Reflection for Forward Focus – JUNE 2019

In the world of smartphones, smart TVs, smart notebooks, people and even smart homes, not only do we have multiple platforms sending us up to the minute information on the property and financial industries, the information can be quite contradictory between the opposing teams.

So, what do we need to take in and what do we need to take as opinion/brush off/ disregard (which is intended with respect to relevance to your goal, no disrespect to those with the opinion).

Facts and figures never lie, however an opinion can also be quite important if you can read between lines and connect the dots with the figures. This means a lot of reading, comparisons and double checking facts – If you can keep up with it all.

An opinion of someone specialising in the industry doubled with also being local, on the ground, in the trenches per-se, will be your gold nugget for your finer details. As for the Mainstream Media? Most likely will not be your source if you want to take your next purchase whether it be for Owner occupying or Investment seriously.

OPQ assist our clients by a breakdown of some key factors we feel are relevant in a holistic fashion as all elements will effect a sale, purchase or property investment one way or another.

AUS Market – OPQ’s Breakdown to JUNE 2019

Summarizing/interpretation of the report released by Core Logic suggests, in this particular report, up take in Auction Clearances and alternative rental investment options with what appears to be a significant population increase via overseas and interstate migration.

What happened during June?

June mid-month on wards saw national auction clearances above 60% clearance rates, seeing 945 capital city properties hitting the market with strong buyer interest and transactionally following through at the time of Auction. According to the data released by CoreLogic, Brisbane specifically experienced a high clearance rate of around 37% during the month, which slumped to 31% which has been blamed on the long weekend enthusiasts taking a break from the rounds of property searching.

Highlights to the end of June -

Adelaide named the best performer with an increase of 0.4% to dwellings value with the median value priced at $430,654.

Darwin came in as the weakest performer, declining a further 3.6% in dwellings value with the capital city median price coming to $387,382.

Darwin did not lose out entirely, where rental yields are sitting at the highest of capital cities on a generous 6.0%

Sydney though did come in at the lowest with a general overall rent a yield of 3.5%

Housing conditions did improve through a slower decline nationally of 0.2%, the smallest of declines recorded since March 2018.

What has been positively noted is the improving conditions due to the post the election buyer activity, RBA cutting interest rates, along with the not so secret plan to cut the rate again.

QLD wide, OPQ has come across an increase in numbers of interested buyers that are becoming more intentional with their follow through, rather than a weekend spent purely musing the market and kicking tyres.

Our network of mortgage brokers, selling agents & banking reps have also commented positively on the increase of enquiry as well as transactions in reaction to what we are seeing now as the new record low of 1.1% rates by the RBA. Going by the numbers of clients, mortgage brokers, bank lenders and the feedback from sales agents, July will see stronger transaction activities by those that have previously been testing waters via questions and actively following the markets. The boost to transactions will be welcomed, however it does come with a hindering feeling that this will not be a long lasting impression as rates will only go up once they've been down.

QLD – What does this mean for you?

Brisbane – A property market shake up

The humble granny flat

Although the values of properties are yet to stabilise instead of the positive spin on “the slower rate of decline”, rent prices are still experiencing increase while the vacancy rate sits at a comfortable 1.6%. This reflects the pain point for young adults needing to save AND rent a property within a decent distance to their work or at least, their commute to work. Although most generally share their space with one or two others, some are seeking the not so glamourous choice of moving back with in with mum and dad to get ahead with this savings quicker.

Some families are now utilising the family property to build a granny flat for their children to rent (significantly lower than an apartment or house) to allow of independent living to the main house, however with the future in mind for was is an increasingly demanding market. The co living property styles of Granny Flat leases or the interest in short term accommodation such as Air BnB.

According to CoreLogic, Brisbane has over 180,000 properties suitable for developing a granny flat, representing approximately 20% of all properties in the city. With an average land size of 759 square metres, The Gap in the Brisbane council area has the most properties available for development while Ferny Hills in Moreton Bay tops the list with six in ten properties having granny flat potential.

QLD – Population Growth comes welcomed with a positive spin Additionally on the rise is the estimated population increase by 89,905 persons**, or 1.8%, throughout 2018 taking the estimated population to 5,052,827 persons. The 1.8% annual increase in population was the largest since June 2013 and consisted of increases of 31,070 persons due to natural increase, 35,039 persons due to net overseas migration and 23,796 due to net interstate migration. The general course of such increase will see demand for more rental properties for families in suburban area along with the inner city living being targeted by the career ladder climbers set for their hard yards to be undertaken interstate.

**Corelogic research results

What does this mean for Owner Occupiers?

Combining all the above information, relevantly to the meto regions of QLD, it is said interest will continue to pick up with buyers now in reach to their deposit goals earlier than expected with required criteria requirements easing along side the rate also. Does this mean you hit the market with your property to sell now? Well, that is a conversation for you to have with your bank and/or accountant. Although the current market financially as well as property is experiencing positives, you will need to note the value of your property amongst the increased interest. In many cases, buyers are still savvy to the value of property, so although there is interest, it does not mean it will meet your needs of a “successful sale” Step slowly and get two or three opinions regarding if it’s the right decision for you. Nothing good comes from a fast transaction.

For Landlords, things are as usual. Rents are stable and vacancy rates are generally comfortable. The increase in population will see the demand of rental properties on each end of the scales (families in suburbs and the single professionals in apartments) increase over the coming years rather than the coming months, so don’t be banking your eggs hastily in the hope of demand – remember to stay on path with your investment plan. The general increase to inner city living, or even just a stone throw outside, has started heating up with competitive pricing to purchase within a quality building amongst key locations. Do not dismiss the 6-8 KM radius of Brisbane, or in general city fringes+ 2km.

A generally consistent rental return (a tenancy of over 12 months) is your key to stay ahead of the game. In the instance of the humble granny flats, this could be seen as a new market player for landlords that want a smaller income at their discretion. This can meet the needs of individuals that appreciate a small space in the ‘burbs minus the lawn maintenance and older styled apartment complexes we often see with 6-20 apartments in one lot.

In summary, our QLD Market has found itself with a busy outlook ahead for the coming weeks/months. although opportunity calls, you will need to use this time strategically for your home purchase or investment. What may mean a rental yield of 5-7% pending on where you buy, or a value of an amount you nearly would not even consider in a "normal" bank rate capacity, you need to consider what the future will hold. In both scenarios, your purchase must come with a contingency plan. No one can tell the future, but you can prepare for a deviation in your plans, especially when considered early enough in the piece, you may find yourself on the other side walking away with minimal impact.

A lot can happen in a month - good, bad & curve ball - So, sit tight, OPQ will check in again within the first week of August with results of our first month in to a new FY.

With passion, strategy & transparency,

The OPQ Team.

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