Why are investors back?

                                                  Geoff Grover Property Talk – May 2013


They are returning, but the flood gates are not open. The initial interest is because rental yields are on the rise, it is very hard to find a rental property today, and confidence is returning that we are past the bottom in prices, so capital growth, albeit modest, is now seen on the horizon.

Both factors are important to investors- rental yield provides the cash flow to support the investment, capital growth is the real reason to invest long term.

The REIQ December Qtr Gross Rental Yield report shows more than 150 suburbs are on average achieving 5%, and anything less will not attract investors - this does not include purchase , management or maintenance costs, just rental income before deductions.

Qld`s 5 Best Performing Post Codes
Postcode Median Sale Rent Gross Yield

4415 $360,000 $640 9.3%

4184 $130,938 $228 9.0%

4714 $119,500 $201 8.7%

4455 $320,000 $496 8.1%

4825 $371,600 $575 8.0%

What is immediately apparent is that the high rates are mainly unique mining areas or very high rental areas like Woodridge that have variable price growth prospects, and that to get those yields, the buy prices are very low, all well under $400,000.

What does this mean for Coolum?

The most attractive rental propositions will be those between $400- $500,000 bigger type, well presented houses returning around $430 to $480 per week, yields over 5% but under 6% preferably unique growth features as near the beach, offer views or have a high Walk Score.

Reasons? $500+ per week rental is hard to get, renters are better off buying, & whilst an investment buy of $600,000 invariably means a better home with higher depreciation to offset against your tax liability, the cash gap between mortgage payments & rental income widens.

Potential sellers should be aware how astute agents can maximize sell potential by informed marketing & buyer negotiation.- new investors need this assistance.

www.geoffgrover.com.au

Mobile - 0414 337 402

E mail – geoff@mountcoolumrealty.com.au

Distressed sales mainly in Qld - but NOT on the Sunshine Coast

New figures show property in a dismal state

Sonja Koremans – Courier Mail – 18^TH April 2013

ALMOST a quarter of all properties advertised in Australia in the First Qtr to March 2013 are distressed sales, according to alarming new figures.

Editors Note – but not on the Sunshine CoastMount Coolum sales in 2012 were well up, very much auction driven,  prices well down, and obviously a function of distressed sales. For the First Qtr, dramatically reduced stocks available for sale has changed the picture.

Right now, buyers are not putting their properties on the market until they see prices driven up – virtually all the distressed sales have been cleared out. Particularly for the lower price points, we almost have a sellers market such is the shortage of stock.

And in stark contrast to reports that Queensland’s real estate sector is back on its feet, the state accounts for the majority of those listings. New figures released by valuation group LandMark White reveal that the sunshine state accounted for a massive 54 per cent of properties advertised by a mortgagee, receiver or liquidator during the March quarter.

The Gold Coast recorded the highest number of distressed property advertisements in the country with 74 per of its listings made by a mortgagee, receiver or liquidator in the three months to March 31.They included big-ticket items such as the Marina Mirage marina and Hope Harbour marina.

Nationally, most receiver sales were in regional areas, with the highest number of distressed listings during the quarter in the agricultural sector. Residential property was next highest. LandMark White found that almost 23 per cent of properties advertised in Australia during the quarter were listed by a mortgagee, receiver or liquidator.Of those, nine per cent were in New South Wales and 15 per cent in Victoria.

Stewart Gilchrist of Colliers' insolvency property services said high-end homes accounted for the majority of distressed sales on the Gold Coast.
“There is still an oversupply of residential in excess of $1 million so those distressed sales would be at the upper end of the market," Mr Gilchrist said.
He said the Glitter Strip’s industrial sector was solid while the commercial market was softer on the back of an oversupply of office space.
“The Gold Coast is development orientated so that could also account for the higher proportion of distressed sales in the region."
He said despite the gloomy figures, confidence had returned to the Gold Coast market.
“Vendors and banks are being more realistic about prices, buyers are back and sales are strong,” he said.

Nationally, the rural sector accounted for 23 per cent of distressed sales, 19 per cent were residential, 16 per cent industrial and 15 per cent retail.
The majority of receivers’ stocks advertised for sale were in regional rather than metropolitan areas - 80 per cent were located outside capital cities.

For the fourth time in six quarters, Queensland accounted for the greatest number of distressed properties for sale nationally.

NSW saw the most positive change, as only seven per cent of all properties advertised in that state were listed by a receiver or mortgagee - a record low. By comparison, the proportion in the same quarter of 2012 was 31 per cent.

Although the distressed ratio in Queensland dropped by 6 per cent, it remains stubbornly high at 39 per cent of all property advertisements in the state. Victoria saw the smallest improvement in the distressed ratio, with a drop from 20 per cent to 19 per cent, which meant that for the first time in the series, Victoria had a higher ratio than NSW.

The Sunshine Coast Recovery Cycle

In recent times analysts have come to re-define the property cycle into 4 phases: boom, bust, recovery, stabilization.A recovery market is characterized by 5 key features according to leading analyst Michael Matusik - rising sales -  a return to price growth, albeit usually quite mild - improving rental yields - more building activity - a more equal market between buyers & sellers.
We showed last month that house sale      volumes had increased in the Mt.Coolum area, although prices were down. The table confirms that volumes for houses,  apartments and land were all up for the whole Sunshine Coast 2012 over 2011. 
Some of the recovery features are in place, sales up & low levels of stock moving to a balanced market, so we are clearly off the bottom, although not far from it.
Matusik believes that the Sunshine Coast is one of several Queensland regions that are now “knocking on the door to recovery”. These are very general assessments. that do not address segment differences.

   Volume Increases - Sunshine Coast

                                                         Source: RP Data

These are reflected in the amount of stock on the market. 

Housing stock is very tight.

The apartment market has high       numbers for sale as long term investors look to realise capital gains or losses from purchases made in earlier years as they recognise extensive periods ahead of slow growth in the property cycle.

The luxury apartment market is the last sector to recover & requires massive price adjustments to move stock as evidenced on the Gold Coast & locally, eg the Coolum Seaside 5 Star liquidation

Analysis by Geoff Grover, Mr Mount Coolum Real Estate

Coolum Beach Realty

Mobile 0414 337 402

www.geoffgrover.com.au

April 2013