Hotspotting

The latest edition of the Good New Bulletin recorded 28 July 2020. Home buying intentions have improved, vacancy rates are low and first-home buyers are busy.

This Winter 2020 edition of the Price Predictor Index reflects the impact of the pandemic on property markets across Australia, including the outcomes for sales volumes and for prices. We have seen a decline in sales activity in some markets while others have maintained their previous levels of property sales, or close to them.

Prices overall have shown considerable resilience during the pandemic: the data from regular sources of price information, like SQM Research and CoreLogic, shows most major markets across Australia have maintained their value levels or recorded small increases, although there is evidence of decline in some parts of the Sydney and Melbourne markets. In some cases, it depends on which data source you use. The different data sources have conflicting information on the Sydney market, for example.

Overall, the Winter 2020 edition shows that some markets have been negatively impacted by Covid-19 while others have continued to show strength.

Many locations across Australia are thriving in the current environment. Many of them are key cities, which are strongly Covid-resistant and benefiting from the trend of people leaving the big cities and moving to lifestyle locations, while working remotely. But how do you find these strong, resilient, growth centres of the future? What research tools can you use to pinpoint the best places to buy to tap into the strongest real estate trends? In this well-timed webinar, Hotspotting founder Terry Ryder spoke with leading buyers' agent Kate Hill of Adviseable about methods of tracking down the places where buyer demand is growing and prices are rising. They discussed why certain locations are stronger than the norm and which research tools you can use to identify the hotspots of the near future.

There's lots of positive news happening in real estate markets across Australia this week.

Sydney is a very big city. There are over 700 suburbs in the Greater Sydney Area. Some, right now, are places to avoid, because of the impacts of Covid-19. But others are thriving. Because of their specific local qualities, they are great places to buy - right now. And we have just published our new FY2021 edition of the Top 5 Sydney Hotspots report to highlight where those places are and why we rate them highly in the current climate. Here’s an example. One of the best ways to gauge how well or how badly a market is handling the pandemic period is to look at vacancy rates. Vacancies have soared in some locations, such as the Sydney CBD, which they now top 15%. But in the Sutherland LGA in Sydney’s south, vacancy rates were low before the pandemic struck and they remain low. Most of the postcodes in The Shire, as it’s generally known, are well below 2%. This location is attracting good demand amid the pandemic because it offers a wonderful lifestyle based on proximity to water and to national parks, at a much lower price than the prestige markets on the North Shore or in Sydney’s inner west. The recent shutdown period has opened the eyes of many people to the possibilities of working from home. And the suburbs of The Shire are poised to attract increased demand from buyers because of this factor. If offers an enviable lifestyle at attractive prices – and still only about 45 minutes from the Sydney CBD. For all these reasons, the Sutherland LGA features prominently in our new edition of the Top 5 Sydney Hotspots report. To learn more, and to discover the other locations we like in the current climate, get yourself a copy of the new FY2021 edition of Top 5 Sydney Hotspots - https://www.hotspotting.com.au/product/top-5-sydney/

Real estate continues to deliver results that are better than the pessimistic forecasts of economists.

Hello everyone, and welcome to my Good News Bulletin

The latest data about house prices was published today, with the new figures from SQM Research showing that six of the eight capital cities have recorded some level of growth during the month of June.

Perth is the leader this month, with its house price index rising 1.3% in June, followed by Darwin with 1%, Canberra with 0.9% and Brisbane with 0.8%.

The news media, however, will no doubt focus on the results for the two cities where prices fell in June, namely Sydney and Melbourne – because, as we all know, they’re the only places that truly matter in Australia – and besides, it’s a negative and that’s what media likes to focus on.

In terms of annual changes, house prices remain higher than a year ago in all capital cities except Darwin – led by Sydney which is still up 11.5% despite a small decline in June, and Hobart which is 10.4% up on last year, and then Melbourne which is 10% higher than a year ago, despite the drop in the month of June.

Nationally, house prices are 6.3% higher than a year ago and apartment prices are up 5% compared to 12 months ago.

The overall impact of the SQM figures is that real estate continues to defy the predictions of major falls in property values. 

We’ve been in the Covid-19 period for over four months and still no sign of property values falling off that proverbial cliff that the attention-seeking economists like to talk about.

Looking to the broader economy, Australia is forecast to be one of the world’s best performers through the Covid-19 period.

The International Monetary Fund in its latest world outlook has revealed the pandemic will lead to a 4.9% fall in global economic activity in 2020.

Australia — alone among advanced economies — will suffer a milder-than-anticipated GDP contraction of 4.5% per cent this year, down from an April prediction of a 6.7 per cent drop.

The IMPF said that Australia is one of “few exceptions” where March quarter growth wasn’t worse than expected.

This reiterates a recent strong rating of the Australian economy by the OECD.

Meanwhile, Australia is one of just 10 countries to retain its AAA credit rating through the coronavirus-induced global recession, after Moody's Investors Service affirmed the rating and maintained its stable outlook for government finances.

Moody's says that Australia's AAA stable credit rating reflects the economy's strengths and good governance, including health management, that will support the country's resilience in response to the coronavirus pandemic.

Moody's forecasts that the economy will shrink this year, but it says the government's budget spending and support from the Reserve Bank of Australia will mitigate the severe contraction.

It says of Australia: "The fall in GDP is smaller than in other advanced economies in general, consistent with signs that more normal work and spending behaviours are gradually returning as the epidemic recedes in the country.”

And it says: “In Moody's assessment, the resilience of the Australian economy supports a return to positive growth next year, without any significant long-lasting impact on growth potential once the crisis passes."

Returning to events in the property market, millennials are at the forefront of house hunting around the country, as real estate agents across the nation report a surge in first-home buyers looking to take advantage of the high level of government support.

Real estate experts say young professionals and couples are busy looking for opportunities to buy in Melbourne, Sydney, Brisbane and elsewhere, in many cases boosted by the HomeBuilder grant from the Federal Government.

The reports come after CommSec released its Economic Six Pack charts for June, which revealed active first-home buyers reached a decade high level earlier this year.

That momentum has further risen throughout the pandemic and could rise again with the federal government’s First Home Loan Deposit Scheme to re-open in July, with another 10,000 places available.

There were 10,000 places available in January, which opportunistic first-home buyers snapped up in a matter of days – and the second round of government support starts this week.

With so much government support around, at both the federal and state levels, it’s a very good time to be a first-home buyer. And of course the low level of interest rates makes it even better.

The weekly auction figures continue to show a market that turning over steadily, without really surging, which is what I would expect in the current climate.

Last week there were 1,424 homes scheduled for auction and there was a preliminary clearance rate of 65%. 

This was the highest number of auctions held in nine weeks, demonstrating an ongoing improvement in seller confidence as auction clearance rates hold reasonably firm under the increasingly higher volumes.  

In comparison, the previous week saw 1,251 homes taken to auction returning a preliminary clearance rate of 66%, which later revised down to 60% in the final figures. 

This time last year saw 1,295 homes taken to auction across the capital cities and a clearance rate of 63% was recorded.

So the current results are fairly comparable to a year ago, despite the impacts of the current Covid-19 period.

BRISBANE’S residential market is weathering the coronavirus storm fairly well, flying in the face of fears house prices would plummet, according to new research.

The latest Real Estate Institute of Queensland quarterly market monitor reveals the median house price for the Brisbane local government area has risen 1.5% in annual terms, to $690,000, while unit prices have increased 1.2% annually to $420,000.

Twelve suburbs outperformed the overall market, achieving double-digit house-price growth over the 12 month period.

Fig Tree Pocket was a standout — the median house price in this western suburb jumped 36%, followed by Milton at 35%, Windsor with 25% and Seven Hills with a 22% increase.

In terms of median unit prices, Bulimba rose 22%, followed by 17% in Murrarie and 15% in Morningside – and all three of those locations are in the eastern suburbs of Brisbane..

REIQ chief executive Antonia Mercorella says Brisbane is on track to be one of the best-performing property markets in the country over the next few years.

And it’s worth noting that the new figures published by SQM Research today show that Brisbane prices rose 0.8% for houses and 1% for units during June – and in annual terms Brisbane prices are up 4.5% for houses and 2% for units.

And, for the final word today, here’s some news from two major businesses which have been booming during the pandemic, not despite Covid-19 but because of it.

Amazon is plotting a major expansion of its Australian business with plans to build one of the country's biggest warehouses in Western Sydney and a search is also under way for a giant shed in Melbourne.

The local expansion plans come on the back of surging online sales due to COVID-19.

Amazon's entry into the Australian market three years ago has been described as “underwhelming”, but the retailer is slowly but surely taking market share with its most recently filed accounts showing an almost doubling of revenues from its Australian business in 2019.

Meanwhile, Atlassian has outlined the design for its new $1 billion-plus headquarters, which reportedly will be the world's tallest hybrid timber building to date.

The locally based, Nasdaq-listed software company has confirmed plans for its 180-metre, 40-storey Sydney office tower next to Sydney's Central Station. 

It will be the flagship project in a NSW government-backed technology precinct that will eventually link Ultimo with Redfern on the CBD's southern edge.

It will sit next to the $2.5 billion Central Place Sydney project, a twin tower development by Dexus and Frasers Property Australia.

Atlassian will be the major tenant, with 4000 staff in the tower.

That’s it for now in terms of the positive events in the economy and the real estate market.

And, before I go, a reminder that we published today the new 2020-21 FY edition of our most popular report, the National Top 10 Best Buys report.

As a special offer to mark the end of old FY and the beginning of the new one, we are offering the report at half the normal price.

And you can check it out on the new hotspotting.com.au website which we launched last week.

Bye for now.

If the economists had been right, Melbourne property values would have collapsed by now. But they haven’t. Despite all the havoc brought by the pandemic and the economic shutdown, Melbourne real estate has stayed solid. A couple of days ago, SQM Research published its latest Housing Indexes -- which showed that, in May, Melbourne prices for both houses and apartments increased. Only slightly, but in the current circumstances, even the smallest levels of growth are remarkable. Melbourne’s solid performance in May, followed similar outcomes in March and April. One of the reasons Melbourne prices have resisted the doomsday forecasts is that supply and demand has remained roughly in balance. There are fewer buyers out there, but there are also fewer sellers. So, generally speaking, one has balanced out the other. There have been fewer buyers at auctions, but considerably fewer properties being offered at auctions, so clearance rates have been quite high. And despite an increase in vacancies as a result of the pandemic pressures, the overall vacancy rate for Melbourne remains below 3%. So that, apart from the CBD and inner-city suburbs, there’s no major downward pressure on rents or sale prices. So, against this background, this week we have published our new edition of Top 5 Melbourne Hotspots. In this report, we outline our selections for the best areas to buy – taking into account the current unusual circumstances and which locations are best placed to come out the other side of the shutdown period in a good position to grow as we move forward. So have a read of the new Top 5 Melbourne report. Melbourne is always a leader in this country in terms of its economy, its population and its property markets – and I don’t see that changing any time soon.

The main reason I started these good news bulletins 2-3 months ago was because mainstream media was obsessing with negativity, including doomsday forecasts on real estate markets.

Right now, real estate consumers of all kinds are desperate for information they can believe about what’s really going on in markets around Australia. Getting access to reliable information about real estate is particularly difficult right now. On the one hand, we have mainstream media going overboard in their desire to identify and exaggerate any negatives they can find amongst the data … …. And, on the other hand, we have some sections of the real estate industry doing their best to talk up the market. The truth often lies somewhere in the middle between those two extremes. And that’s the ground I seek to occupy when I write each edition of my bi-monthly publication, The Ryder Report. The new June edition which we have just published seeks to make sense of everything that happening amid the crazy times that currently exists. The report has an analysis on every state and territory and their capital cities, setting out my take on what’s really going on in those markets. My editorial feature makes the point that, contrary to the typical stance of most media and many economists, we don’t have just one market in Australia. We have many different markets across the country – and I make the important point that, while vacancies are rising and rents falling in some places, particularly the inner-city areas of the biggest cities, there are other markets where demand for rentals is actually rising – and rents are increasing as a result. I analyse the very latest information on prices, looking at what has happened with property prices in the 15 different market jurisdictions across Australia throughout the past three months. I also highlight some of the specific locations that I think should be of interest to property investors … … I write about the efforts of some commentators to create doomsday scenarios for property prices … … I provide some pointers on how to identify the locations likely to emerge from the shutdown period the strongest … … and a whole lot more. So please take the time to read the June edition of The Ryder Report. It’s the best way to be truly informed about what’s really doing on in residential real estate around Australia.