Hotspotting

The price performance across Regional NSW is extraordinary.

Our analysis of 296 suburbs and towns across the state shows that all but two have delivered growth in their median house prices in the past 12 months.

Nine out of ten locations have recorded double-digit annual growth, including 55% of locations which have risen by 20% or more.

Two-thirds of the Regional NSW locations have jumped by more than 5% in the past quarter.

Find out more in our new Top 5 NSW Regional Hotspots Report.

Virtually every suburb in the Greater Sydney Area has delivered growth in their median house prices in the past year and in the most recent quarter.

Only three suburbs – Darlinghurst, Artarmon and Hurlstone Park – failed to record annual growth in house prices.

The vast majority of Sydney suburbs recorded double-digit growth in their median house prices, including 44% which rose by 20% or more in the past year.

All but three suburbs recorded median house price uplift in the most recent quarter, with six out of 10 suburbs achieving quarterly growth above 5%.

FInd out more in our new Top 5 Sydney Hotspots report

It’s useful, I think, to look back and see how the market performed in the past 12 months and what that means for 2022.

While solid past performance isn’t always an indication of how well things will perform in the future, it does gives those who already own an investment property a bit of an indication of how well their assets are performing. 

2022 promises to be the most fascinating year in real estate in a long, long time.

2021 was a relatively straightforward time in terms of what was happening in residential property – in simple terms, prices were rising pretty much everywhere.

Indeed, most locations across Australia recorded double-digit growth in house prices throughout the year. Many locations rose by more than 20%.

2022 is shaping as a more segmented market – or, put another way, 2022 is expected to be a more normal market.

A normal market in Australia is one where some locations are rising strongly, some are rising moderately, some are marking time or stagnating, and a few have falling prices.

This is because property markets are essentially local affairs. Property markets outcomes are dictated by local economic conditions, and these tend to vary from one place to another.

So in 2022 we will see different market scenarios evolving in different locations across the nation.

While there has been a nationwide property boom over the past 18 months, some locations have had strong property markets for much longer than that.

There are places in Australia which have had major growth in their property prices for the past three, four or five years.

In 2022, some of these locations may start to fade.

But many other places are just getting starting on their growth cycles and will continue to deliver big price increases in 2022 and beyond.

So how do you determine which is which – and how do you decide which are the best places to buy.

Hotspotting has two new reports which can answer those questions for you.

One is the new 2022 edition of our National Top 10 Best Buys report. This nominates the 10 locations across Australia that stand out for their growth prospects, taking a longer-term view.

The other is the new Summer edition of The Price Predictor Index. This report classifies every significant suburb and town in the nation in term of its current growth patterns, providing a unique guide to prospects for price movements in the shorter-term.

So, the ideal way to be make informed decisions about where to buy and where not to buy is to get a copy of both these reports: the National Top 10 Best Buys report and the Summer edition of The Price Predictor Index.

The best way to chart what’s happening with individual property markets around Australia is to look at the sales activity.

Sales volumes data is a forward indicator of what might happen with prices. If sales activity is rising, then prices will usually follow this trend, but with a time lag.

If sales activity is falling, prices are likely to stop rising or possibly decline.

Media focuses its attention on giving historical data on prices – what’s happened with price movements in the past three months or the past year.

That can be of interest, but it doesn’t necessarily inform the future.

Sales volumes data does inform the future. It tells us where prices are likely to rise, and where prices may stop rising, or possibly fall.

So, every three months, we get the figures on sales volumes for every significant town and suburb across Australia and analyse the trends.

We marry that with information about vacancy rates and prices to produce one of our most popular reports, The Price Predictor Index.

We have just published our new Summer 2021-22 edition and this shows that markets are continuing to pump strongly in many parts of Australia.

But activity is not rising everywhere. Some locations are showing evidence of having passed their peaks, after several years of good growth.

So this report provides a fantastic national overview of all the markets across the country and tells you which ones are rising, which ones are plateau-ing, which ones are falling and sometimes the ones we think are danger markets to be avoided.

So get yourself a copy of the Summer edition of The Price Predictor Index.

It’s a great way to be informed about individual markets right across Australia – and their prospects for 2022.

https://www.hotspotting.com.au/product/price-predictor-index/

With markets rising – fast – in most markets across Australia, it feels like you could buy anywhere and achieve capital growth.

And that may be true – in the short term.

But sensible investors will be thinking beyond the current frenzy in markets nationwide.

They will be taking a long-term view.

And that means buying in locations that have identifiable drivers of price growth beyond the current nationwide property boom – keeping in mind that some markets, particularly those which started rising BEFORE the nationwide boom, appear to have passed their peaks.

Ultimately, I believe some investors will be disappointed in the long-term performance of their investments, because they haven’t considered their choice of location with sufficient care.

We have just published our latest edition of our most popular report, the National Top 10 Best Buys.

This is the new edition for 2022, focusing on locations I expect to out-perform in the New Year.

In making my choices for the 10 special locations included in this report, I have thought about the factors that will drive capital growth in the long term.

I have sought to target places that are relatively early in the growth cycle.

And I have opted for places which offer a degree of affordability, because I believe that will increasingly be a factor in 2022.

That is why some of the nation’s most high-profile markets are NOT included.

Because they have already had, in some cases, three or four years of strong price growth.

I want the highlight the places that have the potential to do that, but are just getting started on a longer-term growth path.

So grab a copy of our new National Top 10 Best Buys report and find out where to buy in 2022 for growth is sustainable, beyond the current frenzy.

https://www.hotspotting.com.au/product/national-top-10-best-buys/

In media discussions about the many strong property markets across Australia, one city that often tends to be overlooked is Perth.

Perth, in fact, is one of the most buoyant markets in capital city Australia, particularly in terms of the strength of sales activity.

Our latest quarterly survey of sales volumes shows that Perth continues to maintain a very high level of performance, with 65% of suburbs classified as rising markets – one of the strongest results in the nation.

The 116 suburbs classified as rising markets is the second highest number for Perth in the six years we have been conducting our quarterly surveys of sales activity.

To put this into perspective, in the surveys from 2015 through to the end of 2020, the average number of rising suburbs in Perth was 29.

The four surveys conducted in 2021 have revealed 118, 103, 115 and 116 suburbs with rising sales momentum.

This means the Perth market is at its strongest since the end of the resources investment boom in 2013.

This strength is reflected in both the number of locations with rising sales activity and in price growth outcomes.

Prices are growing right across the Greater Perth area, although not yet at the same rates as elsewhere in Australia.

Of the 177 suburbs included in our price analysis, all but two had annual growth in their median house prices – with 155 of them rising more than 5%.

And there is potential for price growth to accelerate, given the high level of market activity that is currently occurring.

Against this backdrop, we have just published the new 2022 edition of our Top 5 Perth Hotspots report.

It’s a report that warrants some attention from investors, because it outlines the locations we expect to perform best in a year that promises to be one of the best ever for the Perth property market.

https://www.hotspotting.com.au/product/top-5-perth/

The year just ending has been one of the most remarkable ever in Australian real estate.
It has produced outcomes which defied the doomsayers, with price growth that exceeded everyone's expectations.

And now our thoughts turn to 2022: what can we expect of the year ahead?
Will property prices continue to rise? And, if so, will the growth levels match those of 2021?
Will interest rates rise and does it matter anyway?
Will the re-opening of international borders and an influx of overseas migrants create a second wave of buyer demand?

At this special webinar event on 8 December, Hotspotting founder Terry Ryder facilitated a discussion with our panel of property experts to find answers to these and other questions about prospects for 2022.
Our panel includes investment advisors, buyers agents and mortgage brokers and each brings a perspective informed by years of experience at the coalface of housing markets across Australia.

Anyone who tunes into mainstream media in this country will be aware that there is endless speculation about what’s going to happen with interest rates.

This is happening for three reasons.

One, journalists and commentators apparently believe we’re all breathlessly interested in what might happen with interest rates some time in the future. I think they’re wrong.

Two, journalists and commentators generally lack imagination and are collectively incapable of coming up with original and useful story lines.

And three, they all apparently think that Reserve Bank governor Philip Lowe is a shameless and habitual liar.

The Reserve Bank governor has declared publicly, repeatedly, almost weekly, that the RBA has no intention of lifting the official interest rate any time soon.

Philip Lowe has stated many times that he expects the next interest rate to be in 2024.

So, no interest rate next year and no interest rate rise in 2023.

But media keeps telling us that interest rates will rise in 2022. That’s their first mistake.

Their second mistake is that they apparently believe that an interest rate rise will bring the property market crashing.

A rate rise will cause massive mortgage stress, apparently, and prices will fall.

I’m happy to go on the public record as saying that they’re wrong and that none of this is going to happen.

And here’s why.

Firstly, history shows us that an interest rate rise does not halt a strong property boom.

Indeed, two or three interest rate rises don’t make a dent in a booming housing market.

In the recent past, it has taken 5, 6 or 7 interest rate rises to bring a raging property market under control.

It’s worth noting that the last time we had genuine nationwide property booms in Australia, in the late 1980s and in the early years of this century, they occurred during times of very high and rising interest rates.

Secondly, the notion that interest rate rise will collapse the property market is based on the premise that the current boom has been caused, wholly and solely, by record low interest rates.

Economists are telling us this every day, demonstrating yet again how little they understand about the housing market.

My list of reasons for the national property boom has 16 dot points, with the level of interest rates just one of them.

Low interest rates didn’t cause the boom  - and rising interest rates, if and when they occur, won’t stop it.

Thirdly, media speculation about mortgage stress caused by future rises in interest rates overlooks the buffers that are in the system.

Most households are well ahead on their mortgage payments – years ahead, in many cases.

And borrowers are not assesses on current interest rates, they’re assessed on current rates plus 3%.

So anyone taking out a home loan with a 2% interest rate, will be assessed by the bank on their ability to repay the loan if the interest rate is 5%.

So rates could double and most borrowers would still be comfortable.

In summary, if you’re thinking of buying real estate and you’re worried about all the media speculation about interest rates, forget about it.

Ignore it. Tune out all this media white noise and just get on with it.

Media has gone overboard on the forecast by the Commonwealth Bank that property prices across Australia will fall 10% in 2024.

As consumers, we can rest assured that it won’t happen - because the people making these forecasts have a track record of getting it horribly wrong in their property market predictions.

There are two major things wrong with the media treatment of forecasts like this:-

One is the speed with which media turns a forecast into a fact. It’s not a case of someone forecasting that prices may fall 10% in the future, but it’s presented as: prices WILL fall 10%.

The second is that journalists never check on the forecasting record of the people they’re publicising. If they did, many high-profile forecasters would never appear in media – because they constantly get it wrong.

The Commonwealth Bank’s latest prediction on prices comes from the CBA’s head of economics, Gareth Aird.

Media assumes this is credible because it comes from one of the Big 4 banks and CBA is our biggest mortgage lender. They must know what they’re talking about, right?

Well, actually, NO.

Based on his track record, Gareth Aird is one of the nation’s worst forecasters.

Let’s look at what he predicted in March 2020 as the pandemic first took hold.

He forecast that residential property prices would drop 10% over six months and 20% in the next year, led by steep falls in Sydney and Melbourne.”

BUT in the next 12 months house prices overall rose 7.5%, with Sydney up 8%, Adelaide 9%, Hobart 13%, Canberra 14%, Darwin 16% and Regional Australia by an average of 13%.

Now, let’s look at his forecast at the start of 2021.

In February 2021, Gareth Aird on behalf of the Commonwealth Bank, was forced to admit they’d got it seriously wrong a year earlier and were now predicting price rises.

But their forecast was: House prices will rise 9% in 2021 and unit prices will rise only 5%.

What’s actually happened? House prices have risen 21% and unit prices 13% in the first 10 months of the year alone.

Once again, they’ve underestimated housing markets across Australia. And they continue to discuss Australia as a single unified market, without allowing for many regional differences.

Let’s face it, Gareth Aird would struggle to accurately forecast what happened yesterday.

And why does this failed forecaster think prices will fall in 2024? Because he expects interest rates to rise and this will generate a big drop in prices.

This, I have to say, is kindergarten analysis. Simplistic, misguided and plain wrong.