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SQM Research Residential Newsletter - 
Tuesday 2 March 2021
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Words for the Week

"Everything has its limit – iron ore cannot be educated into gold.”

Mark Twain, Author

Real Estate Realities 

Property values surge across globe

As COVID-19 hits economies hard, and central banks slash interest rates, property markets around the world have raced ahead. It’s a seller’s market, not just in Sydney or Melbourne, but globally.
A
report in Forbes says low stock levels is also pushing rents higher.Over the past month, the average rent for a studio apartment in New York — locked down and facing protests that only recently ended — increased 8% to US$2,150. The average rent for a 1-bedroom apartment rose 6% to US$2,490.
Meanwhile, home price growth in the US ended 2020 at their fastest pace in eight years, Forbes reports. The S&P CoreLogic Case-Shiller national home price index rose 10.4% in December from a year ago and jumped 9.5% from November.
In Miami, rents continue to rise, up by 2.3% in February, making the city the 8th most expensive place to rent.
Elsewhere, people in several major Chinese cities signed more rental contracts than usual over the Lunar New Year break, according to Caixin Global, a China business daily. The total number of rental contracts it facilitated in 18 cities hit a six-year high. Despite a series of 
restrictions, housing prices started 2021 in China at record highs. In a world awash with liquidity and Bitcoin riches, many people are buying real estate just to put their money somewhere.

PROPERTY LISTINGS FALL IN FEBURARY

by Louis Christopher, CEO

Figures released today by SQM Research reveal national residential property listings fell in February 2021 by 2.7% to 257,592 from 265,116 in January 2021. Compared to 12 months ago, listings are down by 13.1%. The largest monthly decreases were in Adelaide, Brisbane and Perth. Compared to a year earlier, listing fell the most in Hobart and Adelaide.



New Listings (30 days)

Nationally, new listings (30 days) jumped 52.4% over the course of February to 76,430 properties on the market, to be up 6.0% over the year. Canberra new listings jumped the most by 93.8% while Sydney also recorded a robust rise of 70.9%.



The key takeaway from February’s property listing numbers is that despite the rise in new listings nationwide (year-on-year and month-on-month), absorption rates are picking up pace, so much so that total listings actually fell over the same period.  Right now demand is swamping supply. And nowhere more is this the case than in regional Australia.

Still, the big test is to come when JobKeeper ends at the end of this month. If there is no evidence of a material fall in clearance rates over April, then nothing is going to stop the market until the day APRA steps to regulate lending in or we have a rate hike from the Reserve Bank.


Asking Prices

Over the past 30 days, national asking prices rose by 0.7% for houses and 1.1% for units. Compared to a year ago, national asking prices posted increases of 8.2% for houses and 6.2% for units. Regional locations have pushed up the national average in a sign that the rental demand of 2020 has now translated into buyer demand causing sharp rises in prices.

In contrast, capital city asking prices have been flat the falling over the same period with Melbourne dragging down the capital city average. Sydney and Hobart recorded substantial month on month increases in asking prices for houses while units in Melbourne continued to be a drag on the market.


AUCTION RESULTS for week ending 28 February 2021

Full individual auction results can be found on our website: 



AUCTION LISTINGS* for week ending 7 March 2021

CITY Saturday    Rest of Week  STATE  Saturday         Rest of Week              Link                                  
Sydney 682   168 All NSW 770   226   Auctions in NSW
Melbourne 451   83 All VIC 509   101   Auctions in VIC
Brisbane 83   31 All QLD 128   90   Auctions in QLD
Perth 12   6 All WA 12   8   Auctions in WA
Adelaide 59   50 All SA 60   53   Auctions in SA
Canberra 39   27 All ACT 39   27   Auctions in ACT
Darwin 0   5 All NT 0   5   Auctions in NT
Hobart 1   0 All TAS 1   0   Auctions in TAS

* The above counts of auctions represent most recent known auction dates for the coming week.

 

DISTRESSED PROPERTY OF THE WEEK

806/156 Wright Street Adelaide SA 5000

 
This apartment in the Adelaide CBD has spent over one year on the market and the vendor wants to sell quickly. The price has dropped to $555,000 from $590,000 and the vendor says the sale is urgent.

With uninterrupted views all the way to the beach through floor-to-ceiling windows, the two-bedroom apartment coudl have some appeal to buyers. The property comes with lock-up storage and a car park. It features an abundance of natural light, quality fixtures and fittings and a balcony large enough for alfresco dining and with 
views to sea and Adelaide Hills. The building boasts a 22-metre vertical hanging garden - the first of its kind in South Australia.  It also offers a rooftop garden with views over the city, 440sqm outdoor kitchen with timber tables and alfresco dining seating, 17-metre lap pool, 60sqm metre gym. Nice touches indeed!

But before you ponder this as your next home or investment property, let's look at the numbers. 
Asking property prices for 2-bedroom units in the Adelaide CBD are down slightly over the year to 2 March 2021, by 0.3%, and have barely risen over 10 years, up by just 0.4%. Sold records for the 5000 postcode indicate the apartment's price isn't far off from comparable sales.

The story for
asking weekly rents is more sober, with asking weekly rates down by around 9.4% over the last 12 months to 28 February.  The lack of growth in rents may be explained by the very high vacancy rate of 6.3% in Adelaide CBD in January 2021 and a sharp increase in rent listings in the last year, though that vacancy rate is down from a high of 8.5% in September last year.

So, you might be inclined to haggle some more to seal a bigger discount, and the vendor just might be prepared to give way some more to get this property off their hands.

You can monitor this market and others with SQM Research’s 
free property data.  Also consider the SQM Property Explorer product for more in-depth data and property price estimator.


SQM RATINGS NEWSLETTER

Did you know that SQM Research doesn’t only provide residential property data, we also provide research on all asset classes.  We have data and analytics on over 10,000 funds in Australia.  To find out more and to subscribe to our Fund Data tool click here.

If you would like to subscribe to our Ratings Newsletter, click here.  The newsletter provides regular updates on all funds including ratings changes and media releases, and valuable Insights into the point of view of our analysts on a variety of ratings research related topics.  And it’s completely free!
 

SQM RESEARCH HOUSING INDEXES
 
SQM Research Weekly Asking Prices Index
 
Week ending
2 Mar 2021
Asking Price Chg on
prev wk
Rolling month
% chg
12 mth
% chg
Sydney All Houses         1,395.8 -10.3  1.2%  2.2% 
All Units 675.9 1.1  0.8%  -4.2% 
Melbourne All Houses 1,020.5 -0.1  -1.3%  0.2% 
All Units 571.7 0.1  -0.5%  2.7% 
Brisbane All Houses 663.4 2.7  0.5%  1.9% 
All Units 383.9 1.0  0.7%  2.8% 
Perth All Houses 668.1 -0.3  -0.4%  3.0% 
All Units 390.2 0.6  1.1%  4.5% 
Adelaide All Houses 538.2 -1.7  -0.4%  2.5% 
All Units 318.2 -0.8  0.5%  4.6% 
Canberra All Houses 826.3 3.3  0.7%  1.0% 
All Units 465.8 -2.8  -1.4%  3.6% 
Darwin All Houses 585.5 -6.5  -0.3%  3.7% 
All Units 372.1 0.2  0.6%  16.6% 
Hobart All Houses 638.3 17.6  4.7%  13.6% 
All Units 368.5 -2.8  -1.1%  -1.9% 
National All Houses 643.3 0.0  0.7%  8.2% 
All Units 413.9 2.0  1.1%  6.2% 
Cap City Average All Houses 993.8 -6.9  -0.3%  1.0% 
All Units 568.0 0.9  0.4%  -1.0% 

Next update: 9 Mar 2021

SQM Research Weekly Rents Index
 
Week ending
28 Feb 2021 
Rent               Chg on
prev wk
Rolling month
% chg  
12 mth
% chg
Sydney All Houses        656.7 -2.7  0.5%  -7.1% 
All Units 456.3 -0.3  0.5%  -9.1% 
Melbourne All Houses 514.5 0.5  0.0%  -7.0% 
All Units 373.0 -1.0  -1.2%  -12.1% 
Brisbane All Houses 478.4 0.6  0.2%  1.4% 
All Units 382.7 0.3  0.5%  1.1% 
Perth All Houses 502.7 1.3  0.7%  12.6% 
All Units 379.7 0.3  1.6%  12.5% 
Adelaide All Houses 425.5 0.5  0.1%  4.9% 
All Units 318.2 -0.2  0.2%  3.4% 
Canberra All Houses 667.3 -6.3  0.7%  4.8% 
All Units 490.2 0.8  2.6%  5.3% 
Darwin All Houses 584.7 4.3  0.2%  29.2% 
All Units 385.0 -9.0  -3.5%  4.4% 
Hobart All Houses 472.9 1.1  -2.0%  4.6% 
All Units 395.4 0.6  1.4%  -3.5% 
National All Houses 495.0 0.0 0.6%  10.2% 
All Units 387.0 -1.0  0.0% 4.9% 
Cap City Average All Houses 550.0 0.0 0.0% -2.8% 
All Units 412.0 0.0 0.0% -6.6% 

Next update: 4 Mar 2021

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