Shailer Park Area Property Watch Q3 2012

SHAILER PARK AREA MARKET OVERVIEW

The following Property Watch report is the result of an investigation into the historic and current residential real estate market trends of the Shailer Park Area. For the purpose of this report, the Shailer Park Area encompasses the suburbs of Shailer Park, Daisy Hill and Cornubia.

The Shailer Park Area house market has regained some momentum in the year period ending September 2012, after experiencing its lowest sales volume in over a decade in March 2011. Since then, sales volumes have improved and remained steady, recording 166 sales in the six months ending September 2012. However, as a result there has been a softening of median price, suggesting that sales are coming from those vendors who are willing to meet the market. As sales volumes have remained stable, there are signs of an improving market, coupled with solid interest in the sub $500,000 market.

The standard variable mortgage rate, as reported by the Reserve Bank of Australia, is currently 6.65 per cent (as at November 2012), though still has room to move as the official cash rate was reduced a further 25 basis points to 3.00 per cent. This has contributed to an increase in buyer enquiry in the area, though has not necessarily translated to a notable increase in sales volumes. With that being said, sales have remained stable over the year, with the median price having experienced a marked decline over the same period. Pricing continues to be the predominant factor for active buyers, evidenced by the demand for properties priced toward the lower end of the market, with buyers steering clear of higher priced property.

A price point analysis undertaken for the market has highlighted a considerable shift in buyer preference towards more affordable housing options, with the sub $500,000 price range accounting for 74 per cent of total purchases in the September 2012 period, compared to 63 per cent in the September 2010 period.

The median price for the Shailer Park Area peaked in the March 2011 period, where a median house price of $500,000 was recorded. Following this, there has been a steady decline, observing a softening of 13.9 per cent to record a median house price of $430,500 in the September 2012 period. As a result of softening values, there has been an increase in the volume of sales of 16 per cent from the March 2011 period to the September 2011 period. That increase has remained steady into the September 2012 period. Property priced from at least $650,000 has seen a significant contraction, further demonstrating the demand for affordable property in the area, as well as the sensitivity to high prices.

The Shailer Park Area has had very modest growth over the five years to the September 2012 period, recording only a 0.7 per cent increase in capital growth, and a drop of 11.5 per cent in sales activity. Whereas this historical performance may seem somewhat underwhelming, it paves the way for potential future growth. Although it is unlikely to see sales volumes up to levels experienced in 2007, it is likely that they will remain consistent and perhaps increase as the median price continues its downward correction.

The Shailer Park Area rental market has remained relatively stagnant the past three years, experiencing modest rent increases. The exception has been four bedroom houses in the 4127 (Daisy Hill) postcode, which saw rents increase 14.8 per cent from September 2010 to September 2011 ($400 per week to $470 per week respectively) before falling back slightly to $465 per week in September 2012. Based on the current rental and median price data, investors could expect to achieve a respectable gross rental yield of around five per cent from their investment. Rental yields above this are attainable, provided investors buy smart and are able to provide an attractive proposition for tenants.