PROPERTY GUIDE 2012
It's that time of the year again when Australian Property Monitors releases its report on the Illawarra and South Coast.
We will all be keen to see how our suburb has shaped up over the past five years and since last year's report.
Remember this is the median price on your suburb and is a guide calculated on the number of sales made. New developments, sales numbers and suburb growth can all affect these results.
For example, Horsley, Kiama, Dapto, Figtree, Nowra and Sanctuary Point sales numbers have been consistently in the hundreds, however one suburb stands out above the rest in the number of properties being sold.
For the past five years, Albion Park has been consistent, with more than 200 properties sold each year. Woonona follows closely behind with high hundreds and low two hundreds being sold.
Both Albion Park and Woonona have had new land releases and housing developments.
So what can we read into the report from a real estate industry point of view?
In the past five years we have experienced the Global Financial Crisis (GFC), a rising Australian dollar, manufacturing and retail struggling and large global banks collapsing. Considering all this, the good news is that the property sector in the Illawarra has travelled very well in the past five years.
What has been happening globally is having an effect on us and the real estate cycle we have seen for more then 30 years is changing.
Real estate used to work roughly around a seven-year cycle, which would move around generational change and population growth.
However, while this is still a factor we are also seeing people's spending habits change and what happens globally is affecting our decision-making.
The last real estate housing boom was 2003-2004. So are we overdue for a housing boom?
The other good news is that we have seen an ease in the rental market over the past 12 months in the Illawarra. While some renters are still finding it difficult to find rental accommodation, the good news is rent prices are not increasing.
The vacancy rate a year ago was at an all-time low of 0.9 per cent, but in the past 12 months has moved to 3.1 per cent. This increase in the vacancy rate is against the trend elsewhere in the state.
What caused the Illawarra to buck the trend is not easy to pinpoint, but the University of Wollongong entering into its own accommodation, job seeker movement interstate (Bluescope steel retrenchments) and the next younger generation possibly staying longer in the parental home are all likely to have played a part in this trend.
The public housing sector is still struggling to keep up with affordable housing and the waiting list is still 10 years.
The first home buyers' grant on all properties ceased on December 31, 2011, which saw a rush from buyers at the lower, more affordable end of the market.
The scheme is now replaced with grants on only new housing and property for first-time home buyers and investors. The housing and building industry has been struggling and this is welcomed by the Real Estate Institute (REI) and housing industry.
However, the REI would like to see the grant still extended to first home buyers on all existing property to help stimulate housing.
The housing industry is starting to put together more affordable land and house package deals in the hope first home buyers will take advantage of the scheme.
For this to work, more affordable land will need to be released to the market. The land and house package details require the purchaser to buy the land first and build the home later.
This is the only way for the builder to avoid both GST and land tax on the package price. Two contracts will need to be signed, one on the land purchased by the buyer and then a second contract with the builder.
However, the grant is for all new developments, not just land and house packages. Should you purchase off a plan or a finished, ready to move into property (unit, apartment, villa or townhouse) then you are eligible and you meet the requirements for the grant.
The other good news is that the Reserve Bank of Australia has dropped interest rates over the past 12 months. The only disappointment was that not all RBA cuts were passed on by the banks.
As the chairman of the REINSW Illawarra, I will try not to sound biased when I say the Illawarra and South Coast is still paradise - a great place to purchase or build your home and raise your kids.