Hotspotting

It’s always a smart policy to take anything politicians say in an election campaign with a grain of salt and a heavy dose of scepticism.

But this is particularly so when politicians start making motherhood statements about housing affordability, about how much they care about it and what they will do about it.

Housing affordability has been a hot political issue for decades - but with each passing year it gets notably worse, despite all the promises made by a long line of politicians across all the states and territories.

The Sydney and Regional NSW markets are prime examples of why it pays not to generalise about real estate markets in Australia.

Generalisation and trivialisation by media is one of the chief causes of misinformation about our housing markets.

Sydney is usually discussed in media as a single market, as is Regional NSW, despite the size and diversity within those market jurisdictions.

Regional Australia continued to outperform the capital cities in 2022, with dwelling values rising marginally last year in the Combined Regions, compared to a 6.9% decline in the Combined Capitals.

That’s according to data published by CoreLogic early in January. It shows that the Combined Regions recorded a 0.1% increase in dwelling values in 2022 (which means, essentially, no change), helped by a 2.2% increase in regional apartment markets.

Across the house markets, the Combined Regions fell just 0.2% (also, essentially, no change) while the Combined Capitals decreased 7.4%.

Overall, the results for 2022 have been a lot more positive, with growth locations outnumbering declining ones.

More and more credible analysts are suggesting that residential property prices will grow in 2023.

At Hotspotting we certainly believe that most locations will deliver some level of price growth in the coming year.

So, how to determine the best places to focus your attention, to take advantage of the growth that’s coming to Australian real estate?

Many of the answers lie in the pages of Hotspotting’s two most popular reports, which are being published now to provide guidance on where you’re likely to find growth.

Our new 2023 edition of National Top 10 Best Buys has just been published and so too has the Summer 2022-23 edition of The Price Predictor Index.

These two very different reports use different methodologies to pinpoint locations poised for growth in the near future.

If you read both, you’ll be well-placed to make good choices on locations to buy in 2023.

Buy both reports in our Xmas Special Bundle and get the Australia’s Infrastructure-Led Property Boom: National Top 10 report for free.

https://www.hotspotting.com.au/product/xmas-special-bundle/

There’s a lot of media speculation around about the downturn in what economists call “the Australian property market”, with doomsday predictions for house prices in 2023 - but when you look at the actual data, that’s far from the reality.

There continue to be growth markets right across the country, as well as some which have been in decline since 2021 – long before interest rates started to rise.

For the Summer 2022-23 edition of The Price Predictor Index report, we analysed thousands of housing markets throughout Australia to determine the patterns with sales activity, which means buyer demand.

We do this because sales volumes are a forward indicator of what will happen with prices.

Rising transaction levels are usually a precursor to property price growth.

Equally, if sales activity is falling, price growth will slow, or stop – or prices may fall.

Across Australia, there are over 800 towns and suburbs where sales activity is rising and hundreds of others with consistent market performance.

Residential rents in capital city Australia are 24% higher than a year ago, according to the latest Rents Index from SQM Research.

Five of the eight capital cities have recorded annual growth of 20% or more in their rents, headed by Sydney which is up 28%.

Close behind is Melbourne which is up 24%, Brisbane 23% and both Perth and Adelaide where residential rents have increased 20%.

Canberra, Hobart and Darwin have recorded more moderate increases in rents, according to the SQM index.

The figures provide further evidence of the impact of record low vacancy rates across Australia – and the difficulties facing residential tenants around the country.

The key thing that Australian consumers need to know about property prices is that the state of play depends on whose figures you read.

Media reports CoreLogic data most of the time and tends to treat it as gospel truth – and never acknowledges the reality that there are other credible sources of price information which often disagree with the CoreLogic figures.

CoreLogic is undoubtedly the most negative of the price data sources, which may be why journalists favour their figures. That company’s tendency to focus on the negatives certainly suits the narrative that most media outlets prefer.

But other reputable sources of property data have figures that conflict with CoreLogic’s, a fact that should be highlighted more than it is.

There is a growing chorus of reputable real estate analysts who are forecasting that residential property prices will rise in 2023.

In contrast to the predictions of economists working for the big banks and other institutions, specialist real estate researchers see prices growing in the year ahead.

No one is forecasting price rises like we saw in 2021, when the national average was an increase above 25%.

Rather, most credible analysts are suggesting price growth that could be described as solid or moderate.

That’s certainly how we see it at Hotspotting.

If Australia follows the advice of the Greens, it will end up like Ireland.

I don’t mean full of history, incredibly green hills and wonderful hospitality, but facing a rental crisis like nowhere else on the planet.

In Australia we have the greatest rental shortage ever recorded, but it pales in comparison to the situation in Ireland.

The key question is this: how did Ireland get into such a parlous situation with virtually nowhere for people to live as tenants?

The answer is: they implemented government policies very similar to those the Greens want to have legislated here in Australia.

Australian consumers with an interest in real estate have been drowning, lately, in forecasts about big future decreases in real estate values – from the people I call the usual suspects, who have such bad track records in predicting property prices outcomes.

So it’s refreshing to see a high-profile and credible figure actually predicting that property prices will rise in 2023 – and getting considerable media coverage for it.

I’m already on the public record in forecasting growth in house prices in 2023, as is the highly respected analyst Simon Pressley from Propertyology.

And now Louis Christopher of SQM Research has published his annual Housing Boom and Bust report, which broadly forecasts a recovery in property prices in the major cities of Australia.