St George LGA Property Watch Q4 2011

The following report is the result of an investigation into the house and unit markets of four local areas within the Hurstville, Kogarah and Rockdale Local Government Areas (LGAs ).

Area Characteristics
Located approximately 15 kilometres southwest of Sydney and bound by Botany Bay and the Georges River, the Area is easily accessible via the Princes Highway, King Georges Road and the South Western Motorway (M5), with regular rail services to Sydney and Wollongong. The St George region is renowned for its public areas, village style shopping precincts and river bank parks. The major business centres are found in the Kogarah Town Centre, Westfield Hurstville and Rockdale Plaza, while other well known venues such as the St George Illawarra Dragons Football Club are centres for sport and recreational activity in the region.

The Kogarah Area House Market
The suburbs of Carlton and Kogarah form part of the Kogarah, Rockdale and Hurstville LGAs. The median house price in the Area closed the June six month period at $773,000, representing a 12 month growth of 13.7 per cent. The strong increase in the median price is the result of a decline in sales in the sub $900,000 market and an increase in the $900,000 plus price brackets. Activity declined after two years of strong sales activity generated to a large extent by government incentives. Activity in the first half of 2011 yielded 59 transactions , equating to a decline of 27 per cent from the six month period to June 2010, and 20 per cent below the long term average recorded over the past five years. A price point analysis revealed that most houses transacted in the $600,000 to $699,999 price bracket, accounting for 22 per cent of sales. Toward the top end of the market four houses transacted for $1,200,000 plus, while at the lower end eight houses accounting for 14 per cent of the market sold below $600,000.

PRDnationwide Research conducted a resale analysis for house sales over the six months to June 2011 to ascertain the actual gains achieved by vendors who exited the market during the period. The analysis revealed that houses achieved an average annual capital growth of 7.2 per cent per annum, with an average holding period between sales of six years and eight months.

The Kogarah Area Unit Market
Over the past five years unit sales in the two suburbs averaged 213 transactions per six month period. The median price for a unit in the Area closed the June 2011 six month period at $415,000, stemming from 157 transactions. The 3.8 per cent increase in the median price from the June period in 2010 is shy of the average growth of five per cent per annum experienced over the past five years. A price point analysis indicated that units transacting in the $400,000 to $499,999 bracket accounted for the majority of sales in the region (47 per cent), with seven units selling below $300,000. Sales above $700,000 were scarce, while the $600,000 to $699,999 bracket recorded eight transactions, representing five per cent of the market. The suburb of Kogarah accounted for the majority of sales, representing 78 per cent of the market for the first half of the year, with Carlton accounting for the remaining 22 per cent.

The Oatley Area House Market
Located on both sides of the Illawarra railway line, the suburbs of Oatley, Mortdale and Penshurst are split between the Kogarah and Hurstville LGAs. House prices firmed in the first half of 2011 despite softer activity. The median house price in the Area edged to $780,000 as at June 2011, representing a 12 month growth of two per cent. Market evidence suggests that house values have remained stable in the second half of the year. Activity continued to decline from the peaks recorded in the second half of 2009, where a sharp increase in market participants was buoyed by the Federal Governments Stimulus Package. The June 2011 period recorded 112 transactions, equating to a decline of 22 per cent from the six months to June 2010, and 35 per cent below the December 2009 peak. A price point analysis revealed that most houses transacted in the $700,000 to $799,999 price bracket, accounting for 27 per cent of sales. Toward the top end of the market houses transacting for $1,100,000 plus made up 16 per cent, while at the affordable end only two houses sold below $500,000. In the first half of 2011 the suburb of Oatley recorded the majority of sales, with 47 house transactions for the period. This was followed by Mortdale with 37 and Penshurst with 28.

PRDnationwide Research conducted a resale analysis for house sales over the six months to June 2011. The analysis revealed that houses achieved an average annual capital appreciation of 6.1 per cent per annum, with an average holding period between sales of seven years and six months. The results indicate that despite a more modest growth in median price, vendors who exited the market during the period enjoyed a stable annual growth for their assets.

The Oatley Area Unit Market
Over the past five years units averaged 61 per cent of total sales in the Area. Most were located around the town centres on both sides of the railway line and within close proximity to the three train stations servicing the Area. The median price for a unit in the Area closed the June 2011 six month period at $395,000, stemming from 202 transactions. A 6.8 per cent increase in the median price from the June period in 2010 is largely attributed to a decline in sales below $ 400,000, coupled with an increased activity in the middle price brackets. A price point analysis indicated that units transacting in the $300,000 to $399,999 bracket accounted for 47 per cent of the market, with a further five per cent selling below $300,000. Sales above $700,000 were scarce, accounting for three per cent. The suburb of Penshurst accounted for most sales, representing 54 per cent of the market for the first half of the year. It was followed by Mortdale, with 63 transactions (31 per cent) and Oatley (14 per cent).

Rental Market
Vacancy rates in Sydneys middle ring remained below two per cent in October, with the increases in price for both houses and units keeping many into the rental market. The median rental price for a three bedroom house in the Kogarah LGA increased 6.9 per cent to $510 per week in the 12 months to September 2011. For the same period the median rent for a two bedroom unit increased 10.5 per cent to $420 per week. This figure represents the fourth largest increase in Greater Metropolitan Sydney.

Bexley Area House Market
The Bexley market is spread across the suburbs of Bexley, Bexley North, Kingsgrove, Bardwell Valley and Bardwell Park. Recent market evidence shows stability in prices with a significant decline in activity. This is likely the result of vendors and purchasers failing to agree on price, with the vendors often in a position to wait until their expectations can be met. Houses in the Area responded well to the government stimulus measures of 2009, with a robust increase in the median price between June 2009 and June 2010. The median remained stable since, increasing by 0.5 per cent to $713,500 in the 12 months to June 2011. The Area recorded the lowest activity in the past five years, with 164 transactions for the period. A price point analysis revealed that most transactions occurred in the $600,000 to $699,999 price bracket, accounting for 30 per cent of sales, while the $700,000 to $799,999 represented 28 per cent. The decline in activity prevailed over most price bracket with exceptions at the top and bottom ends of the market. Toward the top end houses transacting for $1,100,000 plus increased from 3 in June 2010 to 7 in the first half of 2011, whereas toward the bottom end houses transacting for less than $500,000 increased from six to seven transactions during the period. The suburb of Bexley recorded 66 sales in the first half of 2011, representing a 15 per cent decline in sales from the June 2010 period. Kingsgrove ranked second, with 60 sales compared with 74 sales in June 2010.

A resale analysis for house sales over the six months to June 2011 revealed that houses achieved an average annual capital appreciation of 7.7 per cent per annum, with an average holding period between sales of seven years.

Bexley Area Unit Market
After a prolonged period of little movement in the median price, units in the Bexley Area enjoyed sharp increases in the past three years. More recently units have become the dwelling of choice with downsizers seeking low maintenance and secure accommodation, as well as with investors seeking high yielding properties in lower price points. The median price for a unit in the Area closed the June 2011 six month period at $450,000, stemming from 107 transactions. A long term average growth of 5.2 per cent per annum represents solid performance over the past five years. Activity firmed from the lows of June 2010 but remained 24 per cent below the five year average of 141 transactions per six month period. A price point analysis indicated that units transacting in the $400,000 to $499,999 bracket accounted for 33 per cent of the market, with a further 10 per cent selling below $300,000. The brackets to record the largest increases between June 2010 and 2011 were largely below $400,000, with the exception of the $500,000 to $599,999 bracket increasing from nine sales in the June 2010 period to 27 in June 2011. Bexley rerecorded the majority of transactions in this bracket and also dominated the overall activity, with 84 per cent of all unit sales in the Area.

Rental Market
The median rental price for a three bedroom house in the Rockdale LGA experienced a 10 per cent increase to $550 per week in the 12 months to September 2011. For the same period the median rent for a two bedroom unit increased 2.6 per cent to $400 per week. Strong increases in median rent were also recorded over the past five years, with houses averaging growth of 9.5 per cent per annum, while units averaged 7.8 per cent.

Brighton-le-sands Area Unit Market
The Brighton-le-sands Area is a coastal part of the Rockdale LGA, comprising of the suburbs of Ramsgate Beach, Brighton-le-sands and Monterey. In the first half of 2011 units represented 82 per cent of total residential sales in the Area. The unit market in the Area met softer conditions in the first half of 2011 after strong growth in 2009 and 2010. The median price closed the June 2011 period at $450,000, representing a 12 month growth of 0.8 per cent. Activity firmed after lower figures in 2010 to register 140 unit transactions in the first half of 2011. A price point analysis indicated that units transacting in the $400,000 to $449,999 bracket accounted for 28 per cent of the market. The bottom end of the market contracted from 15 sales in the June 2010 period to four sales in 2011, while toward the top end of the market the $600,000 plus bracket advanced by one transaction to 19. Despite an eight per cent increase in total activity between the two periods, sales at the bottom end of the market and in the $450,000 to $499,999 bracket softened, leading to a decline in median price in the first half of the year. Brighton-le-sands accounted for 54 per cent of transactions in the Area, followed by Monterey (27 per cent) and Ramsgate Beach recording 27 transactions (19 per cent).

Brighton-le-sands Area House Market
The shift to higher density living has increased the pressure on land prices in the Area, turning detached houses to a scarce commodity. The median price continued to grow in 2011 after a short period of consolidation in 2010, increasing 8.1 per cent to $926,000 in the 12 month to June 2011. Subdued activity challenged the significance of the median price, with only 28 houses transacting during the period. This represents a decline of 38 per cent from the June 2010 period and 36 per cent below the long term average measured over the past five years. A price point analysis revealed that most transactions occurred in the $800,000 to $899,999 price bracket, accounting for 25 per cent of sales. The decline in activity in lower price brackets, with stability in brackets above $1,000,000 was the main reason behind the increase in the median price. Toward the top end of the market six houses transacted for $1,300,000 plus, maintaining the same level as in 2010. Toward the bottom end two houses transacted for less than $700,000, representing a sharp decline from eight house transactions in the June 2010 period. Brighton-le-sands recorded 19 transactions for the period with Monterey accounting for the remaining nine. Both suburbs experienced a decline in activity between 27 to 50 per cent from the June period in 2010.

A resale analysis revealed that houses achieved an average annual capital appreciation of 7.5 per cent per annum, with an average holding period between sales of seven years and six months. Capital growth was evenly distributed between Brighton-le-sands and Monterey, with the former recording growth between 3.6 per cent per annum and 16.3 per cent per annum, and the latter from 1.4 per cent per annum to 13.2 per cent.