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Fourth Quarter │2012

ASHFIELD LGA Property Watch®

MARKET OVERVIEW This report is the result of an investigation into the house and unit markets of the Ashfield Local Government Area (LGA), comprising of the suburbs of Haberfield, Summer Hill, Ashfield, and parts of Ashbury, Croydon, Croydon Park and Hurlstone Park.

Units

A Victorian house in Bland Street, Ashfield

MARKET INDICATORS Change from Last

Year

Half Year

UNIT SALES

In 2011 units accounted for 49% of all dwellings in the Ashfield LGA, an increase of seven per cent from 2006. The region is set to pass the 50% mark in the next two years, with the completion of the Carlton Estate development in Summer Hill and the Station 2A project near the Ashfield train station. Additionally, 230 development-approved apartments are expected to commence construction over the next 12 months. The median unit price eased to $455,000 in July, representing a 4.9% decline on the July 2011 figure although the five-year average (5.4% per annum) recorded in the past five years pointed to a stable long term growth. A price point analysis revealed an increase in the share of units selling toward the bottom end of the market (less than $400,000) between July 2011 and 2012. Middle price points contracted, with the $400,000 to $499,999 bracket declining by 7.5% over the 12 month period. Most sales in this price bracket occurred in Ashfield (74% of sales), with the balance transacting in Summer Hill (16%) and Croydon (8%).

UNIT MEDIAN UNIT RENTS HOUSE SALES HOUSE MEDIAN HOUSE RENTS The indicators depicted above are based on the year ending July 2012. Rental indicators are based on 12 months to June 2012.

Medium-density dwelling activity continued to soften in the six months to July 2012, with 157 units transacting over the period, although the figure did not reflect off-the-plan sales in new projects. The level of sales, equating to a 34% decline from July 2011, was the lowest since January 1990. The share of units is expected to increase in the next two years as more medium and high-density developments move into construction phase. However, a number of proposed apartment projects planned to be built on rezoned industrial sites have to date met fierce resistance from local residents.

ASHFIELD LGA HOUSE & UNIT SALES CYCLE House Sales

Unit Sales

House Median

Unit Median

700

$1,000,000 $865,000

KEY HIGHLIGHTS

$900,000

600

500

Number of sales

$700,000 $600,000

400

$455,000

410 294

300

279 301

263 226

266

172

247

288

$400,000 237

238

259

$300,000 157

$200,000 100

181

160

158

125

134

121

122

125

155

142

157

150

118

120

150

142

142

138

136

110

$100,000 99

2012 JUL

2011 JUL

2012 JAN

2010 JUL

2011 JAN

2009 JUL

2010 JAN

2008 JUL

2009 JAN

2007 JUL

2008 JAN

2006 JUL

2007 JAN

2005 JUL

2004 JUL

2005 JAN

2003 JUL

2004 JAN

$0

2002 JUL

0

2003 JAN

The rental vacancy rate was similar the Inner West’s average, creating a challenging environment for tenants and underpinning future growth in rent prices.

216 226

300

303

169

200

$500,000

362

328

2006 JAN

The development of mediumdensity product across the LGA is increasing and is expected to account for more than 50% of dwellings in the next two years.

Median sale price

$800,000

Half year period Graph prepared by PRDnationwide Research. Source: PDS

www.prdresearch.com.au

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UNIT PRICE POINTS 6 MONTHS TO JULY 100% 12%

13%

90%

At least $600,000

80% 27%

28%

70% 60% 50% 29.9%

$500,000 to $599,999

7.5% decline in the 12 months to July 2012

$400,000 to $499,999

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The House and Unit Capital Growth graph below depicts the average annual price growth achieved by vendors who exited the market in the past three years. House growth peaked at an average of 8.8% per annum in July 2010 and declined since, closing the July 2012 period at 4.8% per annum. Conversely, the growth for units, averaging 4.2% per annum in July 2009, has increased over the three years to 8.5% per annum in July 2012. The result points to a growing demand for high-density dwellings in the inner city LGA, resulting in strong returns for owners.

ASHFIELD LGA HOUSE & UNIT CAPITAL GROWTH 10.0%

Unit

37.4%

40%

House

9.0%

$300,000 to $399,999

30%

8.5% 8.0%

24% 21%

10%

Less than $300,000

8% 1% 2011 JUL

0% 2012 JUL

Graph prepared by PRDnationwide Research. Source: PDS

7.0%

Average capital growth p.a.

20%

6.0%

5.0%

4.8%

4.0%

3.0%

The share of houses in the LGA is expected to decline as more medium-density developments move into construction phase DWELLING STRUCTURE 80% 2011

2006

70% 60% 50% 40% 30% 20%

10% 0%

Graph prepared by PRDnationwide Research. Source: ABS

2.0%

1.0%

0.0% 2009 JUL

2010 JAN

2010 JUL

2011 JAN Half year period

2011 JUL

2012 JAN

2012 JUL

Graph prepared by PRDnationwide Research. Source: PDS

Houses The July 2009 peak in house activity was followed by six periods of decline in the number of transactions. Activity in the July 2012 half year signified a 50% decline from the 2009 peak and a 27% contraction from July 2011. An increased level of stock on the market was observed since August 2012, in preparation for the spring selling season. However, it will remain to be seen if an improvement in sales prevails, as buyers’ confidence remains low. The House and Unit Sales Cycle Graph pointed to a decline in Ashfield’s median house price since January 2010, closing the July 2012 period at $865,000. The figure represented a 3.8% decline from July 2011, although the five-year average growth remained positive, with an average increase of 3.9% per annum.

The investment market Ashfield’s large rental market accounted for 40.1% of dwellings in the LGA compared with an average of 30.1% for NSW. A long term increase in rent prices offset some of the declines in capital growth. The median rent of a house increasing by 51% over the past five years while the median rent for a two bedroom unit increased by 41%. In 2011 single bedroom units accounted for 11.2% of all dwellings in the LGA, double the state’s rate. Interestingly, the median rent for a one bedroom unit increased by 52% in the five year period, overtaking that of a house and a two bedroom unit. In June the median rent price for a one bedroom unit closed at $350 per week, while a two bedroom unit recorded a median weekly rent of $420. Vacancy levels remained low despite an increase since in the past ten months. The tight September figure of 1.7% was comparable to the Inner West’s average, creating a competitive environment for tenants and underpinning future growth in rent prices.

Research Analyst │Oded Reuveni-Etzioni P (02) 9257 0254 E odedetzioni@prd.com.au PRDnationwide Ashfield │ Principals John Aslanidis / Paul Kapetanellis

P (02) 9797 9600 E ashfield@prdnationwide.com

This report was prepared by PRDnationwide Research. Source: PDS, ABS, Housing NSW, SQM. 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. © 2012

Ashfield Property Watch Q4 2012  

Ashfield Property Watch Q4 2012

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