National Property Market Summary of Capital Cities

Sydney

The Sydney housing market remains tight due to lack of sufficient supply of new residential property. We anticipate this trend to continue and expect to see a tightening of the rental market, resulting in very low vacancy rates and increasing rents. Sydney's vacancy rate is currently at 1.4%. In the past 12 months, the median unit price has increased by 2.3% to $463,500 and units are achieving healthy yields of 5.2%. The housing market has been flat with the median price of $580,000 in the last 12 months falling slightly by -0.4%. Yields on Sydney houses are 4.4%.

Brisbane

Brisbane's residential market has taken a substantial hit due to the January floods and the median property prices have fallen in the last 12 months. We believe prices have now hit the bottom and with the planned infrastructure spending in the region, there is tremendous potential for capital growth in this market. Brisbane's median unit price is $379,250 and houses is $440,000, both of which is a decrease of -6.3%. Vacancy is at 2.1% and yields for units and houses are at 5.3% and 4.7% respectively.

Melbourne

A historic undersupply in Melbourne has led to a recent increase in development and this activity has now led to a degree of overcompensation and consequently an upcoming environment of oversupply. In the past 12 months, prices are showing signs of correction with both units and houses seeing a fall in the median price. We anticipate this trend to continue and to some degree, intensify. Median prices are $430,000 for units and $520,000 for houses. This represents decreases of -0.9% and -2.3% respectively and the market also has some of the lowest yields in the country.

Adelaide

Adelaide is experiencing a significant decline in property prices, but we anticipate moderate growth in the short to mid-term. In the past 12 months, median unit prices have fallen -4.5% to $340,000 and houses by -2.7% to $400,000. Adelaide's rental market is very tight with low vacancy rate of 1.6%. However rental yields are soft at 4.7% for units and 4.2% for houses. These low yields and the fact that Adelaide's projected population growth is amongst the lowest in the country do not provide a good environment for investors.

Perth

Perth was one of Australia's hardest hit markets throughout the GFC. Since 2007, the Perth market has gone through a period of correction. Vacancy rates have already begun showing signs of tightening and are currently at 1.3%. Blue Wealth is closely monitoring this market to determine when it becomes a buying opportunity. The vacancy rate is 1.3%. Median prices are $400,000 for units and $475,000 for houses, which is a decrease of -1.1% and -5.5% respectively. Yields are currently 4.7% for units and 4.3% for houses.

Darwin

Darwin's continued dependence on Australia's infrastructure sector is not expected to decrease in severity. The region has experienced periods of rapid growth and extreme volatility in recent years. We believe this market is now in a danger zone and do not encourage investors to enter the market at this time. The median unit sales price has declined by -4.1% to $422,250 and houses have decreased by -2.2% to $460,000. Yields are strong at 5.65% for units and 5.2% for houses.

Canberra

Canberra continues to exhibit consistent growth in capital values, low vacancy and desirable yields. It also has a healthy supply/demand profile, the country's highest per capita income and lowest unemployment rate. Blue Wealth is currently assessing the impact the change of government has on Canberra's property market as part of our due diligence for this city. The vacancy rate is 0.7%. Houses have declined by -1.2% and units have grown by 3.3% to a median price of $410,000 and $550,000 respectively and the city obtains healthy yields of 5.4% for units and 5.0% for houses.

Tasmania

Tasmania remains relatively flat and presents a very limited volume of viable investment opportunities. The vacancy rate is 1.9%. Median prices for units have increased by 3.9% to $275,000 and fallen by -3.5% for houses to $336,250. Yields are 5.3% for units and 5.1% for houses.

Summary

Overall, units are outperforming houses in both capital growth and yield. As of June 2011 the average yield on units across Australia’s capital cities was 5.06% versus an average yield of 4.65% for houses. Both units and houses have experienced broad declines in capital values. Of the two asset classes, houses have experienced a more pronounced average decline of 2.71% as opposed to a decline of .93% for unit values. Every market except for Canberra has seen capital value decreases in at least one of the two asset classes analysed. Many property markets are showing signs at being at the 'bottom of the cycle' and these markets will provide strong investment opportunities for investors.

Source: Bluewealth Property

Did You Know...

Of the Australian residential property market:

• 36% is owned outright

• 34% still has a mortgage

• 30% is rented

(Source: Australian Bureau Statistics)