1 A closer look at property investment returns July 2010.
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1 A closer look at property investment returns July 2010
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Transcript of 1 A closer look at property investment returns July 2010.
1
A closer look at property investment returnsJuly 2010
2
Agenda
• An investor’s total return• Historical returns by suburb and region
• Capital returns• Gross rental yields• Estimated total returns
• Investment returns by price bracket• Market update for major capitals• 12 month outlook for:
• Capital growth• Rental yields
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Investor’s total return
Total (before tax) return = Net capital gain + Net rental yield
Net capital gain (annual) = Average annual capital growth - any capital improvement costs
Net rental yield(annual) = Gross rental yield - related running costs
4
Capital returns in Melbourne by Suburb
Source: APM
5
Rental returns in Melbourne by Suburb
Source: APM
6
Total returns in Melbourne by Suburb
Source: APM
7
Total House returns in VIC by LGA
Source: APM
8
Total return – top end vs. bottom end
Source: APM
9
What have house prices done?
Source: APM
Mar
-03
Jun-
03
Sep-0
3
Dec-0
3
Mar
-04
Jun-
04
Sep-0
4
Dec-0
4
Mar
-05
Jun-
05
Sep-0
5
Dec-0
5
Mar
-06
Jun-
06
Sep-0
6
Dec-0
6
Mar
-07
Jun-
07
Sep-0
7
Dec-0
7
Mar
-08
Jun-
08
Sep-0
8
Dec-0
8
Mar
-09
Jun-
09
Sep-0
9
Dec-0
9
Mar
-10
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000Median House Price (Quarterly)
Sydney
Mel-bourne
Brisbane
Adelaide
Perth
National
10
What have unit prices done?
Source: APM
Mar
-03
Jun-
03
Sep-0
3
Dec-0
3
Mar
-04
Jun-
04
Sep-0
4
Dec-0
4
Mar
-05
Jun-
05
Sep-0
5
Dec-0
5
Mar
-06
Jun-
06
Sep-0
6
Dec-0
6
Mar
-07
Jun-
07
Sep-0
7
Dec-0
7
Mar
-08
Jun-
08
Sep-0
8
Dec-0
8
Mar
-09
Jun-
09
Sep-0
9
Dec-0
9
Mar
-10
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
Median Unit Price (Quarterly)
Sydney
Mel-bourne
Brisbane
Ade-laide
Perth
National
11
Weekly Asking Rents
Sep-0
3
Dec-0
3
Mar
-04
Jun-0
4
Sep-0
4
Dec-0
4
Mar
-05
Jun-0
5
Sep-0
5
Dec-0
5
Mar
-06
Jun-0
6
Sep-0
6
Dec-0
6
Mar
-07
Jun-0
7
Sep-0
7
Dec-0
7
Mar
-08
Jun-0
8
Sep-0
8
Dec-0
8
Mar
-09
Jun-0
9
Sep-0
9
Dec-0
9
Mar
-10
$150
$200
$250
$300
$350
$400
$450
$500
Median Weekly Asking Rents - Houses
Brisbane Melbourne Perth Sydney
12
Weekly Asking Rents
Dec-0
4
Mar
-05
Jun-0
5
Sep-0
5
Dec-0
5
Mar
-06
Jun-0
6
Sep-0
6
Dec-0
6
Mar
-07
Jun-0
7
Sep-0
7
Dec-0
7
Mar
-08
Jun-0
8
Sep-0
8
Dec-0
8
Mar
-09
Jun-0
9
Sep-0
9
Dec-0
9
Mar
-10
$150
$200
$250
$300
$350
$400
$450
Median Weekly Asking Rents - Units
Brisbane Melbourne Perth Sydney
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Gross Rental Yields
Source: APM
Melbourne Perth Adelaide Sydney Brisbane Darwin Hobart Canberra0%
1%
2%
3%
4%
5%
6%
Capital City Gross Rental Yields - March 2010 Quarter
Houses Units
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Gross Rental Yields
Jun-02
Dec-02
Jun-03
Dec-03
Jun-04
Dec-04
Jun-05
Dec-05
Jun-06
Dec-06
Jun-07
Dec-07
Jun-08
Dec-08
Jun-09
Dec-09
0%
1%
2%
3%
4%
5%
6%
Melbourne Historical Gross Rental Yields
Houses UnitsSource: APM
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Outlook for next FY
• Capital growth is slowing due to:• Removal of 2009 stimulus• 6 nearly consecutive interest rate rises
• Medium long-term growth prospects still strong due to:• Strong population growth• Undersupply of new properties• Strong employment and income outlook
• Rents set to outperform in 2010• Continued low vacancy rates (~1.5%, and 0.9% Inner)• Strong employment and income outlook• Removal of attractive first home ownership alternatives
