Over the last year, the Australian property market has seen some very encouraging results. Residential real estate prices and values have been rising, buyer activity has surged and the low cash rate has helped these patterns continue for many months.
Housing development across the country is high and state governments everywhere are preparing for population rises. Along with much of this development in residential property, many states have seen increased investment in crucial infrastructure to pave the way for a strong future.
In March this year, Ray White Group achieved a substantial $3.2billion return - an all-time record for the company. Despite a small slip in April down to $2.75billion, the market is still strong and listing activity is picking up quickly.
Ray White Group's strong presence in NSW markets
One state that has stood out among others is New South Wales. Over the last six months, the 270 Ray White Group offices in New South Wales have come together to twice achieve a massive $1billion monthly result. This occurred in November 2013 and March 2014, which are two very busy months for both buyers and sellers in the country.
Over April, some of the strongest performing regions in New South Wales for Ray White Group have been in the Hills District, Illawarra, Eastern Suburbs and North Shore. Both house prices and buyer activity in these areas have grown, leading to great conditions for sellers and opportunities for residential property investors.
As an example, the Eastern Suburbs region of Woollahra has seen house prices rise by 20 per cent over the year to March, figures from Australian Property Monitors have shown.
Meanwhile, the regional area of Illawarra has seen a growing market, due to large amounts of investment in property development and infrastructure. At the same time, the Wollongong region has experienced a substantial improvement in its rental market, which has attracted more property investors to the area. The vacancy rate in Wollongong dropped from 2.3 per cent in March to a tight 1.5 per cent in April.
Property prices fast on the rise
Sydney has been a hot topic in the real estate industry for some time and it's no secret why. The state capital has been the main driver for residential property prices in the country for what seems to be months on end.
In the March 2014 quarter, the Australian Bureau of Statistics' Residential Property Prices Index recorded a 2.3 per cent increase for Sydney. Compared to other capital cities in the country, New South Wales has done exceptionally well.
Melbourne recorded a 2.1 per cent increase, while Perth and Brisbane both rose by 1.1 per cent and 0.8 per cent respectively.
Throughout the year, prices for real estate in Sydney have risen by 16.6 per cent, while attached dwellings saw a shift of 13.7 per cent. With this kind of activity happening, it's no wonder why both domestic and foreign investors are buying up Sydney properties.
Buyers maintain a strong presence
When people mention Sydney, they usually talk about the presence of foreign buyers in the city, too. Foreign investors have been a hot and debated topic in the city of Sydney, with some saying their presence has even pushed first home buyers out of the market.
Despite this, there's no doubt that foreign buyers are here, and they're bringing their money with them. Figures from NAB's Quarterly Australian Residential Property Survey found that New South Wales was a hotspot for foreign buyers purchasing established dwellings. In fact, this type of buyer accounted for a large 12.7 per cent of all established housing demand over the first quarter of this year. This was the highest percentage in the whole country, with Victoria and Queensland just a few points behind.
But it's not just the foreign buyers who are snapping up properties in New South Wales, either. Encouragingly, New South Wales saw 25 per cent of its brand new housing demand from first home buyers, likely due to the government provided grant.
Auctions have also proved to be very fruitful in recent months, especially in the metropolitan area of Sydney. From August 2013 to March this year, the city has enjoyed a high 80 per cent benchmark clearance rate, figures from Australian Property Monitors show. Despite a small dip in recent weeks, the clearance rate for auctions in Sydney has hovered close to 80 per cent.
Suburbs that have maintained a strong performance over the past few weeks have been the lower North Shore of Sydney, the Inner West and the Central Coast. As financial conditions remain accommodative, what's on the cards for the Sydney market in the future remains positive.
Finance figures paint a positive picture
Australia is currently enjoying a historically low cash rate, giving home buyers and sellers across the country something to talk about. With a cash rate this low, interest rates from home loan lenders have dropped to match. While this has created a competitive atmosphere for mortgage lenders, the opportunity for buyers to obtain cheap finance has been ripe.
Australian Bureau of Statistics (ABS) figures identified an 11 per cent rise in home loan approvals in the first quarter of 2014, compared to the same period in 2013. Loan Market director Mark De Martino noted that strong real estate sales coupled with accommodative interest rates were the driver of this activity over the quarter.
However, out of all the states in the country, New South Wales was a clear leader for home loan approvals. The state, along with Queensland, both achieved a 15 per cent rise in approvals over Q1, ABS data has shown.
The healthy number of people obtaining housing finance over the last few months does pose a few questions as to what'll happen in the future, however. As the Reserve Bank of Australia's (RBA) board has found it best to keep the cash rate under three per cent for a year now, it leaves many wondering what will come.
With a high Aussie dollar and a drop in mining investment, it's unlikely that the RBA will hike up the official cash rate in the coming months. Encouragingly, Mr De Martino noted in a 6 May statement that Australia could see a full year before the RBA changes the cash rate.
Whether or not the rate stays the same or reduces further, if the last few months are anything to go by, Australia could see a very hot winter for property.
