Perth Real Estate Prices Close in on Sydney and Small Real Estate Developers in Australia
Property prices in Perth are within reach of eclipsing Sydney as the country’s most expensive, median price data for the September quarter of 2006 shows. Originally published in the Australian Property Investor December 2006 edition on Page 18.
Michael McNamara from APM said the margin between Sydney and Perth house prices was now only 5.5 per cent, just three years ago, Perth prices were half those in Sydney.
“It is interesting to observe that if Perth continues to outperform eastern capitals by the same proportions, then it will soon surpass Sydney for the title of most expensive median house price in the country,” McNamara said. However, he said 39 per cent annual growth was “clearly unsustainable” and tipped that the Perth market would peak in the December quarter this year.
Darwin’s explosive growth also continued in the year to September, with its median house price surpassing Melbourne and Brisbane to make it the fourth most expensive city for houses. In the September quarter itself, growth in Darwin was slowing but still relatively strong. House prices were up 5 per cent over the three months and unit prices climbed 4 per cent.
McNamara tipped that Darwin, like Perth, should peak in the December quarter. “For these markets, much depends on commodity prices as property prices correlate strongly with the commodities index,” he said.
Price growth along the eastern seaboard was virtually non-existent in the September quarter for both houses and units, a fact McNamara puts down to interest rates. “Early this calendar year, property markets in Sydney, Melbourne and Brisbane showed positive signs, leading us to believe that moderate quarterly growth in median prices would be expected throughout 2006,” he said. However, interest rates rises this year have seen buyers in the markets retreat to a more cautious position.
“Eastern seaboard capital cities are now experiencing a stabilisation phase in their property cycles and we predict that trend will continue for the next 12 to 18 months.”
On a different note, Adelaide rentals are in hot demand. Adelaide’s Hills district has put up the ‘no vacancy’ sign, recording a nil vacancy rate in September. The vacancy rate across the city as a whole remained at 1.6 per cent, Real Estate Institute of South Australia figures showed. That is under the national benchmark of 2 per cent. The Hills region, from Crafers to Nairne, recorded a zero vacancy rate, while the western suburbs had the highest proportion of rentals available at 2 per cent.
Tips and inside knowledge from the Dec ’06 issue of the Australian Property Investor magazine.
Inside Knowledge about small real estate developers
Small developers should always allow themselves a little bit of breathing space with their financing, Tom Riley says, because prices tend to change over the course of a job. He says the contract price for his real estate project grew by about 5 per cent over the 12 months it took to complete. However, thanks to the years he’s spent working in the building industry the price rise didn’t come as a nasty surprise to Tom.
“The real estate contract grew just under $20,000 over the 12 months,” he says. “I was anticipating that there’d be the rise and it wasn’t outside the parameters of what I thought it might be.” Other small developers should be aware that the home prices they’re quoted might change as well, he says. “I hear people say, “we’ve got a fixed price contract’ and they probably have, but there’s always a rise and fall clause in there – and it’s usually a rise.”
As a result it’s not the best idea to spend the maximum amount you can access right from the outset. “You need to be in a position where you’ve got a little bit of extra money to play with.” Tom says he doesn’t blame his real estate builder for the rise, as material costs climbed over the 12 month period and so did the charges for real estate sub-contractors.
Tom’s small real estate development tips
1. Not everyone wants to live on the edge. Have a workable back-up plan in case things go pear-shaped.
2. Running your real estate proposal past the council before you buy can save a lot of anguish later on.
3. Put everything in writing. Even things you think are obvious can be misinterpreted by real estate builders, and you may have to make costly compromises later on.
4. Don’t be afraid to ask questions. Some real estate developers think everyone else is stupid anyway, so you might as well ask if you don’t know.
5. Don’t over capitalise for the area you’re building in. There’s no future in building $500,000 townhouses in a suburb where the media price is under $200,000.
6. Do the sums, then do them again, then halve the potential profit and halve it again. If you can live with the result, do it. If you’re young enough, do it anyways – time will fix most mistakes. Real estate property investment can be forgiving if you can wait long enough.
Perth House Prices climbed 39 per cent to $491,587 over the year to September, while Sydney house prices were flat at $520,253 according to composition adjusted medians released by Australian Property Monitors (APM). Unit prices in Perth were up 44 per cent at $341,730, whereas Sydney unit prices dropped 4 per cent to $351,922.
Michael McNamara from APM said the margin between Sydney and Perth house prices was now only 5.5 per cent, just three years ago, Perth prices were half those in Sydney.
“It is interesting to observe that if Perth continues to outperform eastern capitals by the same proportions, then it will soon surpass Sydney for the title of most expensive median house price in the country,” McNamara said. However, he said 39 per cent annual growth was “clearly unsustainable” and tipped that the Perth market would peak in the December quarter this year.
Darwin’s explosive growth also continued in the year to September, with its median house price surpassing Melbourne and Brisbane to make it the fourth most expensive city for houses. In the September quarter itself, growth in Darwin was slowing but still relatively strong. House prices were up 5 per cent over the three months and unit prices climbed 4 per cent.
McNamara tipped that Darwin, like Perth, should peak in the December quarter. “For these markets, much depends on commodity prices as property prices correlate strongly with the commodities index,” he said.
Price growth along the eastern seaboard was virtually non-existent in the September quarter for both houses and units, a fact McNamara puts down to interest rates. “Early this calendar year, property markets in Sydney, Melbourne and Brisbane showed positive signs, leading us to believe that moderate quarterly growth in median prices would be expected throughout 2006,” he said. However, interest rates rises this year have seen buyers in the markets retreat to a more cautious position.
“Eastern seaboard capital cities are now experiencing a stabilisation phase in their property cycles and we predict that trend will continue for the next 12 to 18 months.”
On a different note, Adelaide rentals are in hot demand. Adelaide’s Hills district has put up the ‘no vacancy’ sign, recording a nil vacancy rate in September. The vacancy rate across the city as a whole remained at 1.6 per cent, Real Estate Institute of South Australia figures showed. That is under the national benchmark of 2 per cent. The Hills region, from Crafers to Nairne, recorded a zero vacancy rate, while the western suburbs had the highest proportion of rentals available at 2 per cent.
Small real estate developers and home developments
Tips and inside knowledge from the Dec ’06 issue of the Australian Property Investor magazine.
Inside Knowledge about small real estate developers
Small developers should always allow themselves a little bit of breathing space with their financing, Tom Riley says, because prices tend to change over the course of a job. He says the contract price for his real estate project grew by about 5 per cent over the 12 months it took to complete. However, thanks to the years he’s spent working in the building industry the price rise didn’t come as a nasty surprise to Tom.
“The real estate contract grew just under $20,000 over the 12 months,” he says. “I was anticipating that there’d be the rise and it wasn’t outside the parameters of what I thought it might be.” Other small developers should be aware that the home prices they’re quoted might change as well, he says. “I hear people say, “we’ve got a fixed price contract’ and they probably have, but there’s always a rise and fall clause in there – and it’s usually a rise.”
As a result it’s not the best idea to spend the maximum amount you can access right from the outset. “You need to be in a position where you’ve got a little bit of extra money to play with.” Tom says he doesn’t blame his real estate builder for the rise, as material costs climbed over the 12 month period and so did the charges for real estate sub-contractors.
Tom’s small real estate development tips
1. Not everyone wants to live on the edge. Have a workable back-up plan in case things go pear-shaped.
2. Running your real estate proposal past the council before you buy can save a lot of anguish later on.
3. Put everything in writing. Even things you think are obvious can be misinterpreted by real estate builders, and you may have to make costly compromises later on.
4. Don’t be afraid to ask questions. Some real estate developers think everyone else is stupid anyway, so you might as well ask if you don’t know.
5. Don’t over capitalise for the area you’re building in. There’s no future in building $500,000 townhouses in a suburb where the media price is under $200,000.
6. Do the sums, then do them again, then halve the potential profit and halve it again. If you can live with the result, do it. If you’re young enough, do it anyways – time will fix most mistakes. Real estate property investment can be forgiving if you can wait long enough.
Labels: Australia, Australia Developments, Condo Hotels, Hotel Condos, Perth, Perth Real Estate Investment, Real Estate, Real Estate Developers, Small Developments Perth, Sydney
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