The month in review: Wollongong
By Herron Todd White
December, 2009
Needless to say, 2009 has been an uncertain year for the
Australian property market and the economy as a whole.
In the February MIR we looked at the year ahead and
made some ‘hit predictions’ for 2009. Now that the year
is almost over what did we predict and did we hit the
mark?
Below is an extract from the February MIR:
“We are unlikely to see the market move into recovery for the
next 12 months. The most likely trend will be a combination of
stability in some market sectors / areas and slight downturn
to others. Government policy and the general economic
climate (especially unemployment levels) can have a strong
impact on the property market. So without knowing all the
government fiscal policies for the upcoming year it is a hard
market to gauge. “
For the most part this has been the case. Some properties
still experienced a bit of a decline but in general, most of
the market place in the Illawarra region seemed to hold
fairly stable in terms of property values, and we saw a
definite impact in the lower priced sectors as the effects
of the FHOG initiative. The latest IRIS report shows that
the WSD median house price fell 0.4% to $375,000 over
the year to June 2009 and the median unit price increased
by 1.4% to $299,000. Although this data only takes in the
first half of 2009, our anecdotal observations indicate that
there was perhaps a slight upward movement in property
prices for the latter part of 2009.
So let’s take a closer look at a few of the things that have
happened over the past year that have influenced the
movements of the property market:
- Interest rate stability for much of the year at historical
lows, rising slightly toward the end of the year and
forecast to rise further
- Increase in government incentives for first home
buyers – expiring at the end of the 3rd quarter
- Increasing unemployment rates, but less hurt than
had been predicted (although in Illawarra we are
hovering around 10%)
- Petrol prices remained relatively low
- Slowing of new development
- Rising rents due to housing shortage
- Retraction of choice in lenders
So, through all of this how did the property market in
Illawarra maintain some stability?
Firstly, a lot of these things tend to balance each other
out. Rates went up, then rates went down. Consumer
confidence was down with the talk of the looming
recession but this is then off set to some degree by the
higher incentives being offered to first home buyers.
Furthermore, it is the nature of these factors to fluctuate
(ie: interest rates), and the property market is a fairly slow
moving beast. So when things happen in the economy
that can have a detrimental impact on the property
market, it can take a while to filter through at a local
level. Often by the time it does filter through, the issue
may have already corrected itself, thus alleviating any
downward pressure on the market.
Although property values seem to have held fairly stable
throughout the year, there have been some effects felt
from the current economic climate. The IRIS report shows
that in the year to June 2009 sales volumes fell by 5.3% for
dwellings, 12.6% for units. For land , due to the FHOG of
$21,000 for new construction, land sales actually went up
nearly 50% on the corresponding period last year.
The number of people receiving unemployment
benefits received went up to 7,823, an increase 8.5% on
the previous year. March to June saw over 300 people
added to the list. In the 12 months to June 2009 job
advertisements declined 37% for full time work.
Last but not least, the rental market was predicted to rise
throughout 2008 and this has definitely been the case.
The most recent IRIS data reflects this sentiment, showing
that the median rental price for houses rose by 17% in the
year to June 2009.
Overall winners this year appear to be the lower priced
properties under $300,000 in the outer areas. We also
saw, towards the middle and end of the year, an increase
in some of the higher priced properties over $700,000
in the northern areas, particularly close to the beach.
There weren’t many losers as such, but there has been
a persistent oversupply of new units which have taken
some time to shift at previous asking prices.
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