Liverpool LGA Property Watch Q3 2012
The following Property Watch report is the result of an investigation into the historic and current market conditions of the Liverpool Local Government Area (LGA). The Dynamic nature of the region is the result of a stable flow of new residents, resulting in a demographic growth of 9.5% between 2006 and 2011. Other movements are the result of historical contraction in the share of government housing, and the continued development of both private and public infrastructure, such as the Liverpool Hospital and the Moorebank Intermodal Terminal.
According to the latest Census data, the proportion of residents who were born in Australia increased from 49% of the population in 2006 to 54% in 2011, with the largest changes recorded for newcomers from Asia and the Middle East. The influx of new immigrants increased the pressure on the rental market in the short term and on the wider market in the longer term, as tenants became buyers. In the year to March 2012 the median rents in Liverpool increased by 6% for a two bedroom unit and 7% for a three bedroom house, representing robust growth compared to the median rent in Sydneys outer ring. The increases in price came amid a rise in vacancy to 1.7% in May 2012. Despite this increase vacancy remained tight. The median rent of $420 and $308 per week for a house and unit respectively is considered low compared to Sydneys inner and middle rings, but remains challenging to a significant share of lower income households who reside in the region.
Potential buyers who are active in the market range from owner occupiers upgrading their accommodation to first home buyers, and investors seeking high yielding properties in apartment hotspots such as Liverpool and Warwick Farm. They will normally set aim at lower priced stock, with gross yields ranging between 6.2% and 7.7%.
Strong yields compensated for subdued long term growth in the median unit price, equating on average to 1.8% per annum in the five years to April 2012. Units continue to represent a high yield, low growth investment despite a 12 month increase of 8.4% recorded in April. The Unit Price Point chart links the recent rise in the median price to an increase in units transacting for $300,000 or more and a decline in transactions toward in lower price brackets. Units remain a highly traded dwelling type, as exhibited by a short median holding period of five years and ten months. Unit sales volumes closed the April 2012 period 0.9% higher than the same period in 2011, but remained below the long term average of 390 sales per six month period.
Detached houses recorded a sharper decline in activity than units, with the LGA closing the 2012 period 10.6% lower than 2011, despite a rise in the median price (1.1% for the year). Looking at the House Price Point chart it is clear that a decline in sales between $400,000 and $499,999 was compensated by a rise in activity between $500,000 and $599,999.
A resale analysis was conducted to ascertain the performance of the house market. The House Capital Growth graph demonstrates the average gains made by vendors who exited the market over the past four years. The graph revealed that the April 2012 average capital growth of 5.2% per annum, represented the highest result since the Global Financial Crisis (GFC). Houses also exhibited a longer holding period than units, with a median of seven years and nine months.
Uncertainty in global markets remains heightened, leading to caution in the Australian psyche of individuals and companies. While the official unemployment figures remain low, shedding of jobs by the private and public sectors led to a tightening in families budgets, which created subdued retail conditions and low inflation. It is expected that house sales will remain subdued until such time when confidence returns to the market and families start to spend again. Given these conditions, it also is reasonable to assume that units will continue to play a larger role in the dwelling mix of the Liverpool LGA, as a generational shift and affordability issues draw first home buyers and downsizers to medium density residences.