What property crisis? The market is booming: Hotspotting's Terry Ryder
EXPERT INSIGHT
Apparently there’s a crisis in residential real estate. Prices are rising and it’s an outrage! That’s how mainstream media has characterised current market trends, with strong buyer demand and rising property values. We’re seeing headlines like …
- “Property intervention looms as Sydney market hits record high”
- “Runaway house prices are this year’s looming issue no one wants to touch”
- “Superannuation report warns of housing catastrophe” and
- “Whose job it is to douse this home price bonfire?”.
Journalists love a crisis. If there isn’t a genuine one, they’ll work hard to create a make- believe one.
When prices were falling in the major cities it was a crisis and now that markets have turned around that’s a crisis also. Somebody should do something!
The reality is that nothing terribly serious is happening. For the first time in almost 20 years, we have a genuine nationwide property boom. And, in many ways, this is a good thing.
Markets in Perth and Western Australia have had half a dozen years of down markets, with prices falling. Now, at last, there is recovery. Vacancies are low, rents are rising, first-home buyers are active and prices are starting to head north. Most Western Australians, I imagine, are happy about it.
In Darwin, there’s been a similar scenario. Six or seven years of a falling market – and now, thanks to an improving economy, a strong virus-control situation and reduced vacancies, there’s a turnaround. Darwin, for the first time since 2014, has a pattern of increasing property values. Nobody is protesting in the streets of the Northern Territory capital.
Brisbane has been in the doldrums also. Its prices haven’t been falling like Perth and Darwin, but they haven’t been escalating either. For the past 2-3 years, many pundits have forecast the Brisbane market would rise to the top of the real estate tree, with long overdue price escalation. But it hasn’t happened – until now.
Boosted by an uplift in infrastructure spending, interstate migration to South-East Queensland and the prospect of a Brisbane Olympics, there has been a stunning increase in buying activity in the Queensland capital. This is starting to translate into significant price increases – at last, for the first time in more than a decade. For most Brisbane households, it’s a cause for celebration.
It’s a similar story in Adelaide and Canberra. Serious price growth is long overdue.
Across many parts of regional Australia, prices are rising for the first time in a decade. Some towns still have property values lower than they were 10 years ago. For home-owners in these places, the uplift seen in the past 6-9 months is a cause for celebration.
Crisis? What crisis?
From many perspectives, the property boom is a good and healthy thing, with benefits for the nation.
In the past 12 months, the most active cohort in markets across Australia has been the first- home-buyer cohort. Government assistance measures have never been higher and interest have never been lower – and first-timers have been inspired to take action.
And now that prices are rising, I imagine most of those who bought for the first time in the past year are delighted. Why wouldn’t they be? The uplift in values is increasing their equity and easing the so-called debt crisis shouted by mainstream media, which has told us to expect a disaster for young Australians who bought with only a 5% deposit (through one of the Federal Government schemes).
For those Australians who see their homes and/or their investment properties as the basis of their wealth and the cornerstone of their retirement, it’s a positive. And it’s a win for nation as well, because more people will be able to fund their own retirements based on the value of their properties.
Right now, Australians are buying residential property like never before. I’ve just completed the Autumn 2021 edition of The Price Predictor Index and the uplift in sales activity is quite extraordinary.
When people are out there buying real estate, businesses boom and jobs are created. The sale of a home generally means two households are relocating. And that process creates business for real estate agencies, buyers’ agents, valuation firms, law firms and conveyancers, building and pest inspectors, removal companies, tradespeople and businesses that sell furniture, household goods and many other things.
This real estate boom is underpinning the economic recovery that is stunning economists who didn’t see it coming (they got it wrong yet again). It’s creating energy, excitement and optimism, qualities sorely needed by the nation.
It’s a decidedly good thing.