By Herron Todd White
Almost halfway through the year and 2019 is delivering a declining residential market.
We note that residential sales activity is below where it was during the peaking 2013 to 2017 years, but has not ground to a complete halt. Transactions are still happening, especially where vendor pricing is realistic in the current market.
Selling periods of three to six weeks are still common when the property is priced correctly, but there are many cases of long listings or multiple agents being used when vendor’s hold onto a belief their property can still command a peak price.
CoreLogic has reported that over the three months to April 2019, 75.6 per cent of properties across the country sold for less than their original list price and this phenomenon of discounting is clearly evident in the Illawarra. A property in Armagh Parade Thirroul has recently sold for $755,000 after initially being listed for $880,000 to $930,000. Another on Brunderee Road in Flinders sold for $679,000 after initially being listed for $829,000.
A big surprise for 2019 is that rents have remained relatively stable. With a recent huge supply of new housing in growth corridors and units in the Wollongong CBD it was expected that rental demand and subsequently prices could drop. This doesn’t appear to be the case with property managers reporting decent demand for stock and overall rent prices holding. While this is not great news for tenants hoping for some rent relief, it is encouraging to investors. A decline in selling prices means investors are able to get higher returns that were available at the peak period.
Gross yields as low as 4.25 per cent were being experienced for investment properties at the back end of 2017. A block of five x two bedroom units in West Wollongong sold for $1.1 million recently which shows a gross passing return to the investor of 6.15 per cent with scope for increases in the future. With interest rates still low and rents stable, these returns are slowly drawing some investors back to the market.
Speak with a Wollongong Mortgage Broker today.
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