Slight Fall For Sydney House Prices
NSW capital on track to record first dip since September 2020.
NSW capital on track to record first dip since September 2020.
Slight falls of over 0.2% over the past four months, undoing a small gain recorded in January amid a surge in listings and weakening demand from buyers according to CoreLogic data.
The 28-day rolling tally in the CoreLogic daily index shows Sydney prices slipped into negative territory on February 19 for the first time since October 2020.
With the month almost at an end, the NSW capital is on track to post its first monthly drop in prices since the market bottomed out in September 2020.
“It’s likely we will be reporting the first month-on-month decline in Sydney’s home value index since September 2020,” according to Tim Lawless, CoreLogic’s research director.
“It’s certainly not showing evidence that the market is crashing, it’s probably best described as a levelling out in price, similar to what we’re seeing in Melbourne.”
According to Mr Lawless, the weakening trend in prices is likely to continue as stock is pushed onto the market through to Easter.
“One of the best leading indicators – the comparative market analysis generated by real estate agents on CoreLogic’s RP Data portal when they prepare properties for sale – had risen by 23 per cent over the year and 45 per cent higher than 2020,” he said.
Melbourne too is showing signs of softening with CoreLogic’s daily index reading indicating no change over the past four weeks following a 0.2% price gain in January.
Perth is only recording 0.2% growth over the rolling four-week measures, while housing values continue to record higher gains in Brisbane and Adelaide — up 2.1% and 1.6% respectively over the 28 days ending February 22.
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Savvy high net worth players from Australia and Asia are getting on board as the residential landscape shifts
Build-to-rent (BTR) residential property has emerged as one of the key sectors of interest among institutional and private high-net-worth investors across the Asia-Pacific region, according to a new report from CBRE. In a survey of 500 investors, BTR recorded the strongest uptick in interest, particularly among investors targeting value-added strategies to achieve double-digit returns.
CBRE said the residential investment sector is set to attract more capital this year, with investors in Japan, Australia and mainland China the primary markets of focus for BTR development. BTR is different from regular apartment developments because the developer or investor–owner retains the entire building for long-term rental income. Knight Frank forecasts that by 2030, about 55,000 dedicated BTR apartments will have been completed in Australia.
Knight Frank says BTR is a proven model in overseas markets and Australia is now following suit.
“Investors are gravitating toward the residential sector because of the perception that it offers the ability to adjust rental income streams more quickly than other sectors in response to high inflation,” Knight Frank explained in a BTR report published in September 2023.
The report shows Melbourne has the most BTR apartments under construction, followed by Sydney. Most of them are one and two-bedroom apartments. The BTR sector is also growing in Canberra and Perth where land costs less and apartment rental yields are among the highest in the country at 5.1 percent and 6.1 percent, respectively, according to the latest CoreLogic data.
In BTR developments, there is typically a strong lifestyle emphasis to encourage renters to stay as long as possible. Developments often have proactive maintenance programs, concierges, add-on cleaning services for tenants, and amenities such as a gym, pool, yoga room, cinema, communal working spaces and outdoor barbecue and dining areas.
Some blocks allow tenants to switch apartments as their space needs change, many are pet-friendly and some even run social events for residents. However, such amenities and services can result in BTR properties being expensive to rent. Some developers and investors have been given subsidies to reserve a portion of BTR apartments as ‘affordable homes’ for local essential services workers.
Ray White chief economist Nerida Conisbee says Australian BTR is a long way behind the United States, where five percent of the country’s rental supply is owned by large companies. She says BTR is Australia’s “best bet” to raise rental supply amid today’s chronic shortage that has seen vacancy rates drop below 1% nationwide and rents skyrocket 40% over the past four years.
Ms Conisbee says 84 percent of Australian rental homes are owned by private landlords, typically mum and dad investors, and nine percent are owned by governments. “With Australia currently in the midst of a rental crisis, the question of who provides rental properties needs to be considered,” Ms Conisbee said. “We have relied heavily on private landlords for almost all our rental properties but we may not be able to so readily in the future.” She points out that large companies can access and manage debt more easily than private landlords when interest rates are high.
The CBRE report shows that Asia-Pacific investors are also interested in other types of residential properties. These include student accommodation, particularly in high migration markets like Australia, and retirement communities in markets with ageing populations, such as Japan and Korea. Most Asia Pacific investors said they intended to increase or keep their real estate allocations the same this year, with more than 50 percent of Australian respondents intending to invest more.
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