Hotspotting

Vacancy rates in our already-tight rental markets fell in six of the capital cities and were unchanged in the other two in January, according to the monthly report from SQM Research.

The national average vacancy rate fell from 2.2% in December to 2% in January, but five capital cities – Perth, Adelaide, Canberra, Darwin and Hobart – all have vacancy rates below 1%, while Brisbane sits at 1.7%.

Throughout regional Australia, many centres have vacancy rates below 1% in what represents a national rental crisis for people seeking tenancies.

The industry benchmark is that vacancy rates below 3% represent a shortage of rental properties.

The two biggest cities, where vacancies are highest, showed marked improvements in January, with Sydney falling from 3.6% in December to 3.2%, and Melbourne falling from 4.7% to 4.4%.

SQM CEO Louis Christopher says the figures provide more evidence the worse is over for landlords in the Sydney and Melbourne rental markets.

He says: “The falls in vacancy rates for the month in those two cities, combined with the increased tightness in other cities and regions, has now brought rental vacancy rates down to below where they were prior to the outbreak of Covid19.”

Christopher says the data suggests that 2021 will remain largely a tenant’s market in the inner city areas “but will also very much remain a landlord’s market for regional Australia”.

He also notes that rents for both houses and units have risen in the capital cities, on average, over the past month.

In annual terms, the national average is a 10% rise in house rents and a 4% increase in apartments rents.

The growth has been higher in regional markets than in the capital cities, with Sydney and Melbourne rents still lower on average than a year ago.

But there have been strong rises in Perth, Canberra and Darwin.

In Perth, rents have risen 11.5% for houses and 12.3% for apartments, while in Darwin house rents have increased 27% in 12 months. In Canberra rents have risen around 6% for both houses and units.

Here’s how you spot a real estate charlatan, someone who likes to present themselves as a real estate expert but who in reality knows nothing worth hearing …
1. They speak of Australia as a single property market; and/or
2. They attribute price growth to “record low interest rates”
Mostly these pretenders are economists. I would remind you of a much-quoted definition of an economist: Someone who can tell you tomorrow why their predictions yesterday didn’t come true today.
We have learnt over the years, but particularly in 2020, that the bigger the name and the media profile, the worse they are at analysing residential real estate and forecasting outcomes.
Cast your minds back to the predictions in March/April 2020 from senior economists employed by the major banks, big institutions like AMP and even those working for specialist real estate research entities. And then again later in the year when the so-called
September Cliff was proclaimed an impending disaster.
There was a chorus of predictions of a long recession, with double-digit unemployment and real estate values collapsing. How spectacularly wrong they were. Only the specialist property analysts got it right.
But the appalling track record of economists with real estate analysis stretches back years and includes the alarmist predictions about property prices in the wake of the GFC – also proven to be spectacularly wrong.
It’s remarkable that media continues to give these charlatans airplay. Credibility, it seems, is optional, so long as you have “economist” in your title. So the nation’s gaggle of chattering economists has been compelled to admit they got it wrong in 2020 and most of them are now forecasting big price growth this year. You will note that what they are predicting is already happening, highlighting another characteristic of this bloated and overblown profession: predicting the recent past.
And how do they explain the gathering boom? Record low interest rates!
God help us. The lack of expertise among the talking heads who clutter up the airways with their simplistic analysis is quite breathtaking.
As we all know, we’ve had ultra-low interest rates for years. Very little has changed in that regard to explain the recent uplift in sales activity. When Sydney and Melbourne were having their real estate boom from 2013 to 2017-ish, economists generally explained the price rises with “record low interest rates”. They had no response to the obvious question at the time: how come prices in Perth and Darwin were falling, while Canberra, Brisbane and Adelaide were stagnating?
The “low interest rates = property boom” theory also fails to explain why the last two genuine nationwide property booms, in the late 1980s and in the early years of this century, both occurred during periods of very high and rising interest rates.

My view, strongly, is that record low interest rates do not explain what’s happening in real estate across most of Australia.
The growth is being fueled by multiple factors, including …
 A stronger-than-expected economy
 Lower-than-predicted unemployment
 State and federal stimulus measures
 The build-up of savings during the pandemic period
 People in lockdown reviewing their life choices
 Ultra-low vacancies, putting upward pressures on rents and prices
 Pent-up demand, leading to rising sales activity
 Low listings levels, relative to rising buyer demand
 The Exodus to Affordable Lifestyle trend, which is hugely influential
 Increased spending on major new infrastructure
 The revival of the resources sector
 The return of ex-pat Australians in large numbers
 The belated entry of investors to compete with owner-occupiers
 Perceptions about the safety and solidity of bricks & mortar in times of uncertainty
 The growing prevalence of e-commerce and its impact on industrial property, which
has repercussions for residential demand
 Access to low-cost finance
And you’ll notice that I mention low interest rates as just one of 16 different factors – and I mention it last and definitely least.

National buyers agent Kate Hill of Adviseable and Hotspotting founder Terry Ryder presented a webinar today where participants asked their most urgent questions about real estate in 2021. They discussed prospects for a nationwide property boom this year and beyond, where markets are heading, which ones will show the best growth, and which ones to avoid. Kate Hill and the team at Adviseable range across Australia seeking the best properties for their clients, while Terry Ryder and the Hotspotting team devote every working day to researching markets across the nation. They are uniquely placed to provide an informed perspective on markets of all kinds throughout Australia.

Adelaide is consistent with its sales activity and it delivers steady price growth. It recorded growth in its house prices in 11 of the 12 months of 2020 and overall had a 6% increase in the city’s median price.
The results of our latest quarterly survey of sales volumes in Adelaide are almost identical to those of the past three years. We have identified 62 suburbs with rising sales activity, similar to most of the past 10 surveys.
And, once again, the data shows that this consistent performance is occurring right across the Adelaide metropolitan area. There are 10 municipalities with at least three suburbs with rising sales momentum.
Affordable locations are the market leaders, boosted by the strong activity of first-home buyers.

Our analysis of the price data for individual suburbs shows that two-thirds of Adelaide locations recorded growth in the past 12 months.
And a highest percentage, 70%, had house price growth in the most recent quarter.
Suburbs recording above average growth in the past year are scattered across the Adelaide metropolitan area, covering a range of price points.

We’ve just published our new 2021 edition of the Top 5 Adelaide Hotspots report.
It’s a good report to read in the current climate because Adelaide is well-placed to provide consistent growth this year.

Find out the best areas for growth in our latest Top 5 Adelaide Hotspots 2021 report.

New data from two sources confirms that a national real estate boom is under way across Australia. The latest figures from both Domain and CoreLogic record annual growth in house prices in most locations in the nation, but in particular in the latest quarter. CoreLogic’s 1 February price report shows that all 15 market jurisdictions (eight capital cities and seven state regional precincts) recorded uplift in the month of January and in the three months to the end of January. Domain’s price report published last week shows all eight capital cities had significant price increases in 2020, with particularly major uplift in the December Quarter. The CoreLogic figures show quarterly growth of at least 2.4% in all 15 of the major market jurisdictions. That equates to double-digit increases over the coming year if those growth rates are maintained. But 12 of the 15 major markets had quarterly increases ranging from 3.5% to 7.8%. The Domain data shows quarterly rises in house prices ranging from 3% to 6.4% in five of the eight capital cities and equally significant increases throughout many regional locations. The smaller capital cities and the regional markets are leading the growth in house prices. In annual terms, according to CoreLogic, Darwin (15%), Canberra (9.5%), Hobart (8%) and Adelaide (7%) are all out-performing, while the regional markets of Tasmania, South Australia, NSW and Queensland have all increased by between 8% and 12.5%. The growth is being fuelled by multiple factors, including …  A stronger-than-expected economy  Lower-than-predicted unemployment  State and federal stimulus measures  Ultra-low vacancies, putting upward pressures on rents and prices  Low listings levels, relative to buyer demand  The Exodus to Affordable Lifestyle trend  Increasing spending on major new infrastructure  The return of ex-pat Australians in large numbers  The belated entry of investors to compete with owner-occupiers  The safety and solidity of bricks and mortar in times of uncertainty  Access to low-cost finance And you’ll notice that I mention low interest rates as just one of a dozen different factors – and I mention it last and definitely least. That’s contrary to Australia’s gaggle of chattering economists who seem to think that low interest rates is the only factor causing prices to rise – which, frankly, shows how little the members of that over-rated profession really understand about real estate markets. Bye for now.

Regional NSW is showing nation-leading strength, with a record number of towns and suburbs recording growth in their sales activity in our new quarterly survey.
A total of 116 locations have rising markets, easily the highest number in the six years that Hotspotting has been conducting its quarterly surveys.

Markets across Regional NSW continue to perform at nation-leading levels on price growth.
In the past 12 months, 90% of regional locations have recorded growth in their median house prices. Most have lifted at least 5% and many have had double-digit growth.

The results show evidence of the Exodus to Affordable Lifestyle trend which is sweeping the nation, with growth markets right across the state but most noticeably in places close to Sydney.

And we highlight the best of these regional centres in the new edition of Top 5 NSW Regional Hotspots.

The report provides a range of options for investors to buy affordably in areas which offer good rental yields, backed by low vacancies, and which have continued to deliver price growth through the pandemic period.

Some parts of Australia have low vacancies. But others, notably in the inner-city areas of our major cities, have large numbers of empty properties.

The question for many landlords is: what’s the best way forward when past strategies aren’t working and it’s hard to achieve good rentals and acceptable returns?

The best answer is to consult the experts. And on Thursday 21 January, Hotspotting will present a webinar featuring property management expert Jo Natoli of The Rental Specialists.

Jo will be speaking to Hotspotting founder Terry Ryder to discuss the best strategies for real estate investors facing difficult situations.

Jo and Terry will discuss …

• How to find tenants when vacancies are higher than usual
• How to maximise your rental return
• How to set up your property to get the best results
• Why a good manager is the best investment when times are tough.

At Hotspotting we think these are key issues to focus on, as we launch our webinar series for 2021.

Places that offer both affordability and lifestyle are at the forefront of real estate dynamics across Australia at the moment.

First-home buyers comprise the most active cohort in the market – and the first thing that young buyers are seeking is affordability.

If an affordable location also offers good infrastructure and proximity to major employment nodes, then so much the better.

There is another significant cohort in the market – owner-occupiers wanting to exit the inner-city areas, having made the decision to work remotely, and seeking places that offer a different lifestyle at a more affordable price.

For investors, this is news you can use.

The locations that are being targeted by these other cohorts seeking affordable options are the ones that are showing the best growth at the moment.

Investors were, for the most part, sitting on the sidelines in 2020 but now it’s time for them to get into the market.

There’s a broad consensus among analysts and commentators that we are going to see significant price growth in 2021.

I’m expecting a nationwide property boom in 2021 and beyond – and locations with good infrastructure which offer affordability will be at the forefront of the growth.

So, it’s timely that we are now publishing our Cheapies with Prospects Bundle.

This comprises two Top 5 reports – the City edition and the Regional edition – which jointly focus on 10 key locations which offer an attractive level of affordable buying options and, importantly, the key drivers for price growth.

If you’re an investor thinking of getting into the market this year, to take advantage of the growth that’s coming, this is the right product to get.

The Cheapies with Prospects bundle provides the guidance you need to buy well – ahead of the boom that’s building across Australia.

Sydney markets have defied the pandemic recession, with notable uplift in sales activity and prices in 2020.
Our quarterly survey for the Summer edition of The Price Predictor Index has identified more growth markets than at any time in the six years of these surveys.
In our survey six months ago, we could find only 24 suburbs with rising sales momentum across the Greater Sydney area - and 31 suburbs ranked as declining or danger markets.
Now we find 93 suburbs with rising sales activity - and the number of declining or danger markets has halved.
There are two distinct sectors doing well across the Greater Sydney area: the upper end of the market and the outer-ring areas where first-home buyers and other budget owner-occupiers
have been busy.
The more expensive sector is being led by the Inner West and the Northern Beaches. Other top end precincts with buoyant markets include the municipalities of Woollahra,
Waverley and Randwick. A few tiers below those markets price-wise, Sutherland Shire continues to show signs of
being an up-and-coming market.
The more affordable parts of the Sydney metro area are also buoyant. Out west, the Blacktown and Penrith municipalities both have seven suburbs with rising sales activity,
while in the south-west the Camden and Campbelltown LGAs jointly have 12 rising suburbs.
Our analysis of price trends across the Sydney metro area tells a story of stubborn resistance to the forces of the pandemic.
Most suburbs have delivered growth in their median house prices in the past 12 months – and most also have had growth in the most recent quarter, amid the pandemic period.
So, against that positive background, we have published our new 2021 edition of the Top 5 Sydney Hotspots report.
We’re predicting a nationwide real estate boom in the coming year and we expect Sydney to be part of it.
So have a read of our new Top 5 Sydney report and find out where we think the best places to buy can be found.