How will Australia’s population growth affects local homes?
Figures from the Australian Bureau of Statistics (ABS) show that Australia’s population growth is double the global average - in September 2009 the population moved through 22 million.
How is population growth trend over Australia set to have an effect on the cost of housing on the Northern Beaches?
Simply, as demand is increasing Australia wide there is a flow on effect to each & every corner. Price levels in the Seaforth / Balgowlah area does preclude a large portion of the Australian market. However, there are still a number of buyers moving to the Northern Beaches to take advantage of the tremendous lifestyle that the Beaches provide.
There is a trend of many “kids” leaving home & the area due to price when they choose to buy, however they are quickly replaced with more & more “established families” moving back into the area.
Looking at the results on the ground, after four interest rate increases in the past six months and with a couple more possibly on the horizon, buyer demand is not showing any signs of slowing down.
RP Data’s national research director, Tim Lawless, has stated that current indicators suggest house prices will continue to rise thanks to increasing buyer demand.
“The RP Data – Rismark Hedonic Home Value Index was up 1.8 per cent in January this year, clearance rates are over 70 per cent, new property listings are being absorbed very quickly and rental markets are showing some improvement after a soft second half of 2009,” Mr Lawless said.
“With population growth and thus demand for housing remaining strong, the new housing sector should see ongoing improvements. Dwelling approvals for detached housing have been trending upwards, albeit from a very low base, which is a positive sign that confidence is returning to the building industry.”
There are no surprises here, it’s easily backed up by attending a local open for inspection & you can’t seem to miss the strong attendance.
Linked to the current supply & demand issue, Australian dwelling starts in 2009 were at 13-year lows. Over 2009 work started on 138,450 dwellings across Australia – the lowest calendar year result in 13 years (122,205 starts in 1996).
• In the December quarter, Australian dwelling starts rose by 15.3 per cent – marking the biggest quarterly increase in eight years. Housing starts rose by 13.4 per cent while apartment starts increased by 18.9 per cent.
Source Savanth Sebastian, Economist, CommSec
Although we are seeing strong activity on all levels of property, the fundamental basis for the market strength at different points seem to differ.
The strongest market currently is certainly entry level homes which provide the opportunity to add value. The underlying fundamentals behind this are there are simply more buyers that can afford an entry level home and as such there are more buyers to compete who are also prepared to fight to get the home that has captured their attention.
For the properties high $1 millions – early $2 millions there has been very low stock levels over the past 12 months & as such there are a large number of buyers accruing who are waiting for the right home to come available – with frustration levels rising. As such when these homes do come to the market they are being snapped up quickly.
Prestige properties as we have reported in recent posts have been enjoying the strongest market conditions in the past 2 years.
Confidence is key in this segment with the stock market returning to just under 5000 on the All Ordinaries, the devastation to prospective buyers wealth is no-longer occurring & therefore no longer generating the in-activity that we experienced last year. When priced in line with the market prestige properties are moving quickly, however if over priced homes are sitting on the market for some time.
Last week the Australian published a very interesting graph that identifies how well our top – end markets are progressing following the GFC Wealthy buyers push prestige prices up. Looking back at the prestige market over the past 3 years, below, it will be interesting to see how this quarter closes & exactly how we move from here, however the indicators & market sentiment suggest that we will be moving back above the 2008 levels & prices in the not too distant future.
With a few more properties coming to the market this week it should provide buyers with some additional supply that they are keenly looking for and with demand continuing provide low days on market there should be a number of happy sellers over the coming week.
We look forward to your posts on the blog with any additional thoughts & comments from our readers.
Please feel free to email us if you have any further questions about the market or real estate in general – it would be great to hear from you.
Till we meet again, wishing you all the best in your property search!
The Team at R&W Seaforth/Balgowlah.
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See you at the open for inspections: Click Here for our open times
To keep an eye on this week’s reported Seaforth real estate, Clontarf real estate, Balgowlah real estate, Balgowlah Heights real estate and North Balgowlah real estate Click Here*
*Sales are as reported by Australian Property monitors on 26/03/2010
26.03.10
