By Meighan Hetherington of Property Pursuit www.propertypursuit.com.au
The latest Residex report for the quarter ending September 2007 held some interest reading.
Residex uses a formula called repeat sale methodology to calculate the median house prices which is quite different to most other providers of property market statistics. They report that the median house price for Brisbane was $411,500 showing annual capital growth of 15.5% for Brisbane houses - the strongest growth in all Australian capital cities. This figure is up from 7.58% for the same period last year providing further evidence that we are still in a strong upswing phase of the property cycle.
Rental yields are reflecting this strong growth phase firming up at 4.19% or $330 median rent. This level has been reasonably consistent since the 'boom' ended in November 2003.
Number of sales is starting to head back up to the level we saw in 2002 which was the last time the market was in a strong upswing phase prior to the 2003 boom. Interestingly according to Residex the unit market growth is slowing with only 3.6% growth over the last 12 months and capital growth in the last quarter being the lowest of all capital cities except Sydney.
As we always say, it is not the statistics themselves that hold the key to good property decision making, it is the interpretation and appropriate application of the information at an individual property level that is essential and that is where our local market knowledge is vitally important.
2. Property vs Shares and Houses vs Unit
Residex conducted an analysis of the real returns of a variety of asset classes over the period 1980 - 2007.
|
Asset Sector |
Average Real Return (pa) |
|
Melbourne Units |
11.74% |
|
Brisbane Houses |
11.73% |
|
Melbourne Houses |
11.42% |
|
All Industrial |
11.26% |
|
Sydney Houses |
10.34% |
|
Brisbane Units |
9.94% |
|
Sydney Units |
9.66% |
|
Property Trusts |
9.50% |
|
All Ordinaries |
9.14% |
|
Bonds |
5.96% |
|
T-Notes |
4.81% |
Brisbane houses came in a very close second showing the strength over time of a Brisbane houses against other asset classes.
For those investors who have made the choice to invest in property but are still deciding whether to buy a house or unit, this table also supports our recommendation that when looking for long term capital growth, houses have performed better than units (11.73% vs 9.94% respectively).
For more information contact one of our Client Managers.
