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Australia Property Outlook 2019

Australia is a diverse land that is home to a wide range of fascinating natural landmarks and iconic destinations. It is a multicultural nation that is warm and accepting of people from all over the world.

Boasting some of the world’s most beautiful natural wonders like the Great Barrier Reef (the world’s largest coral ecosystem), Australian Alps and home to special faunas such as the kangaroos and koala.

As the world’s 12th largest economy, Australia is one of the most well-developed countries in the world. Property is one of Australia’s largest assets and a strong contributing factor that influences its economic wealth.

On a global ranking, Australia has had the 6th highest rise in annual property prices over the last five decades, with house prices surging at an average increase of 8.1% per year.

Research by BIS and UBS shows 9 out of 10 properties made a profit in spite of the slowdown in the housing market. However, the market saw a moderation in 2018 with Sydney being the hardest hit, it affected investor’s appetite due to the stricter regulatory and lending measures.

A prominent factor that underpins the Australian economy is its population growth. Australia’s population grew by another 1.6% to 24.7 million in the 12 months to the end of September 2017.

Melbourne

Home to 4.9 million people. Source: ABC News

Known as Australia’s cultural capital, this city that is home to diverse landscapes and cultural history is the sanctuary for coffee lovers. From sandy beaches and historic museums to artisan cafes, Melbourne has it all.

Voted as the world’s most liveable city for seven consecutive years, Melbourne is home to a population of 4.9 million people. The city is set to beat Sydney to become Australia’s most populated capital by 2036.

After five years of steady growth, the Melbourne property market is in for a soft landing following its peak in November 2017. Though experiencing a slight fall, property prices in Melbourne are unlikely to crash as it is underpinned by a robust economy.

Being one of the 10 fastest developing cities and having owned Australia’s strongest population growth rate, Melbourne’s population is set to increase by 10% in the coming years. This has opened the gateway for higher employment rates alongside 35% influx of skilled immigrants. These factors contribute to the moderate rise in rental rates and property prices in Melbourne.

The undersupply of homes is another indicative behind the possible rise of house prices. Urban Development Institute of Australia (UDIA) predicted that if the current situation persists, housing shortage could reach an excess of 50,000 houses by 2020.

With the current population growth exceeding 2%, increasing employment rate and construction activity, Melbourne and its surrounding areas are likely to produce many Hotspots going into 2019.

Last year,  “Melbourne dominated the HIA Hotspots report with 12 of Australi’s Top 20 building growth areas located around Victoria’s capital,” said HIA’s Senior Economist, Shane Garrett.

According to the HIA Population & Residential Building Hotspots Report 2018, the Mickleham-Yuroke area of Melbourne is Australia’s most wanted hotspot, with a population growth of 35.3% during 2016/17 and $222.9 million in building approvals.

Perth

Perth is in for advancement. Source: Property Update

As Western Australia’s sun-drenched capital, Perth has established itself as one of Australia’s prominent travel and business destinations.  

Home to King’s Park and Botanic Garden, one of the largest inner city parks in the world, Perth has some of the world’s finest brands to shop at alongside a thriving city life.

Despite being a city, it is not far from picturesque oceans and beaches. This balance between nature and cosmopolitan living makes Perth an attractive site for investment.

The Perth property market has taken a plunge in the last five years since its peak in June 2014.

With the falling values, research has suggested that the housing market in Perth is in for a bottom out with median house prices set for a decline over the period of 2018/19.

Nevertheless, property prices in Perth are expected to rise in the next two years. The outlook for the state’s economy remains positive with the market beginning to retreat again.

Industry analyst, BIS Oxford Economics, in its latest report revealed that Perth is tipped to have the second-fastest price growth in Australia by 2021, rising by 10%.

In some parts of Perth, prices are on demand year-on-year (y.o.y) where it has increased by 6.6% which indicates that the property market is in for recovery. Perth’s vacancy rate was at 5.1% for March 2018 and is forecasted to increase.

For investors seeking an investment prospect with promising yields and returns, Perth might just be the answer.

Sydney

What does 2019 have in store for the Sydney property market? Source: Property Update

Sydney is known as Australia’s leading global and premier city. It is the destination of choice for entrepreneurs, tourists and students alike.

Rich with a number of tourists spots such as the Sydney Opera House and Sydney Harbour, this city continues to grow in popularity.

Sydney’s housing market recorded a 0.7% price drop as of October 2018, bringing the overall 12-month decline to 7.4% — the largest annual price fall in the city since 1990.

Comparatively, on a longer span, over the last five years, statistics show that average house prices have increased by 51%. Despite the current fall, the property market in Sydney is expected to ascend in the near future.

Rising economic and population growth alongside the increase in employment rate are aspects that would surge the Sydney property market. Foreign investors continue to channel their interests here as prices are looking to rise again in 2020-21.

First home buyers are flooding into Sydney creating a potentially stronger market considering the upcoming initiatives and infrastructure projects.

The NSW government will be directing $A15.3bn towards infrastructure in the next year in order to improve the quality of living and provide a more efficient and convenient commute in and out of the city.

With all these advancements being made, Sydney is on its way to becoming a promising investment for foreign investors.

Brisbane

Brisbane has the most promising growth in the property market. Source: Property Update

Blessed with idyllic weather, award-winning food and wine, adventurous activities and fun destinations for weekend getaways, Brisbane is the hotspot among tourists and investors.

With the second fastest population growth in Australia, Brisbane is set for a prospering year especially in terms of its property market. According to BIS’s forecast, this city will see the strongest growth over the next three years with an increase of 13%.

Buyers and investors are drawn to the state’s affordability that it attracts a larger number of inter-state migrants with an overall dwelling of 5.9% y.o.y.   

Apart from its affordability, the city also shifted its focus on improving its infrastructure to accommodate increasing population growth, alongside the growing job demand.

The influx of large scale developments coupled with major employment hubs will further enhance the liveability of the city. These developments will significantly boost Brisbane’s employment growth and increase the demand for housing and property.

The Australian property market in for a rise, which means property investors can get better returns by buying now while the market is still low. If you are looking for property in the cities of Sydney, Melbourne, Perth, Brisbane and more — give us a call at (+65) 3163 8343 (Singapore), 03-2162 2260 (Malaysia), or email us at info@csiprop.com!

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Written by: Lydia Devadas
Edited by: Jagdeep Kaur
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What’s in store for Melbourne after the elections?

In the recent Victorian State Election, the Labor government led by Premier Daniel Andrews won a second four-year term, defeating the Liberal opposition by an increased majority of 52 seats. To be sure, Labor has grand plans for Victoria lining up to be executed, but investors will be more concerned about what’s in store for the property market. In their election manifesto, Labor had major plans for housing as well as transport and infrastructure. Let’s take a look.

Housing and Planning

Apartments in Melbourne set to reach the next level. Source: Financial Review

Labor plans to improve the housing market in Victoria generally and to also put it on par with the Victorian Renewable Energy Target (VRET), the party’s primary focus for the environment. These efforts are to advance the quality and sustainability of the residential property in Victoria and forge a better standard of living.

Labor has promised that apartment buildings will be subject to a range of tougher standards such as mandatory green space, installation of sun protection and safe cladding. This is particularly important in consideration of the property boom in Melbourne’s inner city, with its rapid growth of high rise apartments. This suggests that there may be increased costs for future developments, in order to comply with these standards.

There also will be subsidies for rooftop solar panels on 700,000 homes, including a plan to allow the government to share costs with tenants and landlords for solar panel installation on rental properties. This will make buildings more energy efficient.

Transport and Infrastructure

Transport links in Victoria are in for a huge transformation. Source: Herald Sun

Labor has a solid record for transport and infrastructure projects. Having already more than $60bn of rail and road projects in the pipeline, the party has further pledged to provide “the biggest transformation of public transport in Australian history”, which is to complete a $50bn suburban underground rail loop including 12 new underground stations.  This is set to complete in 2050.

Additionally, Labor has fulfilled their previous promise to remove 50 of the most dangerous level crossings over eight years, improving safety and efficiency. The revised promise is for 75 to be gone by 2025, and the good news is that they are ahead of schedule, having already removed a total of 29 this term.

Many of Labor’s big projects are either already underway or have start dates including the $11bn Metro Tunnel project, the North East Link and the West Gate tunnel. Work on the long-awaited rail link to the airport will begin by 2022, and $100m has been allocated for planning towards fast trains to Geelong and Ballarat. Upgrades for the arterial roads and country rail lines are also part of Labor’s manifesto.

What’s in it for Investors?

The re-election of Labor is great news for the property investment in Victoria, especially urban Melbourne. The party’s housing and planning manifesto gives good sustainability that would catalyze the housing market.

The transport and infrastructure manifesto has high potentials to increase job demand. Melbourne has overtaken Sydney as the best place to find a job in Australia according to the Commsec’s quarterly State of the States report, which would only fortify its population growth. Added to this is the increased accessibility for residents living in the suburbs to work in the city, making Melbourne a top choice for anyone looking for a home.

This gives investors promising opportunities with good potential for capital growth and good rental yields, both of which is the highlight of any investment prospect.

Interested in getting in to the Melbourne property market and benefitting from its low vacancy rate and future development plans? Give us a call at (+65) 3163 8343 (Singapore), 03-2162 2260 (Malaysia), or email us at info@csiprop.com!

Article by Lydia Devadas; Edited by Ian Choong

Sources:

  • https://www.news.com.au/national/politics/australian-politics-live-tuesday-november-27/news-story/9bd4e3ca763cb24fc3c83e0b9eaea33f
  • https://www.theguardian.com/australia-news/2018/nov/24/labor-secures-stunning-victory-in-victorian-election-as-voters-reject-fear
  • https://www.theguardian.com/australia-news/2018/nov/20/victorian-election-what-the-parties-are-promising
  • https://en.wikipedia.org/wiki/2018_Victorian_state_election
  • Image Credit: https://www.theaustralian.com.au/national-affairs/state-politics/victorian-state-election-2018-live-coverage-daniel-andrews-pleads-for-stable-majority/news-story/bd299031c2325f4401a499ff14a33c1f

 

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Victoria Smashes NSW for the Second Time in a Row

Once again, Victoria has overtaken New South Wales (NSW) as the state with the strongest overall economic performance rankings in Australia.

Margin lender CommSec’s latest quarterly (Oct 2018) State of the States report has revealed that Victoria has come out top in several key indicators, namely economic growth, employment, construction activity and population growth. This is the first time that Melbourne has beaten Sydney as the best place to find a job in Australia, with trend unemployment rate at its lowest in a decade.

Victoria has a promising employment market

The unemployment rate in Victoria stands at 4.7%, approximately 17.4% lower than the decade average. Victoria’s employment rate, however, is well above (13%) the decade average, making it the best state to secure a job across Australia.

Apart from the employment rate, Victoria was also ranked first in construction activity. This is the second time that Melbourne has beaten Sydney to the top spot in this sector.

The increasing construction activity gives a good investment prospect. Image Credit: Mail Online

Victoria retained top spot with construction work done almost 39% above its decade average.

NSW construction was next strongest at 31.4% followed by South Australia, up 25.3%. Construction work done in these states were at record highs in the June quarter.

Victoria also topped the ranking for the second consecutive time as the state with the highest economic growth. Last quarter, it knocked NSW off its perch for the first time in a decade.

Victoria leads the way in economic growth.

Economic activity in Victoria in the June quarter was 26.7% above the decade average level, ahead of NSW at 25.7%.

Victoria emerged the clear winner in CommSec’s latest quarterly economic rankings. Image Credit: CommSec State of the States Report (Oct 2018)

When looking across growth rates for the states and territories, it is clear that Victoria had exceeded the national average in all of the eight indicators measured, albeit by a narrow margin.

Last quarter, Victoria remained just ahead of NSW with strong economic strength, population growth, construction and investment activity.

Investment Prospect

The strong quarterly performance augurs well for Victoria.

Investors can look forward to leveraging upon these promising aspects of Melbourne, using it as a guide to future investments that could result in good rental yield and capital appreciation.  

By Lydia Devadas
Edited by Vivienne Pal

Source:

 

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Perth Set to be the Next Melbourne

Perth is set to be the next Melbourne, a new report from Infrastructure Australia indicates. After a stagnant 2017, Corelogic predicts that house prices in the inner city will rise by 3.3% this year and 4.1% in 2019. With prices at an affordable rate, property situated in choice locations are ripe for the picking and investors stand a chance to reap returns from the growth of the property market in the future. 

Currently Perth is Australia’s fourth largest city by population. By 2046 it is forecast to leapfrog Brisbane into third place, with 4.3 million people — the current population of Melbourne. And if the Government’s recent proposal to restrict immigration to Sydney and Melbourne goes through, the city’s eventual population may exceed even that figure.

Australians traditionally are resistant to the idea of living in apartments, and this is more so for those living in Perth. Just 6.6% of the city’s residents live in apartments, half the national average of 13.1%. This will change as numbers increase — as a large-scale city grows, it expands not just outwards but upwards as well.

The Perth suburban sprawl stretches along the Western coastline for about 150km, making it almost nine times as large as Singapore, but with just over a third of its population. As the population grows to a similar scale as Melbourne, apartment living will become more widespread.

The 2016 Australian Census showed that there is one occupied apartment for every five (1:5) occupied separate houses in Australia; compared with one to every seven (1:7) 25 years ago. Apartments are also getting taller. Twenty years ago, about 20% of apartments were in blocks at least four storeys high, with the proportion now closer to 40%.

Over the past decade, the number of apartments in the Perth council area alone has increased by about 150%. Perth has seen changes in planning that recognises this, and state and local governments are encouraging strategic placing of mixed-developments where they benefit the most, close to existing good transport, infrastructure and in high-amenity locations.

One example of these developments is NV, a new off-plan apartment within Perth’s central business district (CBD), benefitting from the completion of the Perth City Link.

Perth City Link is a major urban renewal and redevelopment project to the tune of over A$5 billion, playing a central role in regenerating Perth’s entertainment, cultural, shopping and infrastructure links. Rail and bus links have been completed, connecting the city centre with the Northbridge entertainment precinct. Currently, further development is ongoing on a mix of retail, tourist, office and residential accommodation.

Corelogic looked at changes in the property market across Australia over the last 25 years, and found that prices in Perth grew at an annual 6.7% for houses and 6% for apartment units since 1993 — making it the third best property market after Sydney and Melbourne.

Located on Murray Str, in the heart of Perth city, NV is within 1 minute reach of top designer brands (King’s Str) and a vibrant F&B & lifestyle area (Shafto Ln). NV boasts top notch lifestyle amenities and is a trophy property in this growing city. NV will be envy of all. INVEST NOW BEFORE STAMP DUTY INCREASE OF 7% ON 1 JAN 2019.

Following the nation’s property downturn, prices have slipped by more than 10% across the city since mid-2014, although some areas have managed to be relatively unscathed. The outlook for the next two years is that improvement in the economy and population growth will stabilise the Perth real estate market. After a stagnant 2017, Corelogic predicts that house prices in the inner city will rise by 3.3% this year and 4.1% in 2019.

RED ALERT: Perth will be imposing additional stamp duty for foreign investors in January, which is an extra 7% on the property price. Investors looking to buy property can avoid the hike by signing contracts before Jan 1st, 2019.

Interested in to get into the Perth property market before the 7% tax kicks in? One of the latest developments in the city’s prime CBD, NV Apartments, has a superb location with a whole host of luxurious amenities, from just A$313,000. Act quickly and give us a call at (+65) 3163 8343 (Singapore), 03-2162 2260 (Malaysia), or email us at info@csiprop.com.

By Ian Choong
Edited by Vivienne Pal 

Sources:
  • https://thewest.com.au/lifestyle/real-estate/perth-destined-to-become-the-next-melbourne-ng-b88972063z
  • https://thewest.com.au/business/housing-market/perth-property-market-suffers-worst-fall-as-inner-city-and-south-west-suburbs-tipped-for-revival-ng-b88962488z
  • http://www.abc.net.au/news/2018-01-16/perth-apartment-development-debate-suburban-sprawl/9324992
  • https://www.perthnow.com.au/news/wa/new-figures-show-more-perth-residents-living-in-apartments-ng-8f60dd3e490dbac3aa5329aa42e51184
  • https://cdn.mra.wa.gov.au/production/documents-media/documents/central-perth/perth-city-link/file/perth-city-link-fact-sheet.pdf
  • https://www.mediastatements.wa.gov.au/Pages/McGowan/2018/08/$158-million-development-approved-for-Perth-City-Link.aspx
  • https://www.finance.wa.gov.au/cms/uploadedFiles/_State_Revenue/Duties/Duties_Circular_17-Foreign_Buyer_Duty.pdf
  • Featured image: State Library & TripAdvisor

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Australia’s Population Growth Not Slowing Down

Compared to developing nations with far stronger population growth rates, Australia is expanding pretty quickly for a developed country.

Last month, Australia’s population officially ticked past the 25 million mark, according to the latest data by the Australian Bureau of Statistics (ABS) – 33 years earlier than projected!

Over the last three years, the nation’s population grew by around 400,000 people per year. If this trend continues, the number might reach 26 million in the next two to four years. This is no mean feat considering that the population Down Under was only at the 10 million mark back in 1960.

Back in 1960, the Australian population totalled only 10m. Today, the population number has ticked over the 25 million mark. For a developed nation, Australia’s population growth rate is quite incredible! Source: Supplied & News.com.au

Nett migration has continued to outpace births, with the highest migrant numbers coming from China and India.

Newly elected Minister for Cities, Urban Infrastructure and Population, Alan Tudge, in outlining plans for the country’s immigration policy, is not in favour of reducing skilled migrant numbers.

“My view has always been that Australia can be a bigger country. But, ideally, you have a broader distribution rather than very rapid growth in some areas,”he said.

Melbourne and Sydney are expected to grow to the size of New York city by 2050 as migration numbers continue to grow.

To date, Melbourne has the fastest-growing population rate in the country. Naturally, this has something to do with Melbourne’s ranking as the World’s Most Liveable City for seven consecutive years, receiving a perfect score from The Economist for healthcare, education and infrastructure.

“There’s a buzz about the city that keeps bringing the world’s best to enjoy Melbourne,” said the Australian government in a statement.

Victoria has an estimated population of 5.71 million, ranking second in the country with a population density of 25 people per sq km. The state accounts for 25% of the entire Australian population. 

And, for the first time ever, Victoria finally overtook New South Wales as Australia’s strongest economy in CommSec’s latest State of the States report.

Victoria’s high population growth has also supported house prices and rental values in Australia, and is a reason why the Melbourne market has remained strong.

In quarterly data by JLL Australia, apartment price growth for Greater Melbourne (for both new and existing stock) increased 6.6% y-o-y to 1Q2018, which is above the five-year annual average rate of 4.5%. Rental vacancy remains tight in the city.

The recent 2018 Global Real Estate Transparency Index by JLL ranks Australia’s property market as the most transparent in the Asia-Pacific region. This, and the all the things that make Australia such an attraction — good governance, strong healthcare and education systems, etc — are a great draw for property investors and millionaires.

What do you think of Australia’s population growth for the Australian economy and property market as a whole? Leave your comments in the box below! For more details on investing in Australian property, call us at 65-3163 8343 (Singapore), 03-2162 2260 (Malaysia), or email us at info@csiprop.com!

By Noorasikin Ali
Additions & Edits by Vivienne Pal

Sources:

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Victoria Smashes NSW as Australia’s Strongest Economy

Victoria, for the first time ever, has finally overtaken New South Wales (NSW) as Australia’s strongest economy, according to CommSec’s latest State of  the States report.

CommSec (Commonwealth Securities) is Australia’s largest online stockbroking firm operated by the Commonwealth Bank of Australia. Each quarter, it releases its State of the States report, which is an economic performance report of Australia’s states and territories. The report covers eight major economic indicators including population, employment, housing, investment, and construction.

Victoria has never owned the top spot in the report’s nine-year history until now, thanks to strong population growth numbers which have been instrumental in driving construction activity. The state currently ranks first in economic growth, dwelling starts and construction work done. In economic growth, Victoria is ahead at 26.5%, followed by NSW at 25.7% and Northern Territory at 25.6%, while Western Australia remains in the last place by 7.6%.

NSW, long standing at the top spot for economic growth in the last four years, slipped to second place due to declines in a number of housing indicators.

Figure shows the percentage of economic growth by state in Australia. Source: CommSec

The gap between the two states, however, remains narrow, leading to the possibility of a change in positions over the next 12 months, said CommSec’s chief economist Craig James.

In terms of population growth, Victoria maintains its position as the clear winner, having toppled other states since 2015. Victoria currently holds a population growth rate of a cool 2.3% above the Australian Capital Territory (ACT) at 2.15% and Queensland at 1.67%.

Meanwhile, the Northern Territory has the lowest population growth at 0.23%.

Victoria is poised to remain in the lead for population growth with research predicting that population figures will reach approximately 6.26 million in 2018.

Victoria claims the highest population growth for the 4th time. Source: CommSec

High population growth will continue to drive the broader economy — by fuelling retail spending and housing demand.

Thus, Victoria’s meteoric population growth will continue to spur Melbourne on as it maintains its credentials as Australia’s “most attractive city” due to stronger rental growth supported by tight vacancy.

As it is, Melbourne — Victoria’s capital city — is predicted to have a swell in population due to its huge student population and migration. In 2016, the Australian Bureau of Statistics (ABS) reported Melbourne as having the most epic population growth of any Australian city, making up almost a third of Australia’s population growth. The contrast is quite significant, with 2.4% in Melbourne compared to 1.2% in the rest of Australia.

With the current undersupply of housing, and demand driving prices, it appears that Melbourne will continue to remain, for some time to come, Australia’s Most Attractive City for global property players in the Asia Pac region.

Looking to purchase a property in Melbourne City? Hit us up — we’ve got limited stock of one of the best residences in one of the most coveted locations in the city. Or, just connect with us to find out more!

By Noorasikin Ali
Additions & Edits by Vivienne Pal

Sources:

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AsiaPac Investors Prefer to Invest in Melbourne

Melbourne overtakes Sydney as the top Australian location for offshore real estate investment dollars in Asia Pacific.

Melbourne seems to be collecting more notches on its bedpost. Not only has it been named the Most Liveable City seven consecutive times; it was also named Happiest City. A new survey has now pegged it as Australia’s Most Attractive City for global property players in the Asia Pac region.

A new survey has revealed Melbourne as the No. 1 Australian city for global property players in the Asia Pacific region.

Property sales and research firm CBRE launched their Investor Intentions Survey 2018, which polled a total of 366 respondents, including real estate funds, developers and companies.

Of those polled, 70% were based in Asia, 18% in Western Europe, the Middle East and North America, and 12% in the Pacific.

The survey found Melbourne overtaking Sydney as the preferred Australian location for offshore real estate investment dollars, as Sydney fell down the yearly rankings from first to sixth. Brisbane came in at eighth place — which was Melbourne’s position last year.

Melbourne’s rise as Australia’s “most attractive city” was “due to its stronger rental growth supported by tight vacancy”.

“Although asset pricing poses a major obstacle, investors remain keen to purchase real estate for risk diversification. Investors’ focus is on income growth as capital value appreciation will increasingly be driven by income growth,” the report stated.

CBRE expects a slowdown in Chinese outbound investment to continue following the introduction of new capital controls by the Chinese government last year.

“This year’s survey indicates that Chinese investors are less keen to invest overseas in 2018. While overall interest remains reasonably firm, fewer investors intend to invest more than they did in 2017.

This reduction of Chinese investment is being offset by investors from Singapore. Cushman & Wakefield reported that Singapore overtook China last year as the largest source of foreign capital for Australian commercial real estate.

Investments into Australia from Singapore quadrupled from about $1bn in 2010 to an excess of $4bn in 2017.

It is clear that Melbourne is driving housing market growth in Australia despite slightly weakened prices this year due to tighter regulation and an ongoing Banking Royal Commission investigation.

Yet experts say that the temporary slump will not make a major impact, and, in all likelihood, is just for the short term. Here’s why:

Melbourne faces a serious undersupply of housing, and this has been a strong driver for demand. The Urban Development Institute of Australia (UDIA) warned last year that the city could have a shortfall of 50,000 houses by 2020.

In their latest report in March this year, UDIA found that the state government will need to increase approvals and commencements of new housing by more than 10% in order to meet demand.

The Victorian government has committed more resources to speeding up the approval process of new suburbs, but the delivery of necessary infrastructure such as sewerage and roads remains a bottleneck.

UDIA Victoria CEO, Danni Addison, said that the supply of new housing being delivered right now was being driven by high population and employment growth.

“The numbers tell us that despite record high levels of building activity, we’ve still got a way to go before we can stop playing catch-up and ensure there’s enough new housing to meet the demands of population growth,” she said.

Data released by SQM Research in June 2018 showed that demand for property in Melbourne has stayed at a constant high. Vacancy rates remained incredibly tight at 1.4%, the same as 12 months before.

Rental rates in the city however, have sharply increased by a total of 3.5% since the the last 12 months, giving potential for high returns on investment, whilst capital growth has slowed.

What are your thoughts about investors flocking to Melbourne’s property market? Drop us a comment below. If you are interested in Melbourne’s potential for high returns, don’t hesitate to give us a call at 3163 8343 (Singapore), 03-2162 2260 (Malaysia), or email us at info@csiprop.com!

By Ian Choong

Sources:

  • https://www.news.com.au/finance/real-estate/melbourne-vic/melbourne-no-1-with-offshore-investors/news-story/3cd0133d959eedcc50df55ca4dee19da
  • https://www.cbre.com/research-and-reports/Global-Investor-Intentions-Survey-2018
  • https://sbr.com.sg/commercial-property/in-focus/singapores-real-estate-investment-in-australia-ballooned-141-us35b
  • http://www.afr.com/real-estate/residential/victoria-at-risk-of-housing-undersupply-warns-udia-report-20180314-h0xg5e#ixzz59lZuQh53
  • http://www.sqmresearch.com.au/19%2006%202018_Vacancy%20Rates%20Steady%20in%20May_FINAL.pdf
  • https://csiprop.com/australia-faces-major-housing-undersupply/

 

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Rapid Population Growth Drives Melbourne’s Transportation Expansion, Housing Demand

Melbourne’s population is set to keep growing, driving the need for improved and expanded transport-related infrastructure. Opportunities continue to abound for the investor as the city’s planned and ongoing transport expansion leads to jobs creation, driving the demand for more housing.

Melbourne looks set to expand its transportation systems in the air, on land and beneath the ground to keep up with its rapid population growth — so rapid, in fact, that Melbourne is set to surpass Sydney as the largest city in Australia by 2031.

Major infrastructure development plans, totalling to over $60bn, are underway, with most projects set for completion by the 2020s and 2030s. For property investors, this translates as good news. Increased job opportunities and continuous effort to preserve Melbourne’s unprecedented quality of life will ultimately continue to attract home buyers and renters alike. After factoring in the chronic undersupply of houses throughout the city, paired with population and economic growth, investors should arrive at one solid conclusion: Melbourne’s property market is a promising one.

Air: Melbourne Airport Needs A New Runway

Melbourne Airport CEO Lyell Strambi has announced the need for a third airport runway to keep up with booming passenger numbers, following the airport’s celebration of nine consecutive years of passenger growth.

Over 35 million passengers passed through Melbourne Airport during the 2016/17 financial year, and this number is expected to almost double by 2033. This inevitably makes the establishment of the new runway one of Melbourne’s top priorities. The runway, set to operate by 2022, will not only reduce delays as more arrivals and departures take place, it will also supply numerous jobs during construction and operation.

Melbourne Airport is known to be a major employer in the local region. About 16,000 people are currently employed at the airport, with 67% of these jobs filled by people whose homes are within a 15km radius of the airport. It is predicted that by 2033, the number of jobs directly related to Melbourne Airport’s operations will grow to 23,000. Furthermore, with a burgeoning number of travellers arriving in Melbourne Airport, the tourism industry throughout Victoria will surely provide even more jobs!

Land: New Road Fills The Missing Link

What is also set to improve tremendously is accessibility by car, as plans for three separate roadworks commence throughout the state of Victoria. The North East Link, the largest of the trio and currently, the largest transport infrastructure in Victoria, is a $16.5bn construction that will fix the missing link in Melbourne’s freeway network. The project will shorten travel times between Melbourne’s north and south-east by up to 30 minutes, take 15,000 trucks off local streets daily and deliver kilometres of new walking and cycling paths. During construction (expected to begin by 2020) and early operation, thousands of jobs will be created.

Image 1: Three feasible options for the North East Link will be designed throughout 2018, alongside specialist studies that will be conducted for planning approval.

Perhaps the most interesting transport development plan in Melbourne is the $1.3bn rail loop and driverless trains that will connect a proposed $30bn ‘super city’ at East Werribee, known as the Australian Education City. Preliminary works to assess the feasibility of this new heavy rail connection have been done as part of the ongoing proposal.

The multi-billion dollar project would see land at East Werribee become home to 30,000 dwellings in medium to high-storey towers, with universities, schools and a research and development hub. Up to 80,000 residents and 50,000 students are planned for the precinct which would see local and overseas universities collaborate to provide world-class education across several campuses. Global tech leaders, such as Cisco and IBM, are eager to snatch a piece of this colossal project.

The $1.3bn rail loop and driverless trains that will connect a proposed $30bn ‘super city’ at East Werribee, known as the Australian Education City.

Underground: Two New Rail Tunnels Need To Be Constructed By 2035

Melbourne City Council has proposed the idea of adding two new rail tunnels — Melbourne Metro 2 and 3 — under the city by 2035. The rail tunnels will join Melbourne Metro 1, the first stage of this underground transport expansion that has been slated to operate by 2025.

Council documents reveal that, should all go according to plan, the second tunnel that links Newport to Clifton Hill via Fishermans Bend, will operate by 2028 or earlier. This tunnel would quadruple passenger capacity for the Werribee line corridor and boost east-west accessibility. Those from the south-west and north-east, too, will find this line adding considerable convenience to everyday travels.

As described in the council paper, Melbourne Metro 3 could be built by 2035. The project would be the second airport rail line linking to Southern Cross, via Arden Macaulay and Maribyrnong. By 2028, trips to Tullamarine Airport is expected to be equal to that of Heathrow Airport today — three rail lines currently service Heathrow.

Conclusion

The various transportation schemes currently in the works will welcome the rising population in Melbourne. To the savvy investor, the widely cited population and economic growth within this coastal capital reads as a precursor for high housing demand. Those with concerns regarding the environmental impact of these projects can be rest assured that measures taken will be passed through strict approval processes before arriving at the least detrimental conclusion.

“Infrastructure projects – electricity, roads, airports, water systems and telecommunications are the foundations of modern economies. They have a huge multiplier effect (a dollar spent on infrastructure leads to an outcome of greater than two dollars)”*. Astute investors realise the mileage that such multiplier effects bring to the investment dollar. If you’re planning to leverage on that and are looking for fantastic property investment options in Melbourne, hit us at at 03-2162 2260 or info@gmail.com or text us in the comment box below!

By Nimue Wafiya
*Balaji Viswanathan

Sources:

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How It’s Done: House Valuation in Melbourne

While there are plenty who claim expertise in the art of valuing homes, the reality is that it’s a little more complicated and less predictable than one might think.

Recent news highlights Australia as having some of the priciest accommodation in the world. As a nation with an iconic property market, it’s no surprise how the topic of house valuation has slowly integrated itself into the average Australian day. Even among non-homeowners, estimating the selling price of houses has become a sort of hobby; many attend auctions despite not having any intention to bid for a property.

While there are plenty who claim expertise in the art of valuing homes, the reality is that it’s a little more complicated and less predictable than one might think.

House Valuation: Location, Housing Features & Circumstance

The basis of house valuation predictably involves the essentials of the house itself. The assessment method is as follows: evaluating the property’s location, land value and accommodation, followed by any additional features such as swimming pools, landscaped gardens and development restrictions.

After all primary information is gathered, they are pooled into comparable sales data as required under Victorian law since new underquoting legislation was made effective on May 1, 2017. Underquoting refers to the practice of misleading a buyer about the likely sale price of a property. These laws necessitate that agents provide potential buyers with details of three comparable sales in a statement of information, as well as an indicative selling price no lower than the seller’s asking price.

Mixed reviews accompany this newly implemented law: some express disapproval over the unseemly properties chosen for comparison, but, most experts have deduced the impact to be generally positive.

“The new price-quoting legislation has seen a shift in the manner in which agents advertise and quote property prices, with a reduced margin between the advertised estimated price and the actual sale price,” says Real Estate Institute of Victoria president Richard Simpson.

Despite such practices guiding property price-listing processes, things could still change during a sales campaign, based on interest recorded at open for inspections.

Jellis Craig director and auctioneer Dallas Taylor brings one last unforeseeable — and very crucial — factor to attention: emotional attachment.

“There’s an element of emotion there that you can’t put into the equation when valuing a property. Emotion might come from the buyer’s parents living around the corner or a triple garage that would be perfect for a home business,” Taylor says.

High demand is, of course, another factor that greatly contributes to the pricing of any particular property. RT Edgar director Oliver Booth provides a possible scenario favourable to landlords: “If you’ve got three people who all like it and all want it, the price is going to go up.”

Which is precisely what’s been happening in all property hotspots all over the world. All the time. 

Which are your favourite suburbs in Australia? Let us know in the comments below!

By Nimue Wafiya


Source:

https://www.domain.com.au/news/how-the-experts-put-a-value-on-melbourne-property-20180302-h0vyop/


CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential and purpose-built student property in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc); Australia (Melbourne, Perth, Brisbane) and Thailand (Bangkok). Our projects are concentrated in high-growth areas with great educational, infrastructural and job growth potentials. We aspire to make a difference in the lives of our clients by helping them achieve their investment goals through strong market research backed by third party experts and due diligence. 

Disclaimer: CSI Prop does not provide tax & legal advice and accepts no liability. Readers are encouraged to consult a qualified tax or legal advisor for a thorough review.

Need advice or clarification? Call us for more information and/or to find out about our projects! Hotline: 03-2162 2260

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Is Growth in Store for Australian House Prices?

What’s in store for the Australian housing market in terms of price growth?

This year will not be a bumper one for the Australian housing market; Sydney will drag Australia house prices down this year. But will it be all doom and gloom moving forward? What does the future hold?

Australia and New Zealand Banking Group (ANZ) economists say Australian house prices will start to go up this year, with higher growth expected in 2019.

Australian house prices are 0.8% higher than they were 12 months ago. ANZ forecasts a growth of 1.8 % this year, which will pick up to 3.6% in 2019.

Senior ANZ economists Daniel Gradwell and Joanne Masters said, “We think most of the slowdown has already occurred. We retain our view that prices will not materially decline. Over the near term, auction results in Sydney and Melbourne suggest that the majority of the price growth adjustment is behind us.”

Australia housing price forecast to 2019: Australia and New Zealand Banking Group (ANZ) economists say Australian house prices will start to go up this year, with higher growth expected in 2019. Source: ANZ & Domain

The economists see the strong labour market and rising incomes as the main drivers of price growth, with the absence of an interest rate increase this year also supporting house prices.

However, Morgan Stanley analysts aren’t as confident, seeing risks building in 2018 after several months of house price weakness and a potential for increased regulatory pressure.

“Conditions for housing for the remainder of 2018 continue to look challenging with further regulatory tightening of credit, an increasing stock of properties to be settled, and continued uncertainty on government policy for housing as the election cycle looms,” equity strategists led by Daniel Blake wrote to clients this week.

“This leaves us cautious on the outlook not just for housing, but the broader economy in 2018, given the leveraged exposure of the economy to the property market.”

Australia housing price forecast by states to 2019: Melbourne and Hobart take the lead again in house price growth moving into 2019. Source: ANZ & Domain

AMP chief economist and head of investment strategy Shane Oliver said that a looming house price crash was unlikely.

Debt serviceability remains relatively strong, with APRA’s rule tightening leading to a drop in interest-only lending, and mortgage stress appears to be low, for now.

House price growth by market segment : Data reveals that, unlike Sydney, Melbourne has seen continual price growth for most market segments throughout the year, albeit at a moderated rate. Source: ANZ & Domain

“To see a property crash we probably need much higher interest rates or unemployment (neither of which are expected) or a continuation of recent high construction for several years (which is unlikely as approvals have cooled from their 2016 highs),” Dr Oliver wrote.

ANZ predicts that Melbourne and Hobart will continue to outperform the rest of the Australian capital cities, like Sydney and Perth. We discussed extensively the growth of Melbourne and the emergence of Hobart in our 2018 outlook on the Australian housing market.

First-home buyers are replacing investors

Tighter regulations governing the number of investor and interest-only lending has seen a significant pullback in buying activity from those types of buyers, ANZ research shows.

Last year, the Australian Prudential Regulation Authority (APRA) changed the rules for lending to investors and interest-only borrowers. There has been an increase in interest rates for these types of borrowers, and serviceability calculations and loan-to-value (LTV) ratio requirements have also been affected.

Financing for Investors vs Owner-Occupiers 2005-2018: While tightened regulations continue to moderate investor sentiment, it will not be at too substantial an extent, given that the Australian housing market is underpinned by strong population growth and housing demand. Source: ANZ & Domain

We are optimistic that while tightened regulations continue to moderate investor sentiment, it will not be at too substantial an extent, given that the Australian housing market is underpinned by strong population growth and housing demand.

However, despite APRA changes reducing the number of investors in the housing market, to a large extent, the gap is being filled by first-home buyers. Government grants and sizeable stamp duty tax concessions in NSW and Victoria have helped spur a revival among first-home buyers.

Number of first home buyer financing commitments 2006-2018: Government grants and sizeable stamp duty tax concessions in NSW and Victoria have helped spur a revival among first-home buyers in recent times. Source: ANZ & Domain

Interest rate hike not expected till 2019

The ANZ economists write that high household debt leaves households sensitive to interest rate increases, but this is unlikely to become an issue this year. They predict that the rate hike will come in mid-2019.

“We do not expect the RBA to hike rates until 2019, and then by only 50 (basis points) in the year, which is unlikely to hit affordability in a material way. Moreover, most households continue to hold a solid buffer.”

While Morgan Stanley remains cautious on the property market, the analysts concede consumer confidence has remained above trend, and building activity has also outstripped expectations.

“These factors are holding up better than past relationships with prices would suggest, which in turn sees the broader impact of the slowdown in housing prices being limited – so far,” the equity analysts wrote.

Article by Ian Choong

 


  • https://www.domain.com.au/money-markets/five-graphs-that-explain-why-the-worst-is-behind-the-australian-property-market-20180405-h0yd27/
  • https://www.domain.com.au/money-markets/whats-next-for-australian-property-prices-3-economic-heavyweights-make-their-case-20180409-h0yijb/
  • www.csiprop.com/australia-property-outlook-2018/

CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential and purpose-built student property in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc); Australia (Melbourne, Perth, Brisbane) and Thailand (Bangkok). Our projects are concentrated in high-growth areas with great educational, infrastructural and job growth potentials. We aspire to make a difference in the lives of our clients by helping them achieve their investment goals through strong market research backed by third party experts and due diligence. 

Disclaimer: CSI Prop does not provide tax & legal advice and accepts no liability. Readers are encouraged to consult a qualified tax or legal advisor for a thorough review.

Need advice or clarification? Call us for more information and/or to find out about our projects! Hotline: 03-2162 2260