Hotspotting

One of the great strengths of Regional NSW is that it provides affordable lifestyle alternatives to the super expensive Sydney property market.

Regional NSW in many ways provides something for everyone: some of Australia’s largest and most important regional cities, attractive sea change towns, appealing hill change enclaves, industrial centres, strong multi-purpose inland cities, lifestyle regions – and price ranges to suit most budgets.

Another of the Regional NSW advantages is that its property markets are underpinned by one of the nation’s strongest economies – ranked No.2 in the January 2024 edition of State of the States published by CommSec.

Part of that growth state economy is a major program of big infrastructure developments, including the $31 billion Inland Rail Link which has been energising markets along the construction route over the past 2-3 years.

Against that backdrop, Regional NSW overall showed steady improvement throughout last year and ended 2023 with a solid market, although not as strong as Sydney’s.

The number of rising markets to be found in Regional NSW has increased recently, which means Regional NSW has started 2024 with good momentum in many locations.

NSW is a big state and there are many different scenarios in play, with markets that are rising strongly, some that are seeing moderate growth and others that are still struggling.

Some of the most high-profile NSW markets, like Byron Bay and the Central Coast, have not yet recovered from the correction phase in their property cycles, following the big uplift in 2020 and 2021.

But other precincts are doing much better. 

The strongest market in Regional NSW is formed by the City of Wollongong and neighbouring LGAs Shoalhaven and Shellharbour.

Those three municipalities comprise a growth cluster on the coast south of Sydney, where most of the individual suburbs and towns have positive trends with sales activity and prices. 

The Newcastle and Hunter region is steadily improving also, but is not yet as bullish as that Wollongong precinct. 

There are nevertheless plenty of growth markets in Newcastle and the neighbouring Lake Macquarie LGA.

Other precincts with positive trends with their sales activity include the Tweed, Ballina, Coffs Harbour, Goulburn, Orange and Albury regions.

 

The Sydney market performed strongly in 2023, according to data from all the major research sources, and has started the New Year with considerable forward momentum.

PropTrack reports that the median house price for Greater Sydney rose around 8% in 2023, above its capital city average of 6.4%.

Domain has more bullish figures, with Sydney’s median house price rising 10.6% last year, while CoreLogic claimed that Sydney house prices lifted 12.5%, also above its national average of 8.6%.

While it’s confusing for consumers that different research entities have conflicting figures on median prices and how much they have changed, the common features from PropTrack, Domain and CoreLogic is that they all record a strong year for the Sydney house market.

In terms of the apartment market, all three major data sources have Sydney showing solid price increases close to their national average figures – 4.5% (PropTrack), 6.3% (Domain) and 7.7% (CoreLogic).

But the most relevant data, we think, is the trends with sales volumes, often a forward indicator of prices.

Hotspotting’s analysis for the quarterly editions of The Price Predictor Index found that the Greater Sydney market improved as 2023 evolved and finished the year strongly.

In our most recent analysis, 84% of suburbs had positive classifications, including 51% of suburbs which were ranked as rising markets.

That 51% rising result was the strongest in the nation and it means that Sydney has entered 2024 with lots of momentum.

Whichever way we look at the numbers, Sydney has a strong market, with rising buyer demand in sectors right across the Greater Sydney area, from the Sydney CBD to Penrith.

As we have noted in recent editions of The Price Predictor Index, there is rising buyer demand in locations with a high content of apartments.

The City of Sydney LGA is one of the busiest in the Greater Sydney Area. Of the 22 Sydney City suburbs in our latest quarterly analysis, 20 had positive classifications, including 15 rising markets.

Other precincts with a high component of attached dwellings also had strong markets, notably suburbs in the Inner West, Parramatta, Ryde, Canada Bay and Strathfield LGAs.

The Inner West LGA has 19 suburbs on our list of which 17 had positive rankings, including 15 rising markets, in our most recent analysis. 

And there is strength in other sectors of the Greater Sydney market. It may be the most expensive of the nation’s city markets, but buyer demand remains strong and prices continue to rise.

There is impetus in inner-city markets with good demand for apartments; in middle-ring locations like the popular Canterbury-Bankstown precinct; and in outer-ring locations with more affordable prices like the municipalities of Liverpool, Blacktown and Penrith.

So Hotspotting expects Sydney to continue to deliver solid growth in 2024 – and to once again defy the economists who have started the year with their customary pessimistic forecasts.

 

When politicians create an inquiry or a royal commission to examine an important issue, you can be certain that nothing much is going to change.

An inquiry is a device used by politicians to give the appearance of doing something meaningful, while changing nothing.

So the Prime Minister’s plan to have an inquiry into supermarket chains like the thoroughly-dishonest Woolworths, which will take over a year, is a clear signal that there is a serious issue which the Federal Government has no idea how to deal with – and that nothing will change any time soon, if ever.

We’ve seen that with inquiries and royal commissions in the past into a range of issues, including aged care, the behaviour of banks and financial institutions, deaths in custody – and, in the real estate space, housing affordability and the rental shortage.

The most likely outcome of these massive wastes of time and taxpayers’ money is that the politicians involved will scapegoat a section of the community, blame them for the problem and hit them with punitive measures, to give the appearance of actually doing something.

And if they can use the situation to hit the chosen scapegoats with new or higher taxes, then so much the better.

This happened with Federal Parliament a decade ago with housing affordability. Two inquiries were held and it was decided to blame foreign investors for poor real estate affordability. The Federal government hit foreign buyers with massive new taxes and told the public they had fixed the affordability problem.

But can anyone say that housing affordability has improved since then?

Clearly, it hasn’t improved, it has continued to get worse, because foreign investors were never the problem.

What these measures did do was effectively wipe out foreign investment in Australian real estate, which is one of the key reasons why we now have a massive shortage of rental properties.

So now federal politicians have concluded an inquiry into the rental shortage crisis, with rapidly rising rents.

This happened in early December – and if you’re wondering why you haven’t heard anything about it, it’s because there was nothing to say.

What recommendations did the parliamentary committee deliver as a result of the inquiry?

None whatsoever.

The only outcome was that the chair of the committee, a Greens politician, repeated the party’s policy of having a rental freeze across the country.

All that time and energy wasted with no outcome at all – other than a reiteration of Greens policy by one committee member, which has no chance of ever being implemented because it’s a folly that would turn a crisis into a catastrophe.

 

Residential real estate abounds with myths and misconceptions,  most of them perpetrated by politicians and others with a vested interest in having people believe something that’s not true.

The greatest fallacy of all is that property investors are a privileged class with massive tax and other advantages that distort the market and cause problems like poor affordability and the rental shortage.

In reality, the opposite is true.

Property investors are seriously disadvantaged and discouraged in so many ways, 

that more and more of them have opted out of owning investment properties, which is why we have a chronic shortage of rental properties.

The fallacy about property investors having big tax advantages which should be disallowed was repeated recently by Everybody’s Home, a coalition of organisations which includes The Salvation Army and National Shelter, which proposed the rather horrifying scenario that everyone who rents would be living in social housing.

Under their proposition, private renting would no longer exist and the one-third of Australian households that rent would be living in social housing.

Given that 90% of the dwellings that people rent currently in Australia are provided by private mum and dad investors, this is a rather radical nation-changing quantum shift in the real estate landscape.

Everybody’s Home justifies this wacko idea by claiming that property investors are massively advantaged by negative gearing and a capital gains tax concession.

But the opposite is true. Relatively few property investors access negative gearing benefits 

and there is NO capital gains tax concession – just a method of calculating capital gains tax 

which is an impost paid only by investors, not by home owners.

Indeed, capital gains tax is one of many examples of ways in which property investors are quite seriously disadvantaged.

Investors pay taxes that home owners don’t pay, namely capital gains tax and also land tax, which increasingly is a major deterrent to investment.

Some states, such as Victoria, have introduced new taxes and charges to further alienate investors and make the rental shortage worse in that state.

Investors also pay higher interest rates than home buyers, although there’s no practical reason why that should be so. Investors also pay higher council rates than home owners and higher rates of insurance than home owners.

Indeed, the system is so loaded against property investors it’s miraculous that anyone would undertake is at all.

And, in fact, it’s that very long list of factors where property investors are disadvantaged 

that has created the worst rental accommodation shortage in the nation’s history.

But if the disconnected individuals at Everybody’s Home have their way, it will become immeasurably worse.  There will be no private rentals at all. 

Everyone will be renting from the government or from international corporations.

 

Australian consumers can be forgiven for thinking that property price data published by research firms like PropTrack and CoreLogic is a matter of fact.

The median house price for a city, you might think, is a matter of fact and how much it has risen or fallen is a matter of fact.

Right? Well, actually, no.

Media reports these figures as if they are absolute fact - but they are not.

Like all real estate data, median prices are rubbery figures.

The median price for a city, and how much it has changed recently, depends on whose figures you believe.

All research businesses have their own methodology for calculating median prices – and the reality is that one research entity has different figures from the next one – so it can get very confusing.

The property website Domain has just published its figures on property prices up to the end of 2023 – and their numbers are starkly different from those published by CoreLogic – and reported by journalists as the gospel truth.

CoreLogic says the national market leader in 2023 was Perth, because its median house price rose 15.6% last year.

But Domain says Perth’s median house price rose 11.9% and wasn’t the national leader at all – that honour was given to Adelaide, where the median house price rose 12.7%, according to Domain.

CoreLogic says Brisbane was the No.2 performer on house price growth last year, with its median price rising 13.3% - but Domain disagrees. It says Brisbane increased only 9.7% - which is quite a substantial difference – and it ranks Brisbane behind Adelaide, Perth and Sydney on price growth last year.

Canberra fell 4.6%, according to Domain, but CoreLogic says it increased 1.0%.

And how much are those median house prices in each of the capital cities?

CoreLogic says the median house in Sydney costs $1.4 million, but Domain says it’s $1.595 million – that’s a difference of almost $200,000.

In Melbourne you pay $945,000 for the average house, if you believe CoreLogic, or $1.047 million if Domain is correct. The disparity there is over $100,000.

Domain says the median house price in capital city Australia now is over a million dollars - $1.094 million, but CoreLogic says $937,000 – a difference of $157,000.

There are also some stark disparities in the price data for apartments.

CoreLogic reported that Perth led the nation on growth in median unit prices, up 12.4% for the year, but Domain claims that Perth rose only 5.2% and was nowhere near the best in the nation, and was out-performed by four other cities.

CoreLogic says Canberra unit prices declined around 1% last year but Domain says they rose 10%, one of the best results in the nation.

How can anyone make sense of these really big differences in the views of two major research sources, who really don’t agree on anything when he comes to prices in our city markets and whether markets have risen or fallen, or by how much.

It’s important to understand that median price figures, like all real estate data, are rubbery figures – and always need to be treated with caution.

And, if you’re wondering where Hotspotting sources its price data, the answer is PropTrack, the research arm of the leading property website, realestate.com.au - which we think has the most reliable and up-to-date data available.

We use PropTrack for the data feed that populates the Research Portal which can be accessed by customers who have one of our memberships.

 

Tim Graham of Hotspotting.com.au was a guest on Corey Jones Motivate Property Podcast this week. They discussed the fascinating world of AI technology and its disruption within the real estate industry, along with some market predictions for 2024.   For those looking for a great Buyers Agent in W.A. look no further than Corey Jones from Motivate Property and be sure to give his podcast a follow.

One of Australia’s leading experts in SDA Housing Investments, Danny Buxton of Triple Zero Property, recently joined Hotspotting founder Terry Ryder in a free webinar, and you can catch the replay here.     About Triple Zero Property     The team at Triple Zero Property are all homeowners and property investors, bringing a wealth of experience to the real estate industry. With over 50 years of combined experience, they have developed the expertise to streamline and maximise profitable property opportunities while minimising excessive time commitments. The team recognises the value of their clients' time and is dedicated to doing the research and legwork for them. Through their established networks and proven track record of independently finding properties that fit each client's profile, budget, and timeline, they are ready to assist in getting them started. Whether it is a client's first home purchase or they are a seasoned investor, the team is eager to help.

The Regional Victoria market continued to improve in 2023, following the lead from Melbourne, although not rising as dramatically as the capital city has recently.

 

As the year wore on, Regional Victoria built on the recovery evident in mid-year, with the number of rising locations almost doubling in the second half of 2023.

 

Two-thirds of locations have positive trends with their sales activity, which means buyer demand, although some locations have been slow to join the overall theme of revival and growth.

 

To put the Regional Victoria market into perspective, the 66% of locations with positive trends is a solid performance, but well short of Melbourne (87%), Brisbane (85%), Regional Queensland (76%) and Regional South Australia (74%).

 

Geelong continues to be a market leader in Victoria, with most of its suburbs on board with the state’s recovery, led by locations such Armstrong Creek and Charlemont.

 

Bendigo has an equally positive market, with strong buyer demand for affordable suburbs like Eaglehawk which has a median house price $515,000 – a price level that’s impossible to find in the Greater Melbourne area.

 

Ballarat is a little less bullish at this stage, but has been a very solid growth over the past five or so years.

 

The Cardinia LGA on the south-eastern fringe of Greater Melbourne has good momentum, led by the towns of Officer (median price $715,000) and Pakenham (median price $640,000).

 

The Mitchell LGA, on the northern outskirts of Greater Melbourne, continues to attract buyers from the capital city. All five of the main Mitchell Shire towns have positive trends, headed by Wallan and Seymour.

 

The Macedon Ranges LGA is also a solid performer, led by Kyneton, as is the Moorabool LGA headed by Darley and Bacchus Marsh.

 

The Latrobe Valley region east of Melbourne is characterised by consistent markets, including Moe (median price $365,000), and Newborough (median price $417,000) – again, with relative affordability a major attraction for home buyers and investors.

 

Other regional centres with good momentum include Wodonga, Wangaratta, Benalla, Bairnsdale, Paynesville, Drouin and Echuca.

 

Overall, the appeal of the Victoria market is that it provides affordable options in strong, growing regional cities like Bendigo, Geelong and Ballarat which are well connected to Melbourne by road and rail – as well as other options further afield like Shepparton, Mildura, Wodonga, Warrnambool and Traralgon.

 

Perth was undoubtedly the capital growth star of Australian real estate in 2023, with the highest increases in median prices both for houses and for apartments, slightly ahead of Brisbane in both categories.

 

Perth continues to be a busy market with good buyer demand – but we are now seeing the first signs of moderation in the three-year Perth property boom, as sales activity starts to taper off from the recent highs.

 

For the first time in three years, suburbs with negative classifications are almost as numerous as the positive ones. And in the latest quarterly edition of The Price Predictor Index, the market-share of Perth suburbs with positive rankings has dropped from 79% to 54%.

 

While the Perth market remains solid, it’s no longer a national leader in sales momentum – and right now some of the best options for investors in Western Australia are regional cities outside of Perth.

 

So our new Top 5 Perth and WA Hotspots report features some of the best prospects in Regional WA, as well as locations which continue to show buoyancy in Perth.

 

Some sectors of the Greater Perth market continue to attract good buyer demand, including the City of Perth LGA, which comprises the inner-city suburbs, reflecting a national trend where inner-city apartment markets in the major cities are attracting high buyer demand.

 

They include East Perth and West Perth, which both have median unit prices in the $400,000s.

 

Outer-ring markets offering affordability are still travelling well, including the City of Armadale and the City of Rockingham in the far south of Greater Perth.

 

Overall, there continue to be some good prospects for buyers in Perth, but you need to be more selective than before – and some of the best bets in WA are now in regional cities.

 

Melbourne has evolved from a struggling market to a boom one in the past 12 months and is now a national leader on growth momentum.

 

Almost half of the suburbs in Greater Melbourne are now classified by Hotspotting as rising markets and 87% of them have positive rankings in our Price Predictor Index.

 

This represents a massive transformation from the situation at the start of 2023. Our quarterly surveys show that the number of rising suburbs in Greater Melbourne has increased from 12 (9 months ago) to 58 (6 months ago) and now to 142 – with rising markets increasing from just 4% of suburbs a year ago to 47% now.

 

A year ago 67 suburbs in Greater Melbourne were categorised as declining markets; now there are none.

 

This return to a market characterised by high buyer demand is seen right across the Greater Melbourne area, with the exception of the Mornington Peninsula.

 

The City of Melbourne, which includes the Melbourne CBD and near-City suburbs, is thriving – but so too are Middle Melbourne precincts like the Whitehorse LGA and the Monash LGA, as well outer-ring areas such as the City of Casey in the far south-east, Wyndham in the far south-west, Melton in the far west and Whittlesea on the northern fringe of the Greater Melbourne area.

 

Earlier this year we identified the City of Melbourne as a national leader of an emerging trend of rising buyer demand for inner-city apartments.

 

This survey has confirmed the strength of this market: the 10 City of Melbourne suburbs in our analysis include nine rising markets and one recovering market.

 

The neighbouring City of Yarra also has busy markets.

 

The City of Whitehorse figures among the standout areas in the middle-ring areas. The 16 suburbs in our analysis include 10 rising suburbs, led by Box Hill; Mitcham; and Nunawading.

 

Other Middle Melbourne areas with strong markets include the LGAs of Banyule, Monash and Moonee Valley.

 

Many of the outer-ring municipalities are attracting high demand. All 15 suburbs in our City of Casey analysis have positive sales activity trends, including 10 classified as rising markets.

 

The City of Melton in the far west has 16 suburbs on our list and 15 of them have positive trends, including 9 rising markets. 

 

It’s a similar story with the Wyndham LGA in the south-west and the City of Whittlesea in the north of Greater Melbourne.

 

Overall, Melbourne markets have transitioned into 2024 with good momentum – and we expect solid price growth in many markets as the year unfolds – certainly much better than the results of 2023.