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Transforming spaces: The rise of life science real estate

BMT team — Wed, 17 Apr 2024 05:23:42 +0000

Global interest in the life sciences showed significant increase in recent years. With Australia boasting one of the largest life science sectors in the Southern hemisphere, our local industry witnessed a remarkable 40% growth since 2021, emerging as a highly sought-after destination for investment in life science real estate, which includes private hospitals, medical precincts, innovation districts, laboratories and residential aged care facilities. This $250 billon dollar local industry is home to 2,600 organisations and the continual growth is underpinned by a world-class medical research sector nurtured in internationally respected universities, hospitals, and medical research institutes. The industry is further boosted by significant government support, which includes a research and development tax offset of up to 43.5% and more than A$21.5 billion in support funds for the life sciences, which would include funding for facilities. With an aging population and rising cases of chronic diseases such as heart disease and diabetes, the urgency for advancements in life sciences and healthcare solutions has never been greater, positioning Australia as an enticing hub for investment, development, and the conversion of existing properties into life science real estate. These facilities can include laboratories and research facilities that are furnished with advanced scientific equipment and infrastructure to support research in areas such a genomics, medical discovery and biomedical engineering. Manufacturing and production facilities designed to meet stringent regulatory requirements for the production of pharmaceuticals, biologics, medical devices and other healthcare products are also sought after life science real estate. Creating collaborative spaces like innovation hubs or biotechnology parks that bring together scientists, entrepreneurs, investors and academic institutions to foster innovation, collaboration and knowledge are also excellent examples of rejuvenating existing property into life science real estate. Life science real estate conversion projects can take various forms, depending on the type of property and the specific needs of the life science tenants. Some common examples include: Office buildings: Vacant or underutilised office space can be converted into modern laboratories equipped with specialised equipment, biosafety features, and collaborative workspaces. This transformation often involves significant upgrades to infrastructure, HVAC systems, and safety protocols to meet industry standards. Industrial warehouse spaces: Large industrial buildings or warehouses can be repurposed into biomanufacturing facilities or research labs for biotech and pharmaceutical companies. These projects may require extensive renovations to accommodate regulatory compliant cleanrooms with controlled air quality and regulated humidity for cell culture, fermentation, purification and other bioprocessing operations. Retail and commercial spaces: Former retail or commercial properties may be transformed into incubator spaces, shared labs, or start-up hubs for emerging life science companies. These conversions focus on creating collaborative environments with access to mentorship and shared amenities. Historic buildings: Adaptive reuse of historic buildings or heritage sites can preserve architectural heritage while providing modern laboratories or other life science facilities. Converting existing property into life science real estate requires strict adherence to regulatory standards like building codes, biosafety guidelines, and environmental regulations. Older buildings may need significant upgrades to infrastructure, utilities, and HVAC systems to meet the specialised needs of life science tenants and investing in cutting-edge equipment is vital for operational efficiency and industry compliance. Despite these challenges the life science real estate conversion trend is expected to continue and expand as the demand for innovative research and development spaces grows. Key stakeholders, including real estate developers, investors, life science organisations, and local governments, play a vital role in shaping the future of these conversion projects. These projects not only contribute to the growth and sustainability of the life sciences industry, but also drive economic development, job creation, and technological innovation while exemplifying the spirit of adaptive reuse that will solve the increasing demand for state of the art research and development facilities. Collaboration with experienced professionals including architects, engineers, quantity surveyors and other consultants is crucial for navigating the complexities of life science real estate conversion. Adaptive reuse conversion to life science real estate will hold significant depreciation value. Below is a case study of a substantially renovated warehouse of close to 460sqm that was converted into a life science centre with various office spaces, breakout rooms, a staff kitchen, laboratories and various utility rooms. Table 1. An example a life science real estate conversion from warehouse to research space. *The Depreciation deductions in this table were calculated using the diminishing value method. With significant depreciation benefits available on the conversion of an existing property for adaptive reuse, we recommend contacting a specialist quantity surveyor like BMT Tax Depreciation for further advice or to request a quote on your life science real estate conversion.

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2023 Property Market Year in Review

BMT team — Mon, 20 Nov 2023 22:47:43 +0000

Despite ongoing interest rate hikes, high inflation and a subsequent ease in consumer spending, the residential property market has shown resilience with a 7.0% growth rate in the year to November 2023. As at the end of November, residential real estate constituted $10.3 trillion of Australia’s wealth, with superannuation at $3.5 trillion, Australian listed stocks at $2.8 trillion, and commercial real estate at $1.3 trillion following closely behind. RESIDENTIAL AND COMMERCIAL PROPERTY VALUES There has been renewed growth in the capital cities property market this year. Brisbane properties have shown growth at an impressive 10.7% over the past year and dwelling values are currently at a record high. Perth has taken a definitive lead at a growth rate of 13.5%, followed by Adelaide which has shown a slowdown from a significant 13.4% in November 2022 in comparison with a growth rate of 7.6% in November 2023. In Sydney, dwelling values increased by 10.2% over the past year, but are still below the record highs of January 2022 and Melbourne showed a respectable 3.0% growth over the past year. Canberra, Darwin and Hobart have struggled to get above the line this year with values falling by -0.3% in Canberra, -1.5% in Darwin and -3.0% in Hobart respectively. The rise in the value of regional property has also slowed across the country showing a more moderate growth rate of 3.4% as of November 2023 compared to the 10.1% growth rate seen at the same time last year, suggesting a potential downtrend in the tree change and a return to city life for many. PROPERTY SALES Most residential homes across Australia take approximately 32 days to sell, with 10.2% more properties on the market across Australia, than the same time a year ago. Perth has once again broken the trend, selling within less than 12 days, highlighting the lack of availability and rise in demand in the already heavily burdened property market in Western Australia. RENTAL PROPERTY MARKET As always, rental rates in the capital cities have shown significant growth at 9.7%, followed by a much more muted growth rate of 4.1% in regional areas. Rental rates across Australia as a whole have averaged 8.1%. According to CoreLogic, there has been a slight compression in gross rent yields nationally to 3.69%, which is down from 3.70% the previous month. LOAN APPROVALS AND CREDIT Covid era fixed rates expired this year, forcing many Australians into mortgage stress, spending well above the recommended 30% of their income on mortgage payments. In 2020 the average three – year fixed rate investor loan was at 2.2%. For some, this has now increased to a comparable variable rate loan of up to 7.21% with the Big Four banks, averaging 6.0% for owner occupiers and 6.49% for investors. Lending standards tightened for all residential and commercial real estate loan categories, but secured, tenanted investors are still positively favored by banks with investor finance comprising 35.6% of new mortgage lending through October. This share of investment lending was highest across NSW at 40.4% and is trending higher than the historic average at the national level. Most owner-occupier loans granted this year were first time buyers, comprising 28.9% of new owner occupier finance, which is well above the decade average of 24.2%. indicating a positive uptake of government schemes for this market segment. In terms of the number of dwellings approved for construction, both detached home – and unit approvals trended well below the historic 10-year average, with units trending even lower than detached homes. INTEREST RATES The 25-basis point Melbourne Cup Day rate hike has taken no one by surprise, leaving 1 in 4 lenders now with loans greater than their incomes according to the Reserve Bank of Australia. The number of Australians defaulting on their home loans, now surpasses the mortgage stress peaks of the Global Financial Crisis, however, returns on interest bearing investments, such as term deposits, have been favorable. Many mortgage customers have also found a way forward by refinancing their loans at more competitive rates. BMT NEWS As quantity surveyors, we have been steadfast in our approach to depreciation, believing that a physical onsite inspection will ensure an accurate and reliable depreciation schedule that will earn the owner the highest possible tax deductions. In 2023 our stance was validated by the Australian Institute of Quantity Surveyors, whose principal mission it is to establish and uphold professional standards at all times, maintain uniformity in procedures, support industry education, and foster public faith in cost certainty and the quantity surveying profession overall. Since opening its doors in 1997, BMT Tax Depreciation has completed more than 900 000 tax depreciation schedules to date, averaging first full financial year deductions of almost $9 000,00 in all residential properties and more than $15 000,00 in new properties, once again cementing our position as market leaders in tax depreciation. To maximise property tax depreciation deductions on your property, Request a Quote from us. The information in this article is sourced from CoreLogic and the Reserve Bank of Australia. This article is general in nature and should not be taken as advice or a guaranteed outcome.

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Property Market Update 2022

BMT team — Fri, 28 Jan 2022 02:16:37 +0000

The pandemic pushed Australians to their limits in 2021, but we remained staunch – as did the housing and property market. Read on for a recap of events in last year’s property market and watch the video to hear the thoughts of our CEO, Bradley Beer. Contents: National property market prices Rental yields Finance and interest rates National property market prices The property market in Australia finished the year with strength. At the end of December 2021, Australian dwelling values were 22.1% higher than in December 2020, coming off a cyclical high of 22.2% in the twelve months to November. Australia’s inflated property market is now valued at more than $9 trillion, a record high after surging home prices through the pandemic lifted the value of residential property by $1 trillion in the past six months alone. Rental yields With national property values recording an annual rise of 22.1% compared with a 9.4% rise in rents, rental yields have decreased as a natural consequence. Gross rental yields fell to a new record low across Australia, reaching 3.2% in December. The lowest yields, by some margin, remain in Sydney (2.4%) and Melbourne (2.7%), however, except for Perth and Darwin, every capital city is recording record low yields. Finance and interest rates Following its December meeting, the RBA kept the Official Cash Rate at the record-low of 0.1 per cent. Concerns about property affordability have risen to the highest-ever level in the latest ANZ/Property Council Survey, with respondents saying soaring prices and increasingly unequal access to home ownership make it the number one issue for governments to address. The powerful Reserve Bank-led Council of Financial Regulators has maintained its watching brief over the hottest property market in over three decades, saying it continues to “closely monitor” the impact of the higher interest rate buffers imposed in November. Hear more from our CEO, Bradley Beer.

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Do you know how to depreciate rental property improvements correctly?

BMT team — Thu, 18 Nov 2021 22:35:23 +0000

Making improvements is all part of owning a property, whether it be a home or an investment. The difference with making an improvement to an investment property is that it can result in higher rental returns and depreciation deductions. But do you know how to depreciate rental property improvements? And what is involved in doing so? Understanding difference between improvement and repair Before we get into the nitty-gritty of how to depreciate rental property improvements, it’s imperative to understand the difference between improvements and repairs as they are claimed differently. An improvement is improving beyond what was there to start with, while a repair is bringing back what was there. A repair can be claimed as an instant deduction while an improvement must be depreciated. Differentiating between the two is considered on a case-by-case basis and an accountant will look at a number of factors such as the asset installed, what was there before, the costs and the reasoning for the repair or improvement. For example, replacing linoleum flooring with brand-new carpet would be considered an improvement as you’re replacing the previous asset with a new, higher quality one. But if you instead just replaced part of the linoleum floor with similar flooring it could be classed as a repair. How to depreciate rental property improvements How this is done depends on the type of improvement and what category of depreciation the improvement, or parts of it, fall under. If the improvement is structural in nature or involves installing fixed assets like kitchen benchtops, tiles and doorknobs, then it needs to be depreciated using capital works deductions. Capital works depreciate at a rate of 2.5 per cent per year for residential properties. This means a capital works renovation can produce valuable depreciation deductions for forty years. But if the improvement includes easily removable or mechanical assets, then plant and equipment depreciation deductions must be used. These work differently as every plant and equipment asset has a designated effective life, so they depreciate at different rates based on the depreciable lifetime they are given. Before any renovation an investor must remember that there are 2017 legislation changes in place that impact depreciation available on plant and equipment assets. It means that any second-hand plant and equipment asset purchased and installed after 9 May 2017 are ineligible for depreciation. Therefore, those looking to take full advantage of depreciation should avoid installing a second-hand plant and equipment asset during a renovation. Some plant and equipment assets may also qualify for special incentives. One of these is the immediate write-off, where new assets that cost less than $300 can be claimed as an instant tax deduction rather than depreciated over time. The second incentive on offer is the low-value pool. This allows new assets that are installed during an improvement to be depreciated at an accelerated rate if they are valued at less than $1,000. It’s also important to remember that anything removed during a renovation can be ‘scrapped’. This means any undeducted depreciable value of a removed asset or structure can be claimed as an instant deduction in the same financial year. Now that we know how an improvement depreciates, how can it be claimed as a tax deduction? The key to claiming this depreciation on property improvements is to use a tax depreciation schedule. This essential report outlines every single depreciation deduction claimable from the rental property. An accountant uses this schedule at tax time each year to determine the depreciation deduction to reduce the financial year’s taxable income. What happens if an improvement is made after a tax depreciation schedule has already been prepared? Rental property improvements are made for a variety of reasons. One could be made due to damage or damage prevention, or simply a renovation to improve the rental return of the property. Whatever the case, the good news for investors that have an existing schedule with BMT is that it’s easy to make amendments to a current schedule to ensure the improvement and its assets are included. Now that you know how to depreciate rental property improvements and what’s needed to do so, contact BMT today on 1300 728 726 or Request a Quote.

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Property market update February 2020

BMT team — Sun, 09 Feb 2020 22:11:34 +0000

House values jumped in January but there are signs of a slowdown House values lifted in every capital city in January with the CoreLogic national home value index up by 0.9 per cent. However, there are signs of a slowdown. Contents: Property values Rental rates Listing numbers Finance and interest rates Construction and commercial property Property values The property market rebound continued into 2020 as January saw prices rise in every capital city and rest-of-state region, apart from regional South Australia. Sydney and Melbourne continue to be market leaders as values increased 1.1 per cent and 1.2 per cent respectively. Hobart values increased by 0.9 per cent, while Brisbane jumped by 0.5 per cent. Canberra (0.3 per cent), Adelaide (0.2 per cent), Darwin (0.1 per cent) and Perth (0.1 per cent) also increased. Perth continued to bounce back after a five-and-a-half-year slump with January also marking the first positive change over the quarter (0.4 per cent) since May 2018. Regional markets also showed strong results during the first month of the year. The strongest conditions were in regional Tasmania (1.3 per cent) and Western Australia (0.9 per cent). Despite strong national results, the rate of growth is showing signs of slowing. The national dwelling index declined from 1.7 per cent in November to 0.9 per cent in January. Seasonal effects, ongoing affordability issues, an increase in advertised stock and tough economic conditions are all impacting the property market recovery. Rental rates Rental rates increased by 0.5 per cent in January however most markets remain relatively weak. Hobart remains the tightest market in Australia, where rental rates have experienced an annual increase of 5.8 per cent. According to CoreLogic, ‘with housing values rising more rapidly than rental rates, gross rental yields are swiftly compressing’. Listing numbers February figures released by SQM Research revealed national residential property listings increased by 2.2 per cent in January, however, were down 10 per cent compared to the same time last year. Overall, advertised listing numbers continue to trend below average, though experts are expecting to see numbers lift later in the year. While an increase in listings would offer a wider range of choice for buyers, it could also mitigate property growth as it dampens the urgency to purchase housing. Finance and interest rates The Reserve Bank of Australia (RBA) left the official cash rate unchanged at its February meeting. The cash rate remains at 0.75 per cent. The Reserve Bank of Australia #RBA has announced its decision to leave the official cash rate for February on hold. It remains at a record low of 0.75% pic.twitter.com/Ngq4vzKqG6 — BMT Tax Depreciation (@BMT_Tax_Dep) February 4, 2020 RBA Governor Philip Lowe said in a statement that: ‘There are continuing signs of a pick-up in established housing markets. This is especially so in Sydney and Melbourne, but prices in some other markets have also increased. Mortgage loan commitments have also picked up, although demand for credit by investors remains subdued. Mortgage rates are at record lows and there is strong competition for borrowers of high credit quality. Credit conditions for small and medium-sized businesses remain tight.’ In other finance news, the Commonwealth Bank and National Australia Bank have been inundated with thousands of applications for the First Home Loan Deposit Scheme since it opened in January. The influx of applications is fuelling a FOMO attitude among buyers and lifting property prices as a result. Construction and commercial property Investment in alternative real estate assets like student accommodation and petrol stations rose to $8 billion in 2019, a 42 per cent jump year on year. With subdued business conditions, property groups are on the hunt for relative value in the property market. The same growth cannot be said for the development sector. According to CoreLogic’s Cordell Construction latest report, the number of new developments which have been announced but not yet commenced decreased by 33 per cent. Nationally, the number of new projects fell by around 5 per cent when compared to the previous twelve-month period. In terms of construction, there were 863 projects moving into the construction phase over December, a decline of 14 per cent. As mentioned in our Property Market Outlook 2020 article, figures from the Performance of Construction Index also showed that overall activity in apartment construction and new developments contracted for a 20th month in December, even as the pace of decline eased.

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What to expect as a property investor in 2020

BMT team — Wed, 15 Jan 2020 03:00:05 +0000

We reflect on how the Australian property market fared in 2019 and delve into what investors can expect to see in 2020. Property investment 2019: the year of highs and lows Property investment 2020: a steady year ahead Property investment trends: what are investors buying? Property investment 2019: the year of highs and lows It’s safe to say 2019 was a year of highs and lows for Australian property investors with the national housing market getting off to a slow start. Investor sentiment was low as policy uncertainty, the banking royal commission and a subdued economy overshadowed the market. Tighter lending conditions effected loan approvals, and property values plummeted. However, the National Dwelling Index reached its turning point in June when Sydney recorded a slight rise of 0.1 per cent, the first monthly increase in the city’s housing values since its peak in July 2017. The Australian housing market moved through one of the largest and longest corrections on record followed by a fast-paced and surprising rebound in values in the second half of the year. House prices in most Australian cities finished on a high with national average dwelling prices lifting 1.1 per cent during December and by 2.3 per cent over the year, according to CoreLogic. A variety of factors are contributing to the recovery including three cuts to the official cash rate with the potential for further reductions, the removal of uncertainty around tax reform following the federal election result, and low advertised stock creating a sense of urgency among buyers. Property investment 2020: a steady year ahead This year is likely to be steady for investors with markets potentially plateauing mid-2020. Smaller cities are starting to show a stronger growth trajectory, including Perth, where housing values have been trending lower since mid-2014. With the cash rate at 0.75 investors will be able to secure credit at a reduced rate, however the ongoing repercussions of the banking royal commission could negatively affect the banks’ ability to lend finance. Unit and apartment sales continue to trend lower, and developers may be retaining stock as a result. Slowed development will have a flow-on effect on the construction industry and is likely to put pressure on property prices as housing stock is reduced despite demand remaining high. Across the states and territories, dwelling approvals fell in the Northern Territory (11.1 per cent), New South Wales (4.6 per cent), Queensland (1.4 per cent), and Western Australia (1.0 per cent), according to the Australian Bureau of Statistics December data. Tasmania (4.5 per cent), South Australia (3.1 per cent), Australian Capital Territory (3.1 per cent), and Victoria (1.3 per cent) recorded increases, in trend terms. To compound the issue, figures from the Performance of Construction Index, a monthly barometer of industry sentiment, showed that overall activity in apartment construction and new developments contracted for a 20th month, even as the pace of decline eased. Along with slowing construction, the first home buyers’ scheme may also contribute to a jump in property prices in the first half of the year. Property investment trends: what are investors buying? Over the past few years, BMT has seen a consistent increase in the schedules completed for new property and this is expected to continue. Already in the 2019-20 financial year, 57 per cent of schedules completed have been for new property. It’s important for investors to understand that every property type, whether it be new or old, will attract depreciation deductions. In the 2018-19 financial year, BMT found residential investors an average first year deduction of almost $9,000 so it’s always worth consulting a specialist Quantity Surveyor to see how much you can claim. Interest in commercial property has also increased, with BMT experiencing a 9 per cent rise in the number of commercial schedules ordered. These schedules are mostly for industrial warehouses, as well as retail and office spaces. Whether you’re investing in residential or commercial property, the team at BMT wish you every success in 2020. You might also enjoy reading: Bushfires offer a timely reminder for landlords What’s happening in the commercial property market

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Property market update November 2019

BMT team — Mon, 04 Nov 2019 03:55:32 +0000

Property values deliver largest month-on-month gain since 2015 A surge in property values in October has delivered the largest month-on-month gain since 2015, CoreLogic’s national index data shows. Property values National dwelling values jumped by 1.2 per cent throughout October, delivering the fourth consecutive month of increased values and the largest month-on-month gain since May 2015. Melbourne overtook Sydney to claim the title of the best performing capital city, recording a 2.3 per cent increase in dwelling values over the month. Melbourne’s October growth is the largest consecutive gain for the city since November 2009. A tighter market combined with strong population growth relative to other cities has assisted the solid rebound. Dwelling values are trending higher across most of the capital cities as lower mortgage rates and improved credit conditions continue to encourage buyers. Dwelling values increased in Sydney (1.7 per cent), Hobart (0.9 per cent), Brisbane (0.8 per cent), Canberra (0.6 per cent), Adelaide (0.4 per cent) and Darwin (0.3 per cent). The worst performing city was Perth, declining by 0.4 per cent over the month. While the downwards trend in Perth has continued, the market is showing an improvement in the rate of decline. Both Perth and Darwin have been weakening since mid-2014, with Darwin down a cumulative 31 per cent and Perth values 22 per cent lower. The median value now stands at $435,119 for Perth and $394,132 for Darwin. Outside the capital cities, Launceston was the top performer for change in dwelling values. Property values in the Tasmanian city increased by 4.7 per cent. The Mackay and Whitsunday region in Queensland wasn’t far behind, recording a 4.4 per cent rise over the month. Rental rates CoreLogic data revealed slowing rental markets throughout October. Over the three months to October, rental rates fell across five out of the eight capital cities. The sharpest declines were found in Darwin, where rental rates were 1 per cent lower for the quarter. Sydney’s rental market also suffered, recording a 0.7 per cent decline in rent prices and the lowest rental yields (3.2 per cent) of any capital city. Adelaide and Brisbane emerged as the top performers. Rental rates increased by 0.3 per cent and 0.2 per cent respectively over the quarter. The current rental conditions are a combination of multiple factors including a rise in rental stock, increased construction skewed toward rental accommodation and higher first home buyer activity. Auction clearance rates Auction clearance rates remained relatively unchanged, pushing 70 per cent and consistently showing strong demand. There were just under 2,000 capital city homes taken to auction in the week ending October 20, 75.6 per cent of which returned a successful result according to preliminary results. Finance and interest rates Lower mortgage rates and improved access to credit are having a positive affect on the national property market as the rebound continues to gather momentum. The Reserve Bank of Australia #RBA has decided to leave the cash rate unchanged at a record low of 0.75 percent. #interest #rates #recordlow pic.twitter.com/fxcjYompFv — BMT Tax Depreciation (@BMT_Tax_Dep) November 5, 2019 Despite a subdued rental market, property investors are seeing improved cash flow as a result of falling mortgage rates. Over the quarter, average rents fell by 0.5 per cent across the capital cities while the gross yields dropped to 3.99 per cent. The average fixed rate mortgage also declined to 3.6 per cent, roughly matching the rental returns. Commercial property Commercial property is likely to become a stronger investment over the next 18 months, according to a report by AMP Capital, with most asset classes set to offer solid returns. Similarly, Australian Bureau of Statistics data from August showed commercial building approvals soared by 54 per cent to their highest point in three years. Australian office sales also soared to $17.9 billion in the first three quarters of 2019, showing strong growth in the sector. On the contrary, commercial primary producers and agricultural businesses could be facing tax changes liken to ‘the removal of negative gearing’. The tax legislation denies owners of vacant land the ability to claim holdings costs such as interest, council rates, land taxes and insurance as tax deductions. Property developers, foreign owners, farmers and trusts are said to be among those hit the hardest by the NSW government crackdown.

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Property market update October 2019

BMT team — Tue, 08 Oct 2019 21:54:05 +0000

Australian property market recovery gathers momentum The Australian property market has continued its recovery throughout September, led by strong rebounds in Sydney and Melbourne. Property values Australia’s two largest cities led the September recovery, with Sydney and Melbourne dwelling values both increasing by 1.7 percent. The positive trend pushed the median property value to $805,424 and $634,913 respectively, however values still remain well below their peaks. CoreLogic cited low mortgage rates, improved credit access and economic factors to the current bounce-back of Sydney and Melbourne. CoreLogic head of research Tim Lawless said: “Population growth is higher, unemployment is lower and jobs growth is stronger, providing a solid platform for housing demand.” Along with this, the Sydney and Melbourne markets have seen stronger investor participation in recent months as market confidence continues to grow. Brisbane and Canberra were the only other capital cities to record a rise in dwelling values, lifting 0.1 per cent and 1 per cent. Values fell in Hobart (-0.4 per cent), Perth (-0.8 per cent) and Darwin (-0.2 per cent), while Adelaide prices remained unchanged.While Perth continued its market decline experts say the city is just at the right stage of the property cycle for growth, having achieved a balance between supply and affordability. Residential property listings Property listings remain low across the country, with existing listing numbers 10 per cent lower than a year ago across the combined capital cities and fresh listings 15 per cent lower. The reduced real estate stock is creating a sense of urgency among buyers, with the fear of missing out boosting buyer activity. Auction clearance rates The seasonal impact of spring showed in the national auction market, with CoreLogic results recording a lift in national residential property listings by almost 3 per cent in the first week of September. National auction clearance rates held around the mid-to-high 70 per cent range over the month, with the results remaining high on larger volumes. Prices also experienced a lift throughout the month. Buyers are paying above the expected sale price as sentiment continues to pick up, and purchasers compete for the few properties on the market. Vacancy and rental rates National rental rates were down 0.1 per cent over September, continuing their downward trend for the fourth consecutive month. Sydney (-1.0 per cent), Melbourne (-0.3 per cent), Perth (-0.4 per cent), Darwin (-0.2 per cent) and Canberra (-1.1 per cent) all recorded a decline in the three months to September. While gross rental yields are still trending slightly higher than 12 months ago, they’re trending lower across most areas. Finance and interest rates The Reserve Bank of Australia (RBA) has dropped the official cash rate below 1 per cent for the first time in history. The official rate is now at a record low of 0.75 per cent. In a statement issued after the call, the RBA said they made the decision in a bid to support employment growth and to provide greater confidence that inflation would be consistent with the medium-term target. A combination of drought, stagnant wage growth and trade conflict between China and the United States also contributed to the controversial interest rates decision. Commercial property New hotel development in Australia is predicted to slow as the country’s struggling apartment market contributes to a decrease in residential-led mixed use projects. Along with the slowdown in development, hotels in Australia have started offering free co-working spaces as a new phenomenon of space activation takes hold. Two hotels in Sydney’s Rushcutters Bay and the CBD have offered free desks to businesses to draw in more patrons through the lure of a busier ground floor lobby. While hotels continue to look for new ways to adapt to the market, Sydney and Melbourne’s office and industrial property sectors have offered strong returns for investors throughout September. Melbourne’s office market boom is expected to continue until 2024, with prime rents expected to rise another 30 per cent to 40 per cent.

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Property market update September 2019

BMT team — Wed, 11 Sep 2019 01:49:09 +0000

National dwelling values increased for the first time since October 2017, as the Australian property market continued its trajectory to recovery throughout August. With the spring season forecast to lift the market, experts are predicting a slow and steady recovery. Property values Housing values increased across five out of the eight capitals and national dwelling values rose by 0.8 per cent throughout August. The increase in dwelling values lifted the national annual rate of decline to -5.2 per cent, an improvement from May 2019 when values reached their sharpest annual decline of -7.3 per cent. August was also the third consecutive month of capital gain in Sydney, Melbourne and Hobart and the second consecutive month in Brisbane. The weakest market conditions remain in Perth and Darwin where values have been declining for several months. Darwin values are now 30.7 per cent below their 2014 peak, while Perth values are down by 20.6 per cent. Despite this, there are subtle signs of improvements in the rate of decline for both cities. Residential property listings An increase in buyers combined with a lack of stock has contributed to further market recovery in August, with listing numbers expected to increase throughout spring. The beginning of September has already signalled a resurgence in the property market, with the largest seasonal rise in new listings in five years. According to CoreLogic data, the first weekend of spring recorded a 21.7 per cent increase in the number of homes listed on the market in Sydney, Melbourne, Brisbane, Adelaide and Perth. Out of the eight capitals, Melbourne had the most substantial increase in listing numbers, up 36.2 per cent from its winter low. Vacancy and rental rates Dwelling values and listing numbers are improving but the same cannot be said for the national rental market. Rents fell 0.1 per cent over August, the third successive month of decline. Brisbane, Adelaide and Hobart rental markets were the only exceptions. Sydney and Melbourne are leading the softening of rental yields, however if the market recovery continues, we could see this stabilise in the coming months. Auction clearance rates Auction clearance rates across the country continued to climb in August and are now at their highest levels since early 2017. Sydney’s auction clearance rate was almost 50 per cent higher in the last week of August compared with the same time last year, as experts predict a bumper spring with the number of property listings already rising. During the same week, Melbourne auctions returned a preliminary clearance rate of 76.1 per cent. Across combined capital cities, 1,605 homes were taken to auction in the final week of August, returning an average preliminary clearance rate of 73.6 per cent. Finance and interest rates Lending to property investors tumbled in July, however, could be back on the agenda as we head into spring. As rates drop and property prices stabilise, the rental investment market is showing signs of improvement. CoreLogic data shows the national average rental yield on residential property is currently 4.1 per cent, a return which experts suggest can comfortably surpass term deposit rates. In construction news, reduced interest rate cuts and tighter credit conditions have contributed to a fall in building approvals. Overall, the number of building approvals fell 9.7 per cent in July. Houses declined by 3.3 per cent and other dwellings, which comprises apartments and townhouses fell by a startling 18.4 per cent. Commercial property The retail property market is continuing to transform as major stores like David Jones, Myer and Big W announced the decision to reduce their store footprint. The reduction in retail stores could see further opportunities for commercial property investors in the warehousing sector, as businesses start to increase their online services. In the agriculture sector, the demand for rural properties didn’t waver throughout August, despite ongoing drought conditions. Reasonable commodity prices, particularly in the sheep market, seemed to lift the rural property market sentiment. Some purchasers were still showing hesitation, with limited cash flow from their existing holdings and little to no stock feed for additional properties.

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Hobart property market set to stabilise

BMT team — Thu, 05 Sep 2019 00:17:26 +0000

While national property prices were plummeting at their steepest decline since the global financial crisis earlier this year, Australia’s island state was defying the odds. Tasmania has experienced significant capital growth in recent years, with Prime Minister Scott Morrison dubbing it the ‘turnaround state’. Hobart in particular has gone from strength to strength, only recently starting to cool off after years of exponential growth. Low supply of dwellings, low median price, tight vacancy rate and an upswing in tourism have all contributed to the city’s property boom. In this article we will look at: Hobart property values Hobart property listings Hobart vacancy and rental rates Hobart property market trends Hobart property values Hobart dwelling values continued to rise over the last month, with the latest CoreLogic data showing a 0.5 per cent increase in values during August, the third successive month of capital gain for the city. Hobart also topped CoreLogic’s list of top ten performers, recording a 3.1 per cent annual increase. Canberra placed second with 1.2 per cent. Over the past five years Hobart’s dwelling values have skyrocketed by 35.9 per cent, more than 10 per cent higher than Melbourne and 15 per cent higher than Sydney. According to the Australian Bureau of Statistics (ABS), Hobart property prices have been rising at an average rate of 4.6 per cent a year — the fastest of all Australian capitals. Despite solid growth, the median price of property ($465,535) remains relatively affordable in comparison to other capital cities like Sydney ($790,072) and Melbourne ($626,703). While the city has experienced enormous growth, the latest CoreLogic figures indicate prices are beginning to stabilise and it’s likely the property market will lose its momentum over the next twelve months. Hobart property listings Hobart had 298 new listings in August, a 12.4 per cent decline in comparison to the same period last year. However, overall there were 1,060 properties listed for sale, a 6.9 per cent increase over the past twelve months. The median time on the market for houses was 39 days, while units recorded a median of 42 days. Hobart vacancy and rental rates Hobart has the hottest renal market in the country and has experienced a 5.5 per cent increase in rental conditions over the past twelve months. The asking rental price for Hobart is $443.50, 9 per cent higher than the same time last year and 29.8 per cent higher than three years ago. Along with this, the city’s residential vacancy rate is currently just 0.5 per cent. Hobart property market trends The number of tourists visiting Tasmania has continued to grow, with 1.32 million visitors travelling to the state over the twelve months to March 2019, according to Tourism Tasmania. With steady visitation growth, Hobart is seeing a trend of investors converting private rental properties into short-stay accommodation. A recent University of Tasmania report recorded a 288 per cent increase in entire properties being listed on short-stay accommodation websites in the city from July 2016 to 2018. Given the city’s tight vacancy rate and rental conditions, reducing existing rental stock could further acerbate Hobart’s household rental stress. In July, the Master Builders Association said regulatory and cultural change to embrace higher-density housing was vital to Tasmania’s future.

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