UP DATE AU T U M N 2 0 1 4
INSIDE: market review sales highlights from the MD our community wedge
Market Review Clearance rates; what do they ‘actually’ mean?
Avg $ Sale Result for Residential Properties
THE second half of 2013 saw clearance rates in Melbourne published at around 70%, a good result many would say, especially compared to the prior year. What this very well publicised figure represents is the clearance rate across Metropolitan Melbourne – from east to west and north to south and doesn’t take into account the difference within the Melbourne markets. Some of the banking groups have simplified the Melbourne market into three distinct rings radiating out from the CBD, identifying them as the inner, middle and outer markets. These three distinct markets all perform differently and so you have to ask, is this figure actually worth tracking? What might be of more interest is a clearance ratio for each market and then look for a comparison between these markets to see how they are performing. Inner city homes can command a higher price and therefore attract a different type of buyer compared to suburban properties between 5-12km from the CBD. Each customer is impacted by different external factors and this has a greater influence on the overall clearance rate than you might expect. What we can tell you is that the inner city market had a clearance rate of closer to 79%* - an enormous difference to the published rate of 70%.
Invest for the future THE Victorian Government in October 2013 released its Blue Print for 2050, Plan Melbourne, estimating Melbourne’s population to be 6.5 million which will require one million more dwellings. Of these, 207,000 have been ear marked for the Central City and surrounds including, the City of Melbourne, Port Phillip, Yarra, Stonnington and Maribyrnong. But is this enough?
Vacancy Rates 0-4km
The clearance rate gives a ‘nice’ insight into the sentiment or appetite in the overall market for property but it doesn’t take into account the varied mix of properties up for auction each weekend. Auctions are by nature an exhilarating and, we believe, a great way to sell a property. However, you need to dig deeper and engage with your agent to see just how your specific property could fair in the current climate and how similar properties to yours have been selling. Accurate data specific to your property is what we think you would be more interested in. So if you are, please call us we would be delighted to share. *Source Data: REIV
While vacancy rates 0-4km’s from the CBD are at an all-time low, average weekly rental returns are at an all-time high and with housing affordability within the proximity of the CBD a long term concern, there is a greater need for good value and cost effective rental properties. New buildings and apartment blocks targeting investors will likely be the future for these suburbs and centres ear marked for development. Knowing that your investment is secure, your property tenanted and obtaining the right return will be of even greater importance as more and more investors come in to the market, position and quality will be imperative.
Nelson Alexander All Competitors
The red tip tells the story. Nelson Alexander has again
Sold Jan 2013 - Dec 2013
EAST MELBOURNE Powlett St SOLD $5,155,000 Sold in Feb 2013, this property remained the highest price reported for auction results throughout the calendar year. A fiercely competitive auction, the house was declared on the market at $4.4m with three participating bidders. At $5m there were only two bidders left, and it raised another $155k in $5k bids.
outperformed its competitors in relation to prices achieved for properties in the inner northern suburbs.
2014 - Where to from here? IT was a good year for the market and the results above speak for themselves. According to the independent company, Property Analytics Australia, to which Nelson Alexander subscribe, the average price across the suburbs we operate in has grown by approximately 4.9%.
In 2013 we started to see the impact of the Self-Managed Super Funds (SMSF) borrowing to buy property, despite being introduced in September 2007. Properties under $800k were beginning to sell well above their reserves and quickly a new competitor at auctions was evolving.
Importantly for us, Nelson Alexander has outperformed the market in nearly every suburb by delivering a higher average sold price across 2013. A tremendous result independently assessed, so it’s great to know that we deliver returns on one of your largest investments.
In a survey conducted in June 2013, SMSFs were wanting to commit 30% of their savings in housing compared to only 3.5% at the time. This will continue to have an impact in 2014 but housing affordability could push some of these buyers out of the Melbourne market and further north to Brisbane, giving some relief to the already struggling first home buyers.
Looking forward into 2014, the all elusive question, what will the market do now? Cautious optimism seems to be the sentiment. The RBA in their December meeting noted there were “reasonable prospects of a pick-up next year” in global growth and “Housing and equity markets have strengthened further over recent months, trends which should in time be supportive of investment”.
The recently announced rezoning across Melbourne will likely have an impact on the long term property landscape and it’s important to be aware of how you and your property could be affected. While it may have little impact in 2014, it certainly will over time and if you’re unsure of the impact this will have on the value of your property(s), we strongly recommend you contact your agent.
BRUNSWICK EAST Jarvie St SOLD $985,000 With direct access to Methven Park this terrific lifestyle opportunity was one worth battling it out for in December. Five bidders and $150k over the reserve later, this 3 bedroom 2 bathroom beauty sold under the hammer at $985,000, as a crowd of 100 people looked on.
ESSENDON Glen St
SOLD $725,000 One of the last auctions of 2013, this versatile light filled villa attracted more than 100 people to witness six determined bidders compete. An exhilarating auction which saw it eventually sell for $725,000 – a huge $125,000 over the reserve price.
2013 was an exciting and busy year for Nelson Alexander and our clients with Melbourne’s property market performing so strongly in the last half of the year, everyone is keen to predict whether this will continue in 2014.
“WITH EACH OFFICE LOOKING AFTER THE OTHER, WE ACHIEVE MUCH MORE FOR OUR CLIENTS THAN WE COULD SEPARATELY.”
From the Managing Director
Early signs are very positive with strong demand and excellent sales results so far. While keeping an eye firmly on the year ahead, I think it is worthwhile to reflect on 2013 in what was an outstanding year for Nelson Alexander. We again enjoyed market leadership across our offices with an average market share of 32% in the suburbs we serve. Our Fitzroy office attained a record 61% share of the market in the December quarter – a very impressive result. Our success in sales was again underpinned by our commitment to operate as an independent wholly owned company. Our ‘’total team’’ approach to every sale in every suburb - together with the sheer volume of transactions we are privileged to be involved in - provides us with an unmatched level of market intelligence and buyer pool. This allows us to consistently deliver more accurate advice, better service and stronger results. We expanded our presence with new offices in Ivanhoe and Coburg, led by Liz Walker and Steven Shaw respectively. Liz, Steve and their teams are passionate about connecting with their local communities and are already delivering exceptional results. The Nelson Alexander Charitable Foundation had another big year in 2013, distributing a total of $262,462 across our local communities and winning the R.E.I.V. Community Service Award for an unprecedented fifth time. I am incredibly proud of our strong connection with the local communities we serve, and particularly the commitment of our staff to our community programs. Our property management team continues to grow rapidly - and to the more than 1,000 new property management clients who joined us in 2013 and are reading this newsletter for the first time - I’d like to welcome you to the Nelson Alexander community. We are now responsible for the management of 8,750 properties, the largest privately managed portfolio in Melbourne. Please get in touch if you are considering selling or leasing in 2014 - it looks like it is going to be another good year for real estate. Thank you for your continued support. Paul Lunardi Managing Director
The Community Wedge The Nelson Alexander Charitable Foundation provides a great avenue for our staff to get involved in the community in which we operate. We’re committed to many causes great and small and are excited about a number of upcoming events planned to raise funds and awareness. In February we’re off to Fareshare to continue our involvement in preparing meals for the hungry and homeless from their new kitchen in Abbotsford. May 22nd will mark the second “Sleep at the G” event, a Melbourne City Mission initiative which invites participants to sleep out at the MCG to gain an insight into the plight of the homeless within our city. Last year we had a team of nine and in 2014 we hope more staff will get on board and spend their night sleeping rough and cold at the G!
It’s not just about raising funds for large organisations. We’re well aware of disadvantaged individuals and groups in our local business footprint that may not be able to receive assistance through large charities or government departments.
Ascot Vale | 9370 7766
In November of last year we heard of a Year 11 student at Princes Hill Secondary College, who is wheel chair bound, and had a dream to travel to New York as part of a Year 11 study program. He needed to be accompanied by two carers at a cost of $8,000 - $10,000. The Charitable Foundation contributed to the cost of his carers and we were delighted to see him head off to New York with his classmates.
Essendon | 9379 1313
If you’d like to learn more about the Charitable Foundation and the work we do in our local communities, please speak to your agent or visit blog.nelsonalexander.com.au.
Brunswick | 9388 0088 Carlton North | 9347 4322 Coburg | 9353 8444 Commercial | 9419 5511 Fitzroy | 9417 1956 Ivanhoe | 9490 2900 Keilor East | 9331 6200 Northcote | 9486 1800 Pascoe Vale | 9354 6144 Preston | 9478 5000