25 Aug Pump up the volume
If increasing sales volumes means a rising property market then pump them up we say! We reveal the suburbs where sales are soaring so you can rock the house, too.
Dinah Lewis Boucher [@DinahBoucher]
In this data feature we’re armed with the biggest increases in sales volumes for each capital city market, courtesy of Australian Property Monitors. A recovering market has, among other factors, improving sales volumes so tracking this can often be a great indicator of a rising market. But, as with all things in the property research process, sales volumes must be looked at in conjunction with a range of other data and factors – but don’t let that ruin the party.
According to property lecturer and author Peter Koulizos, if sales numbers are up, prices are increasing, time on market is decreasing and vendor discounting is decreasing, these are signs the property market is improving. But beware it can go the other way, too.
“If the sales volumes trend is up, but prices are decreasing, time on market is increasing and vendor discounting is increasing, these are signs that the property market is in decline.”
Damian Collins, director of Momentum Wealth, says sales volumes on a citywide basis are a good indicator of where prices are likely to be heading. Strip that down to suburb level and you’ve really got to drill down into the due diligence process to see what’s going on.
“Because what you could find is there’s been a lot of new development happening in the area, particularly in new suburbs on the outskirts and brand new estates,” Collins says.
NEW SOUTH WALES
Rich Harvey, managing director of propertybuyer.com.au, says land supply is a crucial element in the increase of sales volumes of the areas that make NSW’s top 10 list.
“With a range of new land estates offering a variety of new home packages and vacant land under $650,000,” he says, “affordability is a driving factor in all these areas as the median house price in Sydney moves towards
“Continued low interest rates are driving demand in these areas of higher affordability.”
Harvey says Minto is an area of residential revitalisation.
“It’s experienced significant growth due to the emergence of newer housing developments,” he says.
Located roughly 48 kilometres from Sydney’s CBD, APM has Minto’s median house price at $445,000 and median unit price at $290,000.
“There’s also been an increase in the number of ‘flat building’ developments closer to the railway station and transport links,” Harvey says.
Narellan and Elderslie have always been sought-after areas in the Camden region however historically land supply has been limited.
“This has changed over the past couple of years where again new housing estates have led to renewed buyer activity,” he says.
APM has Narellan’s median house price at $491,000 with 12-month (to February 2015) capital growth at
16.8 per cent and five-year capital growth at seven per cent.
Meanwhile, Oran Park is the hub of residential development in the southwest sector according to Harvey.
“This is the premier master-planned community. Oran Park offers a combination of civil works, road and transport infrastructure as well as education, community and shopping amenities,” he says.
APM has its median house price at $609,000, and the median asking yield at five per cent.
“Land prices a year ago were around the $350,000 mark, today the same land is $400,000-plus, and this is only going to go up,” Harvey says.
“Each time a new stage land release is announced, developers generally drip-feed allocations and price control these releases to market. So, new stages are typically priced $5,000 to $20,000 higher than the last stage.”
“In general these suburbs all fall within the ‘southwest growth precinct’ and due to the historical forces of supply, demand and price it will remain an area of high sales activity.”
A quick glance at Victoria’s sales volumes reveals that all 10 suburbs are located in Melbourne’s west and Paul Osborne, founder of Secret Agent, believes this is due to one reason.
“These suburbs are your real affordability belt and that affordability is what’s been driving those volumes,” he says.
“These areas are very much your first homebuyers market and there’s probably a lot of investors there, too.”
So, if you’re looking for blue-chip then these suburbs may not be the ones for you.
Osborne says he’s purchased for his clients in some of these areas, but they aren’t his first preference to buy in, simply because they’re suburbs that are sensitive to changes in interest rates.
“The most interesting out of them are going to be Sunshine, Laverton and Niddrie. These three have slightly better tenant prospects than the other ones,” Osborne says.
Sunshine is located 14 kilometres from Melbourne’s CBD. It has a median house price of $480,000 and 10-year capital growth at 7.2 per cent. The suburb is considered one of Melbourne’s most culturally diverse, with nearly 50 per cent of residents born overseas.
“It’s got a shopping centre, facilities, train line and there’re jobs in this centre. There are good housing styles that can be picked up,” Osborne says.
Niddrie is 15 kilometres from the CBD and has some expensive neighbours according to Osborne, which can only be a good thing for this bridesmaid suburb.
Laverton has a median house price of $367,000 and is located roughly
20 kilometres from Melbourne’s CBD. Most of its housing stock is freestanding houses in the architectural styles of the 1950s through to the 1980s.
Osborne says Laverton is quite a small area and may not be as good an opportunity as Niddrie and Sunshine.
“Although… Laverton does have a lot of potential. There’s a lot of industry that’s being cleaned up there. I’d view Laverton as a bit more risky, but there’s probably some good potential at the same time,” he says.
“Turnover is a good sign these markets are going to kick on for a bit and continue to grow. Sometimes they can work the other way when people are discounting heavily to get out of the area, but in these cases I think they’re all for the right reasons.”
There are a number of good areas on the list that make the cut for Damian Collins of Momentum Wealth, but are there suburbs that stand out from the crowd?
“I’d certainly be sticking with Coolbellup, Coogee and South Fremantle from an investor’s point of view. They’re the top three spots to be looking at,” he says.
“The ones that we don’t like are the outer suburban areas, which include the likes of Golden Bay, Madora Bay and Greenfields. They’re located on the outskirts and could be featuring on the list due to relatively new estates and so forth.”
Coolbellup is an established area that’s going through a bit of rejuvenation at the moment.
“It’s had a big number of apartment projects in the past year, which could be why it’s popped up on these findings, too,” Collins says.
With a median house price of $515,000, Coolbellup has 12-month growth of 14.4 per cent.
“Historically it’s been home to a lot of state housing, but ultimately it’s an area we think will improve over time. It still has a bit of a stigma to it but we think that will change.”
Coogee is a well-located spot on the coast of Fremantle, according to Collins.
“They’ve done a lot of redevelopment there, including a port and a marina. So, it’s certainly a good suburb long-term. While it’s a bit far out from the CBD, it has good access to Fremantle, which is the second city or centre in Perth.”
South Fremantle was quite a working class hub, according to Collins, but the whole area has benefited from the rejuvenation of Fremantle itself. Its current median house price sits around the $920,000 mark.
“South Fremantle has been partially renewed and it will continue. We certainly think this is a good spot for long-term investment.”
While Mount Pleasant and Alfred Cove are premium suburbs, their relative premium price tags may price out a lot of investors.
“Jandakot is near Perth’s smaller airport. It’s not far from the city. It’s still a newer suburb, so we don’t do much work out there, but it does have some longer term potential.”
The general type of property available within these suburbs is what Meighan Hetherington, director of Property Pursuit Buyers’ Agents, finds most interesting.
“I’m not surprised these areas came up as top suburbs on this list primarily due to the style of housing available,” she says.
“The thing that strikes me as a general overview of those suburbs, they’re the type of housing stock favoured by interstate investors.”
Hetherington says out-of-town buyers often prefer brick and tile homes on a concrete slab and there’s not a lot of this stock in supply within the 15-kilometre CBD radius where Hetherington prefers to buy.
The predominant areas on this list are affordable ones, she says.
“[They] have more supply that can come on and be released over time,” she says.
“What we find performs the best is the character Queenslander-style housing. What we generally recommend is timber and tin built between the 1900s and 1940s or low brick and tile but in those inner areas where density is limited and supply can’t be increased.”
For example, Upper Kedron takes the number one spot, located roughly
12 kilometres northwest of Brisbane’s CBD, but Hetherington says a huge amount of stock can become available there at any time.
“A large development was recently approved, although government has called in this approval and is reviewing it,” she says.
The 200-hectare master-planned community was proposed near Upper Kedron and The Gap.
“From that long-term investment point of view, the ability to put more of a similar thing into an area isn’t good for long-term rental income growth and capital growth,” she says.
Newport is located north of the Redcliffe peninsula, approximately 38 kilometres from Brisbane’s CBD, and is home to the new Isles of Newport estate.
“There have been units released up around that area which may have spurred on this suburb,” Hetherington says.
Australia’s largest property group Stockland has plans to urbanise north Brisbane’s bayside with a predicted total value of $590 million in development. Further development of the bayside community is planned to begin in 2016.
“The interesting thing about the Redcliffe and Scarborough area is a lot of southern investors are attracted to it,” Hetherington says.
“They’re coastal or bayside areas, only 40 minutes from the CBD, and if it’s not right on the water they’re still affordable.
“Daisy Hill is an area I know a lot of owner-occupiers like to buy in. That’s an affordable entry-level area. Housing stock is very basic brick and tile.”
Toorak Gardens takes out the number one spot for biggest change in sales volumes year-on-year for Adelaide, but given this suburb is blue-chip it may price many an investor out of its market, Koulizos says.
“This is a prime eastern suburbs location, so investing here is a no-brainer,” he says. The same can be said for Brighton, a prime seaside suburb.
“This isn’t really first-time investor territory,” Koulizos says.
Seacliff makes an appearance on the list and its location next-door to more expensive Brighton could mean there’s good potential for capital growth.
Brompton is an inner northern suburb of Adelaide, located a very walkable six kilometres from the CBD. APM has the median house price at $465,000 and median unit price at $385,000. Koulizos says stick to the old character period housing in this area rather than the new townhouses that developers are building.
Largs North is another bridesmaid suburb with future potential. Median house prices here are $418,000, while the median unit price is $275,000 according to APM data.
“Largs North is actually one of my top 20 suburbs to invest into in Adelaide,” Koulizos says.
“It’s on the coast and is next door to the more expensive suburbs of Largs Bay and Semaphore.”
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