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First Quarter │2013

HORSHAM AREA Property Watch®

HORSHAM AREA MARKET OVERVIEW The following Property Watch report is the result of an investigation into the historic and current market trends of the Horsham Area, which encompasses the suburbs of Horsham and Haven, with a comparison to the wider Horsham Local Government Area (LGA).

Horsham Town Centre

MARKET INDICATORS Change from Last

Year

Half Year

HOUSE SALES HOUSE MEDIAN HOUSE RENTS LAND SALES LAND MEDIAN

The indicators depicted above are based on the year ending October 2012, while rents are based on the year ending June 2012.

The Horsham Area property market has averaged 192 settled house sales per six month period over the past decade. At the time of writing, the most recent six month period ending October 2012 has registered a total of 140 settled sales. Although this amounts to a figure slightly less than the three year average of 152 sales per six months, it is anticipated that there is a larger portion of sales that have yet to settle in the month of October. While activity over the three past years has been fairly robust, the median price has surged to new heights. Twelve month growth in the median house price recorded a substantial 10.3 per cent increase to $235,500. It appears that the period of low interest rates in between 2011 to 2012 has assisted in making property more affordable, allowing for buyers to increase their purchasing power. Early indications have shown that activity in the Horsham Area house market has picked up throughout the last first quarter of 2013, with potential home owners interested in brick veneer houses priced between the $300,000 to $600,000 price range. Investors have also shown interest in the Horsham market, in particular redevelopment sites at an affordable price point of up to $150,000. As displayed in the Horsham Area House Sales Cycle, over the past three years houses have displayed a consistent level of activity, with a rapidly increasing median price. However, while the Horsham Area unit market represents only 15.3 per cent of total dwellings, the median unit price has typically pursued a similar level of growth to that of houses. Only over the past six months has a large price divergence between houses to unit come around. This could offer investors the potential to attain stronger yields.

HORSHAM AREA HOUSE & UNIT SALES CYCLE KEY HIGHLIGHTS

House Sales

Unit Sales

House Median

Unit Median

350

300 $200,000

$170,000

$150,000

200

150

153

140

153

133

168

165

209

205

201

217

234 179

163

172

168

235

239

204

100

232

$100,000

Median sale price

250

257

Over the past ten years, sellers have realised an average capital growth return of 9.1 per cent per annum, through an average holding period of 7.8 years.

$250,000 $235,500

212

In the past 12 months ending October 2012, the median house price increased by 10.3 per cent, to $235,500.

Number of sales

$50,000

50

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2012 OCT

2012 APR

2011 APR

2011 OCT

2010 APR

2010 OCT

2009 OCT

2009 APR

2008 OCT

2008 APR

2007 OCT

2007 APR

2006 OCT

2006 APR

2005 OCT

2005 APR

2004 OCT

2004 APR

$0 2003 OCT

0 2003 APR

The final vacant land median price recorded for the February 2012 six month period was $102,450, equating to an increase of $31,100 in just three years.

2002 OCT

Half year period Prepared by PRDnationwide Research. Source: PDS

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A resale analysis was undertaken to ascertain the average annual returns received by investors who exited the Horsham Area house market over the six months to October 2012. These sellers realised returns of an average 5.0 per cent per annum, through an average holding period of 7.8 years. While this amount of capital growth has declined from the ten year average of 9.1 per cent per annum, it still remains significantly positive.

demand from investors.

Observing the House Price Points chart over the October 2012 six month period, it is shown that the price range of $200,000 to $400,000 has expanded by 7.1 per cent, to amount to 60.7 per cent of total sales. Historically, the sub $200,000 price point has claimed the majority of home buyers.

Redevelopment sites under $150,000

Sales activity in the vacant land market surged 121 per cent in the six month period ending April 2012. This level of high activity has occurred since mid-2006, but has since quietened down over the most recent October 2012 six months. During this recent period a total 20 settled sales occurred, with the half of these sales falling within the $100,000 to $149,000 price range. The median price appears to have reached a price plateau over the April 2012 six month period, and has since contracted by 5.1 per cent to $102,450. Due to a lack of prime land and the ever increasing building costs potential buyers are assessing established homes as a more viable option both in terms of value and position. The general sentiment felt among buyers deems that building a new home will not deliver worthwhile returns in the current market.

HOUSE PRICE POINTS 2010 OCT

2011 OCT

$600,000 to $699,999

2012 OCT

100.0%

25.0%

$400,000 to $499,999

30.0%

$300,000 to $399,999

31.3%

$200,000 to $299,999

25.0%

45.0%

28.4%

$100,000 to $199,999

44.8%

Less than $100,000

46.9% 0%

50.0%

25.0%

31.3%

37.3%

36.1%

35.5%

32.1%

21.9%

23.0%

31.3%

50% Portion of total sales

100%

Over the past five years, the rental market has grown to amount to 29.6 per cent of the total dwellings in the Area. When observing the movements of the rental market within the Horsham Area, rental prices for houses have remained stable over the June 2012 financial year. The median weekly rent for a standard three bedroom house was $230 per week, while the rent for a four bedroom house increased by 22.6 per cent (to $325 p/w). Vacancies in the rental market have slightly increased over the second half of 2012, providing more expectation that the weekly median rent for homes will remain fairly stable over 2013. Looking ahead into 2013, a sustained period of low interest rates should draw investor activity into the property market, as loans become more affordable transferring into more attractive yields. Houses should continue to observe steady growth, while units will likely see a price correction.

Prepared by PRDnationwide Research. Source: PDS

AVERAGE CAPITAL GROWTH

HORSHAM AREA VACANT LAND SALES CYCLE

$102,450

120

$100,000

9.9%

100 $80,000 80 $60,000

60 $40,000 40

14.2%

$20,000

20

Prepared by PRDnationwide Research. Source: PDS

2012 APR

2012 OCT

2011 APR

2011 OCT

2010 APR

2010 OCT

2009 APR

2009 OCT

2008 APR

2008 OCT

2007 APR

2007 OCT

2006 APR

2006 OCT

2005 APR

2005 OCT

2004 APR

15.0%

2004 OCT

5.0% 10.0% Average capital growth p.a.

2003 APR

3.7%

$0

2003 OCT

0 2002 OCT

0.0%

$120,000

Number of sales Median

5.0%

Number of sales

Six month period

140 2012 OCT 2012 APR 2011 OCT 2011 APR 2010 OCT 2010 APR 2009 OCT 2009 APR 2008 OCT 2008 APR 2007 OCT 2007 APR 2006 OCT 2006 APR 2005 OCT 2005 APR 2004 OCT 2004 APR 2003 OCT 2003 APR 2002 OCT 2002 APR 2001 OCT 2001 APR 2000 OCT 2000 APR 1999 OCT 1999 APR 1998 OCT

Median sale price

$500,000 to $599,999

Price bracket

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Half year period Prepared by PRDnationwide Research. Source: PDS

Research Analyst │Aaron Maskrey P (07) 3370 1702 F (07) 3120 4502 E aaronmaskrey@prd.com.au PRDnationwide Horsham │Principal Wes Davidson P (03) 5382 0000 F (03) 5382 0600 E wesd@prdhorsham.com.au PRDnationwide does not give any warranty in relation to the accuracy of the information contained in this report. If you intend to rely upon the information contained herein, you must take note that the information, figures and projections have been provided by various sources and have not been verified by us. We have no belief one way or the other in relation to the accuracy of such information, figures and projections. PRDnationwide will not be liable for any loss or damage resulting from any statement, figure, calculation or any other information that you rely upon that is contained in the material. Prepared by PRDnationwide Research © All medians and volumes are calculated by PRDnationwide Research. Use with written permission only. All other responsibilities disclaimed. © 2013

Horsham Property Watch Report Quarter 1, 2013  

Horsham Property Watch Report Quarter 1, 2013