The RP Data Market Activity Index, which measures the volume of pre-listing activity by real estate professionals, has begun to increase over the last week. As yet it is unclear whether this is due to a late start to the spring selling season however, the recent increase in listings and strong auction volumes suggest that this may be the case. The largest increases in pre-listing activity have been recorded within Victoria, South Australia and Western Australia.

The Reserve Bank (RBA) decided to increase interest rates by 25 basis points this week following their monthly board meeting. The increase takes the official interest rate to 4.75%. At the time of writing it was not clear what the average standard variable interest rate would be, the CBA lifted their rates by 40 basis points and the other major banks as yet have not announced their moves. The one thing you can guarantee is that the average variable interest rate will at the very least be 7.65% (up from 7.4% last month). The increase in interest rates caught most off guard, especially considering that inflation figures were well within the RBA’s target range of 2% to 3% on an annual basis. Clearly the increase was a preemptive tactic, aimed at reducing the inflation risk which is being fuelled by the booming mining and resources sector and a labour market that is approaching capacity.

The ABS this week released building approval numbers for September 2010. On a seasonally adjusted basis, total dwelling approvals fell by -6.6% for the month, annually total approvals are down by -11.6% and this week’s interest rate hike will likely further dampen building approval numbers in the coming months. Private sector dwelling approvals have fared quite poorly also. Private sector house approvals are down by -2.3% for the month and are -14.1% lower over the year. Private sector unit approvals had been quite buoyant over recent months however, they recorded a sharp decline of -15.7% during September and are down by -0.6% for the year.


Advertised Stock on the Market
The number of newly advertised properties for sale has continued to increase over the last week, up by 0.7%. The total number of newly advertised properties is now 21.5% above the 12 month average and 21.8% higher than at the same time last year. With new property advertisements continuing to increase, so too have total advertisements which are 0.9% higher than last week and 11.2% above the 12 month average. The total number of advertised properties is 13.5% higher than at the same time last year. With stock levels mounting, buyers are gaining more leverage over vendors in the market. The most recent vendor discounting figures from RP Data and Rismark show vendors are on average reducing their price expectations by 5.9% on sale compared with a discount rate of 4.9% at the same time last year.

Latest National Auction Clearance Rates
Last week the weighted average capital city auction clearance rate was recorded at 53.4%, its lowest level since the last week of January this year. Despite the soft clearance rates, volumes remained strong with almost 1,800 auctions during the week. In Melbourne, auction clearance rates fell from 62.2% the previous week to 61.6% last week. Sydney’s auction clearance rate increased slightly last week, up to 58.7% from 56.1% the previous week. Despite the fact that clearance rates are quite soft, there are currently more than 2,000 capital city auctions planned for this week.

Number of Properties Advertised for Rent
The number of newly advertised rental properties has fallen to its lowest level in 19 weeks and is now below the 12 month average level. New rental listings fell by -2.1% over the last week and are -0.2% below the 12 month average level. With new rental listings falling, the total number of rental advertisements has also fallen, down -2.0% and is also at its lowest level in 19 weeks. Total rental advertisements are now -0.9% below the 12 month average level.

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Fifteen years ago only 25% of capital city home sales were for units and apartments. Today, medium and high density housing accounts for about 35% of home sales.

More buyers are choosing to live in higher density housing, particularly in inner city areas of capital cities. Since 2005, coming out of the last significant property boom, the proportion of unit and apartment sales had been moving lower until the trend was disrupted in 2009. The boost to the First Home Owners Grant and the sharp drop in interest rates saw first home buyers flow back into the market resulting in a rebound in demand for detached houses. With the highest level of housing affordability since 2002, it was no real surprise to see first time buyers targeting detached homes. The jump in the proportion of houses being sold during 2009 can also be partly attributed to the longer settlement time large apartment developments involve. There may be some revisions to the proportion of sales as these larger projects settle.

A hotel property in Paddington, New South Wales, has been sold privately in a deal negotiated by agents of CBRE hotels.

The Bellevue Hotel is located at 157-159 Hargrave Street, Paddington, on the corner of Caledonia Lane.

CBRE hotels agent, Daniel Dragicevich, marketed the property on behalf of the Evenrace Group and negotiated the sale to interests associated with Sydney businessman, John Singleton.

“The hotel attracted significant buyer interest and the yield, of close to 10%, is further evidence that the sub-$7 million hotel market in metro Sydney is still highly sought after by investors and publicans,” said Mr Dragicevich.

According to CBRE hotels, the deal highlights the strong investor demand for prime Sydney hotel assets.


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With property value growth flat over the September quarter and the market transitioning from a period of strong growth to relatively flat conditions, we have long expected that rental market activity would start to pick up.

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