White Paper – May
What happened to the markets in May?
The month of May raised the question: “Have the property markets ever been as buoyant as they currently are?”
In a month not normally regarded as one for all time records, we saw the Ray White Group’s total exceed $4 billion, something that came totally out of left field. The underlying influence of Asian interest is evidenced by the fact that it has been the central areas of, effectively, two capital cities Sydney and Auckland which produced gamechanging results. Yet, it’s not just these markets that are strong Melbourne and, increasingly, Brisbane are also strengthening.
But the upturn in these markets has not been great enough to outweigh the damage to confidence in Western Australia caused by the end of the mineral price boom. Perth is experiencing activity well below that experienced when the resources industry was at its peak just a year ago even in a low-interest rate environment, markets can soften quickly. One can imagine what the Queensland market might be doing now if the resources market was firmer.
Yet, markets such as the current one place potential vendors in somewhat of a quandary sell now on the basis that the market is peaking, or hold on with the assumption that there are still going to be significant gains to be made at the end of the year? So, although the market is so strong it is not leading to a surfeit of listings: instead it is leading to a heightened percentage of properties being taken to auction. In recent times, it has been impossible to price residential assets and most forms of commercial assets in the capital cities noone knows at what price-point buyers’ interest might be exhausted and nothing serves sellers in such a market better than a well-executed auction.
The residential market is active across the new project area and the resale markets. It is leading to a boom in residential site sales as developers, increasingly from offshore, continue to make major commitments. The strong market continues to create a repricing of all investment stock, residential and especially commercial across all income producing ranges. With the new lower interest rate environment, cash flow from investments is being regarded more keenly than in recent times.
May also saw some strong commercial property results from the regional areas, complimenting the continuing strong markets in capital cities. Markets such as Wollongong, Toowoomba, Noosa and Cairns are showing some promising signs.
Loan Market recorded strong lodgements of $950m in May, up 20% on the same time last year. NSW and Victoria both had record months, lodging over $300m each. The New Zealand business also recorded strong results, settling $900m for the month. For Ray White, $1.3 billion in unconditional residential sales in Sydney, set a new record, with a spread from Double Bay, with sales of $80 million, to the Ray White office in Bankstown which made 49 sales from individual vendors for a total value of $33 million.
What’s New at Ray White
Perhaps the standout feature of May for the Group was the continued momentum of our specialist services and their integration to deliver a complete service to clients. The continued activity of our commercial development sites team following the $96m sale of the Surry Hill Shopping Centre, and its partnership with our Projects team is resulting in our appointment to large new apartment developments in Epping, Lane Cove and the Sutherland Shire. Our Hong Kong office is now becoming quite central to the marketing of these projects.
During the month, the value in new young principals taking ownership of Ray White businesses was highlighted. When a group has achieved the length of time that the existence of Ray White has, the great challenge is its continuing attractiveness of young people who see, in the brand, a young, dynamic and aggressive network.
The impact these new Principals are having is astonishing. It’s no secret that the NSW market is the most active in memory and it is being reflected by a number of new office openings including Ray White Taylor Jones, Laurieton, Baldivis, and Ray White Drury in New Zealand.
The Connect conference is getting closer, with a strong lineup of speakers seeing the event almost sold out, with less than 150 tickets left. It is shaping up to be a great programme. An exciting feature at this year’s conference is our first ever international awards presentation, celebrating the achievements of our best operators across the agency and brokerage businesses.