Red23 Research Newsletter | Jan.’20

On behalf of the Red23 Research team we welcome you to 2020 and hope you had a wonderful festive season with your family and friends as well as a well deserved break.

In 2019, we witnessed a market correction due to unsustainable price rises in 2018. March 2019 was the beginning of very quiet months ahead and uncertainty within the economic environment we play in. As an industry, we have done well to push through its adversities, in hope of better conditions in spring. The spring season provided much optimism in the industry.

In the long term, housing demand will continue to exceed supply due to population growth from overseas migration, our saviour. 2020 will be a year of stable prices for a return in sales numbers.

Headlines in the media have become a blessing, bringing enthusiasm to buyers with fear of property prices rising and ultimately, being priced out of the market ‘again’. First Home Buyers are out in full force taking up the opportunity to secure their spot of the First Home Loan Deposit Scheme. This scheme has proven to be very popular.

In accordance to the REIV, ‘the December 2019 quarter marks the first time that metropolitan house values have surpassed $850,000. This result comes on the back of two consecutive quarters with growth of more than 3% each, the last time this occurred was in June 2017. Melbourne house prices are up by 3.7% in the latest REIV December 2019 quarterly data, while units have grown by 3.8%. For the first time Melbourne unit values surpassed $630,000, while new benchmarks were set across inner, middle, and outer rings’.

Nationally, owner occupier home loans increased in value and number from 19,840 in October 2019 to 19,866 in November 2019. A 10% increase from 12 months ago and a month on month increase of 1.6% from October 2019.

New construction home loans fell 8.4% to 3028 from 3305 in October 2019. This figure shows that sales are mainly in established homes which poses a threat to the construction industry which is yet to pick up.

These positive headlines and a positive swing in property prices have provided much needed positivity in the residential market. Vendors will be more confident to list their properties on the market, as predicted for February 2020, there will be a large number of established homes available on the market.

The market recovery is in its early days as we have already seen the established property market turn around; this recovery will flow through to the new homes market in the near future.

Table 1: Median Prices and Lot Sizes | Dec. ’19

Ranking LGA Size (Sqm.) Dec. ‘19 Nov.’19 MOM change Dec.’18 YoY Change
1 Casey 408 $355,000 $354,000 0.3% $371,700 -4.7%
2 Cardinia 453 $349,000 $345,000 1.2% $332,500 4.7%
3 Hume 420 $335,000 $335,000 0.0% $379,000 -13.1%
4 Whittlesea 392 $326,000 $330,000 -1.1% $324,000 0.8%
5 Wyndham 400 $325,900 $330,000 -1.2% $348,000 -6.8%
6 Melton 397 $293,500 $296,000 -0.8% $328,500 -11.9%
7 Gr. Geelong 476 $292,000 $291,900 -0.03% $280,000 4.1%
8 Mitchell 448 $278,500 $280,000 -0.5% $285,000 -2.3%
    400 $324,000 $325,000 -0.2% $349,900 -7.8%

Table 2: Median price by suburb in growth areas | South East | Dec.’19

Suburb Dec.’19 Sept. ‘19 Jul.’19
Berwick $428,000 $462,000 $462,000
Botanic Ridge $415,000 $462,000 $462,000
Casey Fields $302,500 $395,000 $395,000
Clyde $349,000 $297,500 $320,000
Clyde North $346,500 $357,500 $362,500
Cranbourne $347,800 $350,900 $343,100
Cranbourne East $316,500 $339,000 $316,500
Junction Village $387,000 $316,500 $387,000
Lyndhurst $449,900 $478,500 $446,950

Land market specifics:

Casey has taken out first place in the median price land market in November, with a median price of $355,000, up 0.3% since November 2019 and a 60 days change of 2.92%. Demand in the City of Casey continues, with land in Clyde and Berwick, as well as Junction Village and Botanic Ridge leading the prices (see table 2).

Cardinia, was in first place 60 days ago however has moved to second spot a more affordable median price of $349,000, an increase of 1.2% from November 2019 and 4.7% since 12 months ago.

Cardinia and Greater Geelong continue to witness year on year growth, partially due to an increase in the availability of land, whereby there was a shortage of land 12 months ago in these regions.

Mitchell continues to provide the most affordable land lots with a median price of $278,500, a slight fall this month, first in many months.

Greater Melbourne’s median lot price is down -0.2% to $325,000 from last month or -7.8% YOY. The median land size remains at 400sqm as it has done so since the beginning of 2019.

In terms of land size, 2019 has also seen some transition in land size due to affordability. 300-400sqm lots have been favourable this year, particularly in the western corridor and south-east corridor. 400sqm to 500sqm lots are still favourable in Greater Geelong and the Northern Corridor.

Land size sales over 500sqm is prevalent in Greater Geelong, however, this number will decrease in 2020.

In the last quarter of 2019, we witnessed a change in the sale of land sizes which can be seen in the graphs below.

Graphs 1: Land size sales, QIV.’19