Dear Wayne, 

With over 300 developers and master agents with Australian projects entrusting Investorist with their ‘channel sales’ globally, I am privileged to have insight into what’s happening right now in the Australian residential property markets. I wanted to share with you some of these insights for the year so far.

Oversupply

The Australian apartments sector is receiving its fair share of media attention lately, most of it not upbeat. I don’t share the populist view of doom, particularly on the Brisbane and Melbourne markets. Much of the country seems to be under-supplied, house and land developers are consistently reporting to me that they struggle to secure enough land, and rents across most suburbs continue to rise.

I do however see some areas that have a lot of supply. These are typically pockets or suburbs where infrastructure has failed to keep up with the supply of product and thankfully in most of these areas, developers are largely self-regulating supply through holding back proposed projects.

Our data shows a 12% reduction in apartment projects launched coming to the market this year to date, most of which are located in these areas. 

Local Demand

Interesting to note, in 2016 75% of Australian apartment and house and land sales on Investorist came from local buyers. So far in 2017;

Searches on Australian projects are up 40% in the last 90 days

Sales enquiries generated from these searches were up 24%

48 new active local agencies have joined Investorist

80% of all views on Australian projects in the last 90 days were from selling agents located within Australia

Sentiment from these companies is also strong, albeit tempered by the consistent negative press.

Melbourne developers and project marketers, with a large exposure to the Victorian residential market, have understandable concerns around stamp duty changes coming into effect 1 July. However, the leaders of these companies consistently tell me that most of their buyers were not aware of the extent of stamp duty savings available.

Popular consensus is that whilst there will be a significant short-term reduction in sales activity in Victoria post 1st July, ’turning off of the tap’, the market will soon return to normal. This slump and then rebound effect is what we have witnessed in Brisbane following the media bashing the market received mid last year. 

Off-Shore Demand

International demand for Australian property is coming back, but the landscape has changed.

In July / August of last year, the second round of tax changes coincided with a tightening of Chinese currency exchange, and the huge changes to local Australian lending. These combined changes hit the industry hard. In fact, more than 80 of Investorist's Chinese members (close to 10% of our Chinese network) either closed or changed their business focus. In total, we found demand from all offshore markets into Australia was down 30% in the last half of 2016.

By March 2017 however, the demand had returned. But where that demand is coming from has shifted. Most established, traditional high volume companies are presently focusing on settlements and they are being even more picky with stock selection. This means developers need to be engaging with selling agents much sooner if they want their projects to make the list.

Investment-focused mainland Chinese groups are also starting to view options other than Australia, with interest in the USA having particularity spiked in the last 6 months as well as in some of the higher yielding UK regions. In 2017 we have also noticed a significant rise in interest from migration agencies as well as education agencies, with many of these companies opening direct property divisions.

At Investorist we have been increasing our marketing efforts as well as upping our travel to second tier cities to increase our membership base of Chinese Agents. This strategy has been very successful, and contributed to our biggest and best China Connection event to date this March, with 100 China-based businesses meeting 9 leading developers and marketers from Aus, the US and South East Asia. The event was so successful that 2 of the developers immediately rebooked our next show in June. In addition we have notable new attendees including Mirvac, McGrath and Salta. 

Forward Outlook

We all can breathe a sigh of relief over the latest federal budget; changes such as limiting foreign sales and a tax on vacant dwellings should effect very few. Victorian developers should be making the most of the next 5 weeks, now is the time to offer additional incentives to your agents and get as many pre-sales locked away as possible. For other states there is less urgency, you may even see some increased demand in July with a change to Victoria’s competitive position.

Generally, I believe the outlook for our industry is positive. On Investorist we always see the highest performing projects are the ones that get the fundamentals right; location, product, price and of course promotion.

 

Written By: 

Jon Ellis | Founder & CEO of