Four standout trends in the end of 2018 Australian property markets: Hotspotting's Terry Ryder
EXPERT OBSERVER
Our quarterly surveys of sales activity always reveal key trends and the latest shows just how many growth markets we have in the different markets across Australia.
The smaller capital cities and in particular regional Australian are providing some compelling growth areas which provide an attractive combination of affordable prices and solid rental yields, compared to the now-fading markets in the biggest cities.
Here are four key findings from the new edition of The Price Predictor Index:-
1. Adelaide Is the Unsung Hero
Hotspotting’s latest survey confirms that Adelaide is the standout market in capital city Australia and is largely an unheralded star – although we note the latest report from realestate.com.au which lists Adelaide alongside Hobart as the fastest-selling markets in the country.
Adelaide seems destined to always fly under the radar screen of national media, but it has a noteworthy property market.
We reported in the previous edition that Adelaide had become the nation’s leading market jurisdiction, with 61 suburbs with rising sales activity. Our new survey reveals Adelaide has improved further and now has 71 growth suburbs.
The next best city is the recovering Perth market, which has 49 (up from 45 in the winter survey). Canberra is also travelling well, with a solid (relative to its size) 22 upwardly-mobile suburbs.
Brisbane remains lukewarm, but with promise of better things, and Hobart, which is currently the leading city on price growth, looks to have passed the peak of its up-cycle.
Darwin remains mired in its downturn. As noted in previous reports, Sydney and Melbourne are well past their peaks and have few growth markets.
2. Regional Markets Out-do Their Capital Cities
Regional areas continue to out-perform their capital cities in the eastern states.
Regional NSW is the only serious challenger to Adelaide as the market jurisdiction with the most rising markets and now has considerably more growth markets than Sydney.
Regional Victoria is also pumping and is out-performing the fading Melbourne market.
Regional Queensland is out-doing Brisbane, which is yet to fire. And Regional Tasmania is raging in the wake of Hobart’s mini-boom.
This is also being reflected in price performance. The strongest price growth in the past 12 months has occurred in selected Regional Victoria markets, while Regional NSW has multiple precincts where double-digit annual price growth has been recorded.
The strongest market in Queensland is the Sunshine Coast and we are seeing a return to solid price growth in recovering Central Queensland markets like Mackay. A recent REIQ report confirmed that Regional Queensland was out-doing Brisbane on price uplift and a CoreLogic analysis in November listed Regional Tasmania as a national leader on price growth.
3. Price Patterns Confirm The Importance Of Demand Data
Price performance around Australia in the past 12 months has emphatically confirmed the basic premise of The Price Predictor Index: that increases in sales volumes (buyer demand) in a location leads to price growth, but with a time lag.
The time lag factor often means that price uplift continues for a considerable time after sales activity has started to taper off.
Right now, many of the locations around Australia with the biggest price growth are what we classify as “plateau” markets – places where sales activity has passed its peak and tapered off at still-solid levels a little below the peak.
A prime example is provided by the outer ring suburbs of Melbourne, where sales were previously rising strongly and have now tapered off – but prices are still rising. This is true for suburbs in the Whittlesea, Hume, Casey and Wyndham LGAs, where most suburbs have recorded growth above 10% in the past 12 months, including many which have recently topped 20% growth.
This is also true for the suburbs of Greater Geelong and other areas just outside Melbourne, including Pakenham, Officer and Warragul in the south-east. New South Wales examples include the Central Coast and the City of Newcastle.
4. Big City Prices Stronger Than Media Suggests
Mainstream media is over-stating price decline in our two biggest cities, partly caused by dodgy data and analysis from some of the research companies and partly through the ineptitude of economists, who pontificate on subjects beyond their area of expertise, notably residential property markets.
Our detailed analysis of recent activity in Sydney and Melbourne has found evidence of price decline in some markets, but not the wholesale large decreases claimed in daily newspaper reporting.
In our analysis of Melbourne we say this: “A feature of Melbourne is the number of locations where prices remain strong … Our survey has found over 100 suburbs across the metropolitan area where median prices have recorded double-digit growth in annual terms, including 85 where prices have risen further in the most recent quarter. This finding contradicts media coverage, which suggests prices are falling across the Melbourne metropolitan area. The general theme, based on our survey, is that the top end suburbs are experiencing price decline, the middle market areas are holding firm on pricing and the cheaper areas are still rising.”
Prices are weaker in Sydney, but we can find few locations with sufficient decline to justify claims that Sydney prices are down 8% in annual terms (CoreLogic figures). Few individual suburbs have fallen that much, as yet.
And I note that the latest figures from other research sources, including SQM Research, Domain and the ABS, record Sydney’s price decline in smaller numbers.
Terry Ryder is the founder of hotspotting.com.au
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