Hotspotting

The latest data on population movements shows that the key demographic trend of the 21st Century, the one we call the Exodus to Affordable Lifestyle, is still very much alive and pumping. And one of the key drawcards to people making the move is the number of jobs on offer in regional areas, coupled with cheaper house prices and a different lifestyle. Although news media has tended to characterise the movement in population from the big cities as a response to Covid lockdowns - and therefore probably now over - the truth is that this trend started long before the pandemic arrived and it continues to be a major force in the nation. The big movement in population from the biggest cities to smaller cities and in particular to regional areas has been under way for the past decade - and is essentially about the search by many people for a more relaxed and more affordable way of living, enabled by technology which allows more people to work remotely. This has had a big impact on housing markets, with regional areas out-performing their capital cities on price growth consistently in recent years.

Perth continues to be Australia’s strongest property market, with a busy and competitive housing scene and rising prices. The key information for real estate consumers is that Perth remains a long way short of having fulfilled its potential for growth. There’s still plenty of price rises to come. And one of the reasons for that is that Perth remains one of the most affordable markets in capital city Australia.

The NAB Residential Property Index is forecasting price growth this year and next year – and that’s significant because it’s rare for this report to find any thing positive to say about Australian real estate.

NAB has been publishing this quarterly index report for many years and its hallmark is being extremely negative or conservative about property prices across Australia.

It forecast price decline in 2020 but prices rose and it forecast very moderate growth in 2021 and we saw an extraordinary property boom.

So to have the NAB Residential Property Index predicting solid increases in house prices not only this year but in 2024 as well is, I think, quite significant.

The NAB Residential Property Index is forecasting price growth this year and next year – and that’s significant because it’s rare for this report to find any thing positive to say about Australian real estate.

NAB has been publishing this quarterly index report for many years and its hallmark is being extremely negative or conservative about property prices across Australia.

It forecast price decline in 2020 but prices rose and it forecast very moderate growth in 2021 and we saw an extraordinary property boom.

So to have the NAB Residential Property Index predicting solid increases in house prices not only this year but in 2024 as well is, I think, quite significant.

Anyone who is puzzled by the behaviour of major news media can achieve a better understanding if they get this simple proposal: media isn’t interested in helping us or informing us – their goal is to alarm us or downright scare us.

And news media doesn’t particularly care whether the material they’re presenting is accurate or fair or reasonable – as long as they can induce us to click on something, they’re happy to do it, at any cost.

 The truth is optional and duty of care is nowhere to be seen.

All forms of news media have chosen this path – publications which previously had pretensions to being quality media, like the Sydney Morning Herald or The Australian, these days have a cheap-and-nasty sensationalist tabloid mentality in news presentation.

While the decision by the Premier of Victoria Dictator Dan Andrews to scrap the 2026 Commonwealth Games is extraordinary, it is also in one sense unsurprising.

Because that’s the way Dan Andrews runs his state, with policy on a whim according to the mood of the all-powerful Premier.

It’s only a year ago that Andrews announced that the Games would be held in Regional Victoria, that the cost would be $2.5 billion and that the benefits to the state would be considerable.

Twelve months later he claims that cost is now as high as $7 billion and no longer viable. Many authoritative commentators have dismissed the $7 billion figure as fanciful and plain dishonest.

The reality is that Victoria’s finances, under the leadership of Dictator Dan, are in disarray and it’s struggling to pay its bills and fund essential infrastructure – always remembering that under his guidance Melbourne became the world’s most locked-down city during Covid – and now Regional Victoria is paying the price.

If Australians fully realised the degree to which politicians have caused or exacerbated most of the major problems the nation faces, there would be rioting in the streets.

The streets of our major cities would resemble the recent scenes in France if there was a full appreciation of the way politicians create problems, fail to enact solutions to serious problems and/or create legislation that makes a serious problem worse.

Everyone with a mortgage is paying massively higher monthly costs because the Federal Government has taken no action to address rising inflation – leaving it to the Reserve Bank to use the dumb, blunt instrument of lifting interest rates to try to fix the problem.

Households across Australia are dealing with massive increases in energy costs because politicians have messed up the electricity supply system.

We’ve had royal commissions into multiple core issues, including aged care, the behaviour of the big banks, deaths in custody and many other issues – and there’s o evidence of improvement in any of those areas.

Housing affordability has been a massive issue for decades and there have been multiple government inquiries but the problem continues to get worse.

The rental shortage crisis has been building for years – and not only do politicians have no solutions, but every time they pass laws that impact on real estate markets they make it considerably worse.

Think about that for a moment.

A July article declared 2023 to be “The Year of the Apartment”.

At Hotspotting we agree that the year is seeing a growing body of evidence that apartments are emerging from the shadows of standalone houses as a worthy competitor for investment dollars.

As at July 2023, apartments overall were outperforming standalone houses in a number of ways – including faster growth in rents, superior price growth rates for much of the past 12 months and a majority of new dwelling approvals.

University of NSW's City Futures Centre research has found that at least 16% of the population now live in dwellings such as apartments, townhouses and retirement villages.

It said there are more than three million strata and community-titled lots in Australia.

More than 200,000 new lots like units and townhouses were created in the last two years and nearly half (48%) of people living in private apartments are 20-39 years old.

More apartment households rent than are owner-occupied - with 47% of stock being rented.

Most Australians who invest in real estate fail to achieve their goal of creating a large and sustainable property portfolio.

Over two million Australians own an investment property but 70% of them have just one property and another 18% have two. That’s nine out of ten with just one or two properties. Those who own five or more are less than 1% of the total.

And here’s why so many fail to achieve great success: they're herd animals.

They lack the ability and mindset to think and act independently.

That “less than 1%” who have a portfolio and a decent crack at success with property investment? They’re the people, the minority of people, who have a plan and are willing to invest in information and advice to make good decisions – and generally are able to take action where most people are adopting a “wait and see” approach.

They accumulate good real estate assets and keep them. They make their next purchase when they’re ready to add to their portfolios, regardless of public sentiment or the tone of media or the trend with interest rates or the (alleged) state of the market.

The successful investor thinks and acts regardless of all that white noise in the background.