Yamanto Property Watch Q1 2012
The following Property Watch report is the result of an investigation into the historic and current market trends of the Yamanto Area, which encompasses the suburbs of Raceview, Flinders View, Yamanto and Churchill.
The Yamanto Area house market registered a total of 153 settled transactions in the six months to December 2011, with sales performance on par with that recorded in the corresponding period in 2010. The June 2011 half year period registered one of the lowest levels of activity on record, with a total of 129 transactions. The notable underperformance of the house market during this time was perhaps largely attributed to the severity and extent of the January 2011 floods. This is further substantiated by extremely low vacant land sales during the June 2011 half year period, with only three out of the 14 sales recorded in the first quarter.
Affordable housing continues to underpin a sustained level of activity following the markets outperformance during 2009, where government stimulus, extremely low interest rates and softened property values contributed to a short-term resurgence in sales volumes subsequent to the economic downturn in 2008. In addition to affordable housing, the combination of a 50 basis point reduction to the official cash rate in November and December 2011 and the end to the QLD Home Builders Bonus in January 2012 (now extended to April 2012) have to some extent enticed many would-be buyers to enter the market during the six months to December 2011. Conversely, the removal of transfer duty concessions for purchases of established property (by previous owners of property) in August 2011 resulted in a notable decrease in enquiry and sales from this buyer group.
Observing the House Price Points Chart over the December 2011 half year period, it can be evidenced that a growing number of buyers are transacting in the sub $300,000 price range. This is evidenced by the gradual decrease in median price over the past two years. There is currently an over-supply of affordable house and land deals in the immediate area that are not moving which is diluting resales in the established market and subsequently placing downward pressure on prices. This pressure has been exacerbated by a subdued level of demand in the market which has derived from increasing unemployment in the area, with many small to large business having closed their doors during 2011. On the other hand, the expansion of the Royal Australian Air Force base during this time has generated substantial investment and short to long term employment opportunities in the immediate area.
It is anticipated that sales will continue to improve in 2012, albeit gradually, as the lure of well-priced property rekindles the interest of first home buyers and young families. Median rents recorded for the 4305 postcode demonstrated a stagnant increase in rental prices across all house types over the past three years. Low rental price growth has underpinned an affordable rental market, resulting in a notable increase in the number of new bonds recorded in the December 2011 quarter. The evidence suggests that current rents are nowhere near high enough to make an impression on renters to contemplate entering the property market. It appears that renting continues to be the most financially viable option for many, especially considering the current economic climate. It is also widely recognised that many aspiring buyers are saving up substantial deposits, despite the major banks lending up to 95 per cent for suitable candidates, in addition to the extensive incentives available from the government and various developers. Over the past two years, many would-be buyers have been conditioned to adopt this risk adverse measure to avoid positioning themselves with mortgage stress and/or negative equity. This has ultimately translated into weak sales activity and subsequent price corrections across both the new and established markets. Whilst the prospect of further price corrections and increases to mortgage rates remains a real possibility in 2012, an improvement in confidence which has already manifested in the market is expected to drive sales activity. With that said, price growth will remain flat at least for the short to medium term.
The table below provides an overview of the individual performance in each suburb within the Yamanto Area catchment. Yamanto topped the table with a total of 56 sales during the December 2011 half year period, and was also the only suburb to record a positive (107 per cent) annual change in sales activity from the corresponding period in 2010. Raceview was edged out of first place recording a total of 54 sales, representing a marginal decrease of 6.7 per cent in sales from the previous year. Flinders View recorded a total of 37 sales, representing a notable 31 per cent decrease in activity which is likely attributed to a higher median price in the area. Churchill recorded only 6 sales which is a result of being a comparatively small suburb.