National price boom may be about to begin
The latest price data tends to support my view that we have not had, to this point, a national property boom; and that we may be about to have one.
Australian Property Monitors’ price data for the June quarter suggests only Sydney has had exceptional pride growth, both for houses and for apartments. All other capital city markets have had growth ranging from negative to low to moderate.
The APM figures are generally (though not completely) in line with those published by RP Data.
Let’s look at houses first. In terms of annual growth to the end of June, both data sources report a capital city average a little above 10%. Economists have looked at that and perceived a national boom, which provides further evidence of how desperately dumb they all are, on property matters at least.
Looking city by city provides a different perspective. Only one city has achieved the city average growth rate. Sydney’s annual growth was 16% (RP Data) or 17% (APM). The property boom starts and ends there.
Both sources agree that Melbourne has grown close to 10%, Brisbane around 7% and Perth around 5%. Depending on which source you prefer, Adelaide has grown 3% or 5%, Hobart 2% or 6%, Darwin 5% or 1%, and Canberra has grown 3% or dropped slightly.
There’s a similar pattern with apartments. The capital city average is annual growth of 8.3% (APM) or 9.1% (RP Data). But the only boom figures have been in Sydney, up 12% or 13%.
Melbourne has risen 4% or 5%, Adelaide about 1% and Darwin 7% or 8%, while Perth is up 5% if you believe APM or more if you favour RP Data.
There’s conflict with the data on the other three capital cities: Brisbane is up 5% or down 1%, Canberra is up 4% or down 2%, and Hobart is up 7% or down 8% - for reasons I don’t understand, there is always this great contradiction about the Hobart unit market in the figures from the two competing sources.
The bottom line is that there is no boom in those figures, except for Sydney. There is evidence aplenty of solid markets in most cities, but the growth rates are low to moderate (and, in a few cases, negative). Keeping in mind that there were several years of falling values pre-2013, the data makes nonsense of the bubble arguments from those suffering from limelight deficit disorder.
So no national boom – but, if you look more closely, evidence that one may be brewing. Looking at APM’s annual growth figures for the cities, if you compare the 30 June 2014 numbers with those six months earlier, you find that the growth rates have improved in most cities.
Adelaide grew only 3% in 2013 but six months later the annual growth rate has doubled. Brisbane’s growth rate is up from 5% to 7%. The annual growth rates for Sydney and Melbourne have both grown two percentage points. Hobart has improved from 5% to 6%. Perth, Darwin and Canberra have deteriorated, but the city average has risen from 9.8% to 10.9% in six months.
According to the APM figures, all capital cities except Darwin showed improvement in their median house prices in the June quarter.
Similarly, most of the cities delivered growth in their apartment markets in the June Quarter, with an average rise of 2.5%. Only Hobart and Canberra fell.
The overall picture, therefore, is growth rates that are moderate - but rising.
Housing finance approvals are up 10.7% for owner-occupiers (with all state and territories rising strongly except the Northern Territory) and 27% for investors (with five states/territories recording annual rises above 13% and six states/territories recording monthly rises of at least 14% in May, the latest month for which we have figures).
Residential building approvals rose 17.4% in the 12 months to the end of May, with five states or territories recording annual rises above 20%.
There’s a pattern there suggests growing national momentum in property markets. The national price boom that was incorrectly perceived by myopic economists, and then inaccurately declared dead by those who rush to judgment, may be only just beginning.