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Australian Property Market - Second Quarter Review

Michael Cleary

Read Time: 8 minutes

If your water cooler conversation is anything like mine, the chat is all about it being July and half way through the year! This also means it’s time for our Australian property market second quarter review. In this blog, we take a look at how each capital city performed in June, the last quarter (April - June) and the past 12 months (June to June). I apologies in advance for the length of this one, however, there’s a lot to get through. So grab a herbal tea, wine, craft beer - whatever tickles your fancy really, and get stuck in.

Sydney

Capital Growth: 

  • June recorded growth of 2.2% (all dwellings)

    • 1.8% for houses and a whopping 4.5% for apartments

  • For the quarter capital growth increased by 0.8% (all dwellings)

    • 0.9% for houses and 0.5% for apartments

  • Year on year the city has seen a very handy increase of 12.2% (all dwellings)

    • 13.0% for houses and 8.6% for apartments.

Gross Rental Yield (Houses): 

  • Has improved slightly, ending June at 2.8%

    • At the end of the first quarter, rental yields were sitting at a low of 2.7%.

Combined Rental Vacancy Rates: 

  • Have ended the quarter slightly lower at 1.8%

    • With the previous quarter sitting at 1.9%.

Median Dwelling Price: 

  • $880,000 as at June 30, 2017

    • Up from $805,000 in the last quarter.

State Government: 

  • Liberal Party.

Unemployment Rate (NSW): 

  • A low 4.8% as of May 2017

    • Down from 5.2% in February 2017.

Property Cycle: 

Sydney has continued on its bullish path of growth and is exceeding market expectations. However, we are now starting to see the Sydney market cool, with auction clearance rates dropping off, numbers at open homes down and most seem to have overcome the FOMO phobia, coming to terms with Sydney simply being a global city that attracts global prices. We are currently in the transition period of a seller's market to a buyers market and moving forward, we expect to see things cool over the coming months.

Melbourne

Capital Growth: 

  • June recorded capital growth of 2.7% (all dwellings)

    • 2.8% for houses and 2.3% for apartments

  • For the quarter we saw a capital growth increase of 1.5% (all dwellings)

    • Houses 1.9% with units declining by -2.5%

  • Year on year all dwellings have increased by 13.7%

    • 15.0% for houses and 1.5% for apartments.

Gross Rental Yield (Houses): 

  • Rental yields have slightly declined to end the second quarter at a very unattractive 2.6%

    • At the end of the first quarter, they were sitting at 2.7%.

Combined Rental Vacancy Rates: 

  • Have dropped in the second quarter to 1.5%, showing signs of strong rental demand

    • Having ended the previous quarter at 1.7%.

Median Dwelling Price: 

  • $675,000 as at 30th June 2017

    • Having ended the previous quarter at $605,000, as at March 31, 2017.

State Government: 

  • Australian Labor Party.

Unemployment Rate (VIC): 

  • Sits at 6.0% as of May 2017

    • Slightly lower from the previous quarter of 6.1% as at February 2017.

Property Cycle: 

Melbourne still has some gas left in the tank, however, record growth above 13% won't be sustained and we expect this to reduce to levels of normality towards the back end of 2017. It should revert to a more sustainable growth range of 5-7% through to 2020. Following this, we may see it stall/plateau for a year or two.

Canberra

Capital Growth: 

  • June recorded growth of 2.6% (all dwellings)

    • 2.5% for houses and 3.5% for apartments

  • For the quarter all dwellings declined by -0.4%

    • -0.6% for houses and a gain of 3.1% for units

  • Year on year all dwellings have increased by 9.6%

    • Houses being 9.7% and apartments 7.6%.

Gross Rental Yield: (Houses): 

  • The second quarter has ended at a healthy 4.1%

    • A continuing pattern as the first quarter ended at 4.0%.

Combined Rental Vacancy Rates: 

  • Have ended the quarter at 1%

    • Up slightly from the 0.9% of the previous quarter, most likely due to more stock being released to the market.

Median Dwelling Price: 

  • $625,000 as at June 30th, 2017

    • Up from $586,500 as at March 31, 2017.

State Government: 

  • Australian Labor Party.

Unemployment Rate (ACT): 

  • A very respectable 3.5% as at May 2017 illustrating a stable market for employment

    • Down from 3.8% as at February 2017.

Property Cycle: 

Canberra is now in a rising market and our key indicators lead us to believe there are great long-term opportunities. All the key economic indicators point to continued growth in the Canberra housing market. The strong public sector and above average household incomes, all point to continued growth in the future. The BIS Shrapnel recently ranked Canberra No.1 for capital growth through to 2020, with estimates of 16% capital growth increase from 2017 - 2020.

Hobart: 

Capital Growth: 

  • June recorded strong growth of 2.8% (all dwellings)

    • 3.1% for houses and -0.2% for apartments

  • For the quarter all dwellings declined by -1.3%

    • -1.5% for houses and 0.7% for apartments

  • Year on year all dwellings have increased by 6.8%

    • Houses by 7.4% and apartments by 1.5%.

Gross Rental Yield (Houses): 

  • Ending the quarter at 5.1%. To note Hobart still holds the highest rental yield along with Darwin

    • The previous quarter ended at 5.0%.

Combined Rental Vacancy Rates: 

  • Have finished the quarter at an extremely tight 0.6%

    • And have remained steady from last quarter.

Median Dwelling Price: 

  • $355,000 as at June 30th, 2017

    • Which has remained the same from the first quarter.

State Government: 

  • Australian Labor Party.

Unemployment Rate (TAS): 

  • 6.1%, as at May 2017

    • This has increased slightly from 5.8% in February 2017. Something we will definitely be monitoring closely.

Property Cycle: 

Hobart presents fantastic affordability backed by strong data suggesting good growth. However, this is a strong short term play as the main driver for growth is tourism. Population growth is good and unemployment is just below the national average. Don’t be surprised to see continued growth in the short term, however, the market can fall as quickly as it increases.

Adelaide: 

Capital Growth: 

  • June recorded negative growth of -1.7% (all dwellings)

    • -1.6% for houses and -3.7% for units

  • For the quarter all dwellings declined by -0.2%

    • Houses gained 0.5% and apartments declined by -6.9%

  • Year on year all dwellings have increased by 2.4%

    • Houses by 2.7% and apartments have decreased by -1.3%.

Gross Rental Yield (Houses): 

  • Ends the quarter at 4.0%

    • Unchanged since the last quarter.

Combined Rental Vacancy Rates: 

  • Sitting at 1.8%

    • The last quarter finished at 2%.

Median Dwelling Price (All dwellings): 

  • $440,000 as at June 30, 2017

    • An increase of $1,000 from last quarter.

State Government: 

  • Australian Labour Party.

Unemployment Rate (SA): 

  • 6.9% as at May 2017 - South Australia holds the highest unemployment rate in the nation

    • Up from 6.6% in February 2017. This is obviously a concern and we will continue to monitor the unemployment rate. We expect to see further government initiatives to help ease this by awarding of federal infrastructure projects to the state.

Property Cycle: 

Adelaide is the beautiful sleeping giant. Much like Brisbane, in that, it has just chipped away with moderate growth over the last 10 years. Unfortunately for the state, a lot of the big industries like cars and mining are almost now non-existent. This leads to the city having the highest rate of unemployment nationally. However, as mentioned above, with the federal government trying to stimulate growth, it’s an affordable market with strong prospects for future growth if they can get it right.

Brisbane (Excluding Gold Coast): 

Capital Growth: 

  • June recorded a decline in growth of -0.5% (all dwellings)

    • Houses -0.6% and units gained 0.8%

  • For the quarter all dwellings increased by 0.5%

    • Houses increased 0.8% and apartments lost -2.4%

  • Year on year all dwellings have increased by 2.0%

    • Houses by 2.5% and apartments have declined by -3.2%.

Gross Rental Yields (Houses): 

  • Is sitting at 4.1% and always a popular driver for investors

    • Has remained the same since last quarter.

Combined Rental Vacancy Rates: 

  • 3.1%, slightly down from the previous quarter

    • The previous quarter ended at 3.3%.

Median Dwelling Price (All Dwellings): 

  • $497,200 as at June 30th, 2017

    • Up from the last quarter where it ended at $480,000. The slow burn continues…

State Government: 

  • Australian Labor Party.

Unemployment Rate (QLD): 

  • 6.1% as at May 2017

    • Down from 6.7% in February which is a great sign for the region.

Property Cycle: 

Brisbane has been ticking along ever so slowly, however, we are concerned by the significant oversupply of apartments in the Brisbane CBD. Although historically this hasn't been proven to be an issue for stand-alone dwellings in the suburbs, we can't help but think there will be some sort of flow on effect. Unemployment is still relatively high and population growth is low in comparison to other major cities. In saying all of this, there are regions that we are monitoring recording strong growth or showing signs of strong growth in the near future.

Perth: 

Capital Growth: 

  • June recorded an increase of 1.4% (all dwellings)

    • Houses at 1.4% and apartments 0.7%

  • For the quarter all dwellings increased by 0.1%

    • Houses stayed flat at 0.0% and apartments rose slightly by 0.6%

  • Year on year all dwellings have decreased by -1.7%

    • Houses have decreased by -1.9% and apartments have had a slight gain at 0.5%.

Gross Rental Yields (Houses):

  • Sitting at 3.6%

    • Which has remained unchanged since the last quarter.

Combined Rental Vacancy Rates: 

  • 4.8% (a national high)

    • Has remained the same since the last quarter.

Median Dwelling Price (All Dwellings): 

  • $484,000 as at June 30th, 2017

    • Up from $475,000 in the previous quarter.

State Government: 

  • Australian Labor Party.

Unemployment Rate (WA): 

  • 5.5% as of May 2017

    • Down from 6.0% in February 2017.

Property Cycle: 

Perth has continued its slide from the mining boom recording extremely high vacancy rates and declining housing values. With minimal to negative population growth.

Darwin:

Capital Growth:

  • June recorded a decrease of -2.2% (all dwellings)

    • Houses -1.8% and apartments -3.9%

  • For the quarter all dwellings decreased by -5.2%

    • Houses at -3.5% and apartments dropped a massive -11.7%

  • Year on year all dwellings have decreased by -7.0%

    • Houses decreased by -6.2% and apartments decreased by -10.5%.

Gross Rental Yields (Houses): 

  • Sitting at 5.1%, increasing slightly since last quarter

    • Ending the previous quarter at 5.0%.

Combined Rental Vacancy Rates: 

  • Are sitting at 3.2%

    • Down from 3.8% in the last quarter.

Median Dwelling Price (All Dwellings): 

  • $480,000 as at June 30th, 2017

    • Down from $490,000 as of March 31, 2017.

State Government: 

  • Australian Labor Party.

Unemployment Rate (NT): 

  • A relatively low 3.2% as at May 2017

    • Down from 3.5% as at February 2017.

Property Cycle: 

Darwin remains unpredictable for the short term. It's a sit and watch for Darwin, however, we do believe there will be great buying opportunities come 2018 and beyond when we forecast improvement in the economy, population growth and business investment.

Milk Chocolate was founded seven years ago by Richie Ragel and Michael Cleary, to purchase residential and commercial property in Australia on behalf of our clients, looking for a home or investment property. To see how we can help you get in touch here. 

Thanks, Michael 

Related articles: Australian Property in 2017, Australian Property Market - First Quarter Review, Factors That Affect the Price of Australian Property. 

Sources: Australian Government Department of Employment / SQM Research / Herron Todd White / CoreLogic

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Thanks, Michael