner might be, for instance, an insurance company, an Australian super fund, a foreign sovereign wealth fund, a private equity firm, or the building’s developer.

Although new in Australia, build-to-rent is quite common in many other countries. Under its North American name, “multi-family housing”, the format has generated more than 6.3 million new apartments since 1992 in the US alone. And in the UK, a build-to-rent sector has led to 68,000units built or under construction since 2012.

Read More...

DISTRESSED PROPERTY OF THE WEEK

46 Stockdale Crescent, Wembley Downs WA 6019

Click to enlarge

Built in 1969, this 2-bedroom duplex/semi-detached home is available to move right in or renovate and develop further. With some 77 sqm of internal living space and multiple outdoor entertaining areas, it offers a great lifestyle in this sought-after suburb of Wembley Downs, approx. 11 km from Perth's CBD.

This property offers an open-plan designed kitchen, living and dining area; 2 spacious bedrooms, a separate laundry and a split system air conditioner.

Located within walking distance to several highly sought after schools - Hale School, Newman College, Churchlands Senior High School - and only a short drive to the redeveloped Scarborough Beach and Floreat Forum, means you are never too far away from the action.

The property has been on sale since May 2019 and is currently listed for sale with a price of "From $450,000". It last sold for $460,000 in October 2008. For a comparison, the adjacent duplex at 44 Stockdale Crescent last sold for $585,000 in August 2013. The vendor is motivated and says it must be sold.

Asking prices for postcode 6019 currently range from $497,000 for all units to $699,300 for 3 bedroom houses. Currently unit prices in the area are showing growth of 4.5% over the month, after a 4.1% increase over the quarter. House prices for 3-bedders however, show minor declines of 0.5% over the month, after a 0.9% increase over 12 months.

Investors could rent this home for approx. $384 to $470 per week. Weekly rents for 3-bedder houses in the postcode have declined 6.7% over the month. Unit weekly rents declined 3.8% over the month however, over the quarter there has been an increase of 3.7%, after a 3-year increase of 6.2%. Vacancy rates sit at 3.5%. Investors can earn Gross rental yields of 3.79% for houses and 4.0% for units.

Recently some mining towns in WA may have shown signs of growth however, the Perth property market is still struggling to show signs of improvement since the downturn in 2014. We saw small increases in 2017, the recent Interest rate cuts may help with a further turnaround. Follow this market’s progress, check out SQM Research’s free property data at SQM’s website. Also consider the Property Valuation product for more in-depth data and property price estimator.

SQM RATINGS NEWSLETTER

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SQM RESEARCH HOUSING INDEXES

SQM Research Weekly Asking Prices Index
Week ending: 9 Jul 2019		Asking Price	Chg on prev wk	Rolling month % chg	12 month % chg
Sydney	All Houses	1,227.0	-9.3	0.0%	-8.9%
Sydney	All Units	693.3	0.4	1.2%	-4.4%
Melbourne	All Houses	937.7	3.1	0.1%	-5.2%
Melbourne	All Units	539.0	-0.5	-0.4%	-1.6%
Brisbane	All Houses	617.2	-0.1	-0.1%	0.0%
Brisbane	All Units	372.2	0.4	0.1%	-2.3%
Perth	All Houses	657.4	-1.3	0.6%	-2.0%
Perth	All Units	386.2	0.3	0.4%	-2.4%
Adelaide	All Houses	514.9	1.2	0.5%	1.6%
Adelaide	All Units	300.6	-1.4	-0.4%	0.1%
Canberra	All Houses	794.3	-1.3	-1.9%	-2.0%
Canberra	All Units	430.6	-0.0	-0.1%	6.4%
Darwin	All Houses	583.9	0.9	-1.3%	-1.2%
Darwin	All Units	355.7	0.1	-0.1%	-5.2%
Hobart	All Houses	518.4	0.1	-0.4%	5.5%
Hobart	All Units	305.9	-1.4	0.6%	2.7%
National	All Houses	565.6	-1.1	-0.3%	-0.5%
National	All Units	374.9	-0.2	0.4%	-0.2%
Cap City Average	All Houses	904.9	-4.0	-0.4%	-5.7%
Cap City Average	All Units	562.9	-0.7	0.5%	-3.1%

Next update: 16 Jul 2019

SQM Research Weekly Rents Index
Week ending: 4 Jul 2019		Rent	Chg on prev wk	Rolling month % chg	12 month % chg
Sydney	All Houses	683.9	-1.9	-1.1%	-3.6%
Sydney	All Units	502.3	-0.3	-0.2%	-3.8%
Melbourne	All Houses	535.9	-1.9	-0.8%	2.4%
Melbourne	All Units	422.5	-0.5	-0.3%	2.6%
Brisbane	All Houses	463.0	1.0	0.8%	2.5%
Brisbane	All Units	374.1	-0.1	0.8%	1.2%
Perth	All Houses	439.5	-2.5	-2.5%	3.6%
Perth	All Units	337.7	0.3	0.4%	3.8%
Adelaide	All Houses	399.8	1.2	1.5%	4.6%
Adelaide	All Units	309.4	0.6	1.1%	3.1%
Canberra	All Houses	626.0	2.0	1.2%	-1.1%
Canberra	All Units	461.1	0.9	0.4%	4.5%
Darwin	All Houses	528.6	3.4	4.8%	-2.3%
Darwin	All Units	367.6	-0.6	-1.1%	-9.2%
Hobart	All Houses	441.1	1.9	2.8%	10.5%
Hobart	All Units	403.6	13.4	5.9%	16.1%
National	All Houses	441.0	1.0	0.2%	1.8%
National	All Units	366.0	-2.0	-1.9%	3.4%
Cap City Average	All Houses	549.0	-1.0	-1.1%	0.2%
Cap City Average	All Units	441.0	0.0	0.0%	-0.7%

Next update: 12 Jul 2019