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Australia’s Property Market Pressure Index

Australia’s Property Market Pressure Index
July 8, 2021 Propertyology Head of Research and REIA Hall of Famer, Simon Pressley

With property prices rising all over Australia the degree of pressure within property markets has reached all-time record levels.

Australia’s rising-tides-lifts-all-ships property market is currently underpinned by two common denominators: on the demand side is record low interest rates while the volume of dwellings listed for sale is as tight as a mouse in a matchbox.

Contrary to some recent commentary, overall Australia does have enough dwellings to house our 25.7 million residents. The extra 1.8 million dwellings added to the nation’s housing stock over the last decade was more than enough for the 3.6 million increase in population.

Also, let’s not forget we have recently cranked up our construction sector at a time when Australia’s population growth rate is the lowest since World War 1, more than 100 years ago.

Property prices are increasing at the fastest pace in a generation (since 2004, to be specific) primarily because the total volume of dwellings advertised for sale has consistently declined from 345,058 just 5-years ago to currently only 236,218.

So, it is not a construction problem – the primary issue is that property buyers are competing for a pitiful 2.2 percent of nationwide dwelling stock.

We are currently in the early stages of a national property boom that, to be completely frank, Australia desperately needs to have [here’s why].

While no Australian location is spared from these ridiculously low resale supply volumes, the reading on the real estate pressure gage will always vary from location to location.

Propertyology has compared the volume of properties listed for sale in each Australian location now with this time 5-years ago.

A very high portion of Australia’s 200 individual towns and cities have seen the volume of properties listed for sale over the last 5-years decline by more than 20 percent.

Arguably Australia’s hottest property at the moment is New South Wales’ north coast. House prices in locations such as Ballina, Byron and Coffs Harbour increased by 30 percent over the 12-months directly after the March 2020 national lockdown, while advertised rents also produced an annual increase of more than $7,000.

Even Tom Cruise would be amazed by the mission impossible of buying real estate in the inland locations of Albury (54 percent less supply), Dubbo (46 percent), Kempsey (61 percent) and Orange (68 percent less resale stock), where property prices increased by between 15 and 20 percent over the last 12-months.

Sydney’s south-west and the Northern Beaches have tightened the most from a resale supply perspective. It is a completely different story though for Sydney’s rental supply surplus and weak economic outlook.

Queensland, Australia’s most decentralised state, has widespread property market pressure. Resale housing supply has reduced significantly over the last 5-years in Bundaberg (36 percent), Cairns (33 percent), Gold Coast (27 percent), Maryborough (44 percent) and Townsville (30 percent).

On the Sunshine Coast, the property market is as tight as a rusty bolt in locations such as Noosa, Maroochydore, Nambour, Caloundra, Coolum and Gympie.

While they were underwhelming property markets for much of the last decade, resale supply in Brisbane (29 percent less) and Adelaide (31 percent) has reduced significantly over the last 2-years.

Australia’s second best-performed capital city property market over the last five years, Canberra, continues to tighten. Along with Darwin, Hobart and Sydney, Canberra produced a 20 percent increase in median house over the 12-months ending June 2021.

So much for all that doomsday talk of economic depressions, fiscal cliffs and market crashes.

Here’s how we combine our thought-leading research with Propertyology’s award-winning buyer’s agency services.

In Tasmania, the enormous reduction in housing supply in Burnie (74 percent less) and Launceston (65 percent) over the last 5-years, along with solid economic fundamentals, has played a significant role in the 50 percent increase in house prices over the same period.

The 246,000 residents of Hobart only have 1,595 dwellings listed for sale today (the lowest ever on record). A 61 percent reduction in resale supply since the beginning of its property market growth cycle 7-years ago has seen real estate values double – the nation’s strongest performer over that period.

Trying to buy real estate in regional Victoria right now is akin to seagulls fighting over a chip.

Ballarat, Bendigo, Geelong, Mildura, Shepparton, Traralgon, Warragul, Warnambool and Wodonga each have at least 30 percent less supply now than 5-years ago. So, it’s no wonder that the median house price has already increased by 30 percent over the last 3-years in Bendigo, Ballarat, Mildura and Warrnambool, better than most capital cities.

Greater-Melbourne has the same volume of properties listed for sale today as 5-years ago, when this great global city was in the middle of its last property boom. The least amount of pressure is in Melbourne’s inner-east, CBD and south-west.

After a 6-year run of property price declines in Western Australia, today’s low resale supply influenced the double-digit real estate price growth over the last 12-months in Albany, Bunbury, Esperance, Geraldton, Margaret River, Perth and Port Hedland.

Meanwhile, the 536 dwellings listed for sale at the end of June is an all-time record low for Busselton’s property market.

A notable observation from Propertyology’s research is that there is still ample resale supply in each of the capital city CBD’s. The only exception to this is Hobart, which does not allow high density apartment development.

The low pressure gage reading for Australia’s ‘cupboards in the sky’ is reflective of this asset class’s long-running poor capital appreciation and continuing soft-as-butter rental markets.

Beware the various state government incentives recently announced in attempt to lure gullible property buyers. It’s akin to the tactics of a major retail chain promoting a ‘clearance sale’ to get the scraps off the shelf that no one else wanted.

Propertyology are national buyer’s agents and Australia’s premier property market analyst. Every capital city and every non-capital city, Propertyology analyse fundamentals in every market, every day. We use this valuable research to help everyday Aussies to invest in strategically-chosen locations (literally) all over Australia. Like to know more? Contact us here.

Here’s how we combine our thought-leading research with Propertyology’s award-winning buyer’s agency services.