Sunshine Coast rents soar

Rents across the Sunshine Coast have increased dramatically during the past two years, with the latest RP Data survey revealing the average tenant is spending at least 30 per cent of their income on rent, 35% if they rent a home.

Those are the percentages banks once estimated mortgage repayments to be.

Government figures reveal a two bedroom flat in the Caloundra coastal region which was leased at $230/week in the September quarter of 2006 is now leased for $60 more.

The same flat in Alexandra Headland which cost $260 two years ago would now be leased for an average $325 a week.

Mr. Ford discovered for himself just how tough the rental market can be when he offered the second bedroom of his two room, one bath unit in Mooloolaba for rent.

“The first day I had four people call, the second day 12 people called,” he said.

“The majority of people I spoke to said they can’t afford to rent a house themselves. Many of them had moved to the Sunshine Coast and found it really expensive compared to where they were, so they have to go back to shared accommodation.”

It is a trend which Mooloolaba Ray White property manager Kristy Sloan said was common.

“We have a lot of couples and friends or two couples coming in to rent something together, as long as there are two bathrooms,” she said.

The Mooloolaba Ray White office was one of the few real estate offices to open over the Christmas and New Year break and Ms Sloan said they received more than 14 rental applications during the two week period.

“We have a lot of owners reducing prices,” she said.

“Our owners have been willing to reduce rents to get people in straight away. The $10 $15 a week reduction may not seem much to them over the year, but it means a lot to those who are renting.”

Carolyn Wray McCann, a property manager with Laguna Real Estate in Noosa Heads said there had been a strong response to rental properties after a traditionally slow Christmas break.

She said more holiday home owners had asked for appraisals which could indicate more rentals could come on to the market this year as owners decide whether there is more value in transferring the property over to tenants.

Housing minister Robert Schwarten said almost all major cities and towns in Queensland recorded rental increases in the past year.

Sunshine Coast’s 30-year growth spurt

The Sunshine Coast has been the second fastest growing region in Australia for the past 30 years – behind only Mandurah in Western Australia, new figures show.

A Picture of the Nation, a report based on the 2006 Census, shows the Coast had a growth rate of 18% a year between 1976 and 2006, behind Mandurah’s 27.5%.

The Coast’s annual growth rate declined to 4.3% between 1996 and 2006 behind Mandurah on 8.2%, and the Gold Coast/Tweed’s growth of 5.9%. Our growth was more than three times the national average of 1.2% a year in the past decade.

The Coast has grown to become the 11th biggest population centre, just behind Wollongong in New South Wales, which is now among the 10 slowest growing areas, with Whyalla in South Australia and Maryborough to our north. Nearby Hervey Bay is just below the Coast on the top 10 list for Australia with a 12.6% increase.

Nationally, the report also confirms the man drought is no myth – there are 99 fellas for every 100 females.

At 75 years of age, there are only 69 gents to every 100 ladies.

More than four out of five people aged over 80 identified themselves as having a religion – 30% identified as Anglican and 23% as Catholic.

Drop in home loans raises fears of higher rents

And there are fears that a drop in investment loans could lead to skyrocketing rents and more homelessness.

Just 5994 new loans were approved in WA in November, the lowest since he same month in 2002 and almost 40 per cent fewer than in May 2006, according to Australian Bureau of Statistics data. It was a fall of 5.8 per cent on October.

The raw data shows just under 5000 were for buying established houses. There were also 2104 re-financings, which are not included in the overall totals.

About $171 million in loans were for building new homes and a further $57 million were for building them. About $1.3 billion was loaned to buy established houses.

Loans for investment housing, which were not broken down by state, fell 7.4 per cent on the previous month and 33 per cent on November 2007.

Housing Industry Association executive Chris Lamont said the investment numbers were of “real concern”.

“Unless new measures are implemented… we are going to see more households struggling to afford rental accommodation,” he said.

“This is likely to mean an increase in demand for public housing and potentially a further increase in homelessness.”

He called for a doubling of the depreciation allowance, incentives for building energy-efficient homes and an expanded national rental affordability scheme.

Meanwhile, the Urban Development Institute of Australia has backed the Housing Industry Association’s analysis of other recent housing data by pointing to an expected improvement in new home sales to first home buyers with the tripling of a grant.

HIA WA executive director John Dastlik told WAtoday.com.au last week that there would be a lag between the introduction of the $21,000 grant and its flow-through effect on home sales due to the approvals process in WA.

He was commenting on figures showing new home approvals in the state slumped to an eight-year low in November.

Figures released by the federal government at the weekend showed there had been 279 applications for the grant in WA since October 18, the date it was increased.

But UDIA WA chief executive Debra Goostrey said this was misleading as in WA there needed to be a contract to build before prospective homeowners could apply for the grant, unlike the eastern states where house and land packages from the same company triggered an application much sooner.

UDIA figures showed a “major jump” in land sales from when the grant was announced. The top 12 developers in the state sold 678 lots in the six weeks from October 27, almost 300 more than in the corresponding period before that date.

January is the busiest month to secure rental accommodation

January is the busiest month to secure rental accommodation and it is important that you know how to achieve the best result in a rental squeeze.

With current rental vacancy rates at their lowest, at an average of just over 1.1 per cent, and January the most popular month to search for rental property (based on data from January 2008 traffic to the rent section of the realestate.com.au increased by 41 per cent) you have to be ahead of the pack to secure the appropriate accommodation sooner rather than later.

Jamie Pride, Australia CEO of realestate.com.au, says that while securing a rental property may be challenging for some, there are certain things individuals can do to improve chances of securing their next home.

“With nine out of 10 consumers using the internet as their primary search tool to look for properties, doing your homework in advance can save renters a lot of time, money and heartache.

“The beauty of using the internet is that renters can email the agent direct, have access to property photographs and they can also research the local area to ensure the suburb they choose has the right amenities before they leave the house,” says Mr Pride.

Realestate.com.au’s street maps allows renters to scope out the public transport, shops and libraries close by – something vital for regional students who may not be familiar with the area.”

TOP TIPS FOR SECURING A RENTAL HOME

* Offer to have more than one month’s rent deposit in advance, together with your bond

* Look at surrounding suburbs for cheaper options

* Streamline the application process by having your deposit bond, application form and referees organised in advance, so you are one step ahead of the competition

* Dress to impress – make sure you are presentable at the time of the inspection – as first impressions count!

* Follow up with the agent to reinforce your interest in the property, so you are kept ‘top of mind’

* For first time renters, ask a parent to accompany you at the ‘open for inspection’ as you may come across as more responsible

* Always try to rent a property with gas heating and appliances, as opposed to just electricity, which can prove more costly

Build now or miss out!

First home buyers flush with government handouts have been warned there will never be a better time to build their own home on the Sunshine Coast.

As the domestic building industry on the Gold Coast dries up, forcing builders to slash prices to attract business, their counterparts on the Sunshine Coast are enjoying a busy start to 2009.

It means first-home buyers are missing out on the type of discounts on offer further south but builders say they can still get them into their own homes for well below $400,000. Eligible first home buyers can receive $21,000 if they choose to build a home – $7000 more than those who buy an existing dwelling.

Combined with low interest rates and the state government’s abolition of mortgage duty and stamp duty for first home buyers, it means business is brisk for local builders.

PJ Burns sales manager Anne Powell said the number of inquiries from first-home buyers had doubled since the extra government money was made available.

The company is selling four-bedroom, two-bathroom, 180sqm “turnkey” house and land packages at Stocklands’ Woodgrove Estate at Beerwah for $360,000 – $370,000 and Ms Powell said they were attracting strong interest.

“There is definitely a greater sense of urgency in the first-home buyer inquiries – I would confidently say twice as many as before,” she said.

A poll of Coast builders yesterday found similar stories and a range of house and land packages for less than $400,000.

Most affordable was Stockland’s $336,219 package at its Woodgrove estate in Beerwah, courtesy of a $10,000 discount promotion.

A recent survey by the company found 400,000 first home buyers will consider building in Queensland in the next two years and just over 50% of them will have a budget of less than $400,000.

The company is offering a $10,000 discount which brings its $346,219 house and land package at Woodgrove estate down to $336,219.

With $21,000 in government money knocked off the top, first home buyers are picking up three-bedroom homes for just over $315,000.

“We believe the combination of the higher grant, lower interest rates and excellent housing choices means now is an ideal time to buy,” Stockland, Qld general manager Mark Hunter said.

But he warned many people might not be aware the offer of an extra $7000 was only available for people who had signed a contract by June 30.

Dwyer Quality Homes contract administrator Steve Regeling said sales to first-home buyers had at least doubled with the extra government funding, while Steve Morcombe from Morcraft Homes warned prices would only go up.

“The offers of assistance for first-home buyers is a chance in a lifetime,” he said.

“We’ve sold to a number of first home buyers already and have still got first home buyers in the process of deciding who to build with.”

Steve Robinson, from the Sunshine Coast branch of the Master Builders Association, said local project builders had operated on tight margins for several years and “don’t have much room to move” when it came to offering discounts.

“But the guys I have spoken to say it is great time to buy a home now,” he said.

“They aren’t able to cut costs to meet a market situation because margins are tight but they believe they are already offering good, cost-effective products.”

Yield improvements could be the shining light for 2009

With many experts predicting 2009 will be a relatively flat market, the big benefactor of these conditions is likely to be rental yields.
 
Throughout 2008 all capital city markets recorded significant improvements in their average gross rental yields. Meanwhile, across most of these areas dwelling value growth was relatively flat. Between Oct-07 and Oct-08 Adelaide (6.92%) and Darwin (6.47%) were the standout performers in terms of property value growth.

In spite of the fact that price growth was relatively strong in Darwin, it also recorded the greatest increase in average gross rental yields, with an improvement of 0.81% during the year followed by Perth (0.76%) and Sydney (0.58%). Adelaide was the only capital which recorded a fall in rental yields during the last year, with yields falling by just 0.06%.

Perhaps more interesting is to look back to 2007 when during that year value growth was quite strong with median value increases ranging from 3.94% in Perth to 22.07% in Brisbane. During that year Melbourne (-0.23%), Brisbane (-0.33%), Adelaide (-0.54%) and Canberra (-0.25%) all recorded falls in average gross rental yields. Meanwhile, the greatest increase in yields was recorded at 0.43% in Perth, which at that time was the country’s worst performing market in terms of value growth.

Complimentary data which supports the likelihood of continual yield improvement is the latest housing finance data which shows fewer properties are being built and purchased for investment purposes.

On a rolling 6 month average basis, construction of new investment housing is down by 7.9% in Nov-08 compared to Oct-08. Meanwhile, over the year to Nov-08 the value of investment housing is down by 17.9%. Volumes now sit at levels equivalent to those seen in mid 2007.

It’s not just the value of construction of new investment houses which is down, so too is the value of investment housing purchase. As at Nov-08, the total value is down 0.9% compared to October and over the year the total value is down a significant 26.2%. Current volumes sit at levels similar to those witnessed in early 2003.

The implications of fewer dwellings being constructed for investment purposes and fewer existing properties being purchased is that the shortage of rental properties is likely to continue. This will be particularly evident within capital city areas where rental vacancy rates are already below 2% in Sydney, Melbourne, Brisbane and Adelaide and just above 2% in Canberra and Hobart.

With underlying demand increasing due to rising population growth, the housing shortage (and the rental shortage) situation is likely to become exacerbated.

On the flip side, for those who own or are thinking of purchasing investment properties, it is anticipated that rents will continue to rise as property values remain relatively flat. The bi-product of these rental increases will be continuing improvements to gross rental yields. These improvements in yields may also be enough to encourage investors back in to the market in mid to late 2009, particularly those investors that are driven by yield rather than short-term capital growth.

Home improvements keep builders on job

A growing market for home renovations is keeping the Sunshine Coast building industry active despite an acknowledged slowdown in the new home market.

Housing Industry Sunshine Coast/Wide Bay branch manager Adrian Langford said the value of approvals for alterations and additions on the Sunshine Coast was worth $119 million in 2007-08 – up 1% on 2006-07.

He said although that did not seem like much, it was outstanding given the higher interest rates, fuel costs, and food bills faced in the last financial year.

And while Australian Bureau of Statistics figures lag behind the trends being experienced on the ground, they show that the average value of renovations done on the Sunshine Coast is higher than any other area in Queensland.

Housing Industry Association analyst Darren Barlow said the higher the value of the land, the more likelihood there was that owners would decided to renovate rather than sell and move.

This was simply because land was priced because of its position, and people with property in good locations were loathe to shift.

Rather than face the transition costs involved in selling and buying, there is a shift to put money into improving the liveability of the existing property.

Mr Barlow predicts that in the next couple of years on the Sunshine Coast there will be a surge in the value and number of renovations being carried out.

Mr Langford said that already regions within the Sunshine Coast had seen very healthy growth in the value of alterations and additions approvals. Sunshine Coast council’s Maroochy office is up 40%, Tewantin 16% and Caloundra nearly 4%.

He said signs for the 2008-09 year pointed to further healthy growth for Maroochy.

“The renovations sector tends to respond more quickly to lower interest rates than new home building does,” Mr Langford said.

Strategically located affordable properties likely to be the best performers during 2009

The RP Data-Rismark Property Values Indices for houses and units reveals that the Australian property market continued to show real resilience to the global credit crisis and slowing economic growth.

Looking into 2009, the report suggests the greatest growth will come from the affordable segments.

RP Data National Research Director Tim Lawless said recent improvements in market conditions have coincided with the affordability improvements brought about by the decision by the Reserve Bank of Australia (RBA) to cut official interest rates by 1.25 per cent in September and October collectively.  This was further complemented by the Government’s announcement that first home buyer incentives would be increased.

“The interest rate cut in November and then again in December will also provide further support to the market with mortgage rates now falling by 30 per cent to reach around 6.7 per cent,” Mr Lawless said.

Based on the findings in the latest RP Data-Rismark National Property Value Indices, in the 12 months to end October 2008, Australian property values had only declined by -1.2 percent.  This is despite mortgage rates peaking at 9.6 per cent in August and the benchmark share market measure, the S&P/ASX 200 Index, falling by around 40.5 per cent over the same period.

According to Chris Joye, Managing Director of Rismark International, the worst period for Australian property values was in the second quarter of 2008 when prices fell by -1.9 per cent.

“This is when the RBA’s rate hikes took effect and consumer sentiment plunged. In the third quarter of 2008, Australian property values fell slightly by -0.7 per cent. The latest October and November sales data suggests that house prices in the final quarter for 2008 will be broadly stable,” he said.

Other indicators are also pointing towards an improving property market.  Indicative of this it the recently released Westpac-Melbourne Institute ‘Time to Buy a Dwelling Index’ shows confidence in residential market conditions increased by 39.4 per cent in December from its September levels which were 21.2 per cent up on the June level.

Mr Joye said, “Assuming most of these rate cuts are passed on by the banks, variable rate borrowers should see their interest rates drop to around 5 to 5.6 per cent respectively – this will provide further dramatic improvements to affordability.”

In 2009, Mr Lawless believes the affordable segments of the property market will offer the best opportunities for capital growth. 

“This will be somewhat of a turnaround for the property market where over the last four years; it has been the affluent properties which have generally provided the best capital growth.”

“Market activity is already showing signs of increasing at the lower end of the pricing scale,” he said.

The latest housing finance data from the ABS shows that first home buyers now represent 22 per cent of all market transactions in the residential property sector. This is expected to increase during the first quarter of 2009.  

Looking ahead into 2009, Mr Lawless is encouraging buyers to target ’strategically affordable’ properties – these are homes with a reasonable price tag that are well serviced by public transport, arterial roads and the necessary amenities such as shopping, schools and health care facilities.