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It Is Officially Here: Australian Property Boom

It Is Officially Here: Australian Property Boom
January 18, 2021 Propertyology Head of Research and REIA Hall of Famer, Simon Pressley

It commenced in Q3 2019 but was placed on pause for a few months when the germ arrived in Australia. Now it is back with a huge head of steam. According to official data, November 2020 marked the beginning of a widespread national property boom.

Last week’s ABS data release confirmed that the value of new home loans taken out in November set a new national record.

Home loan activity is what we call a ‘leading indicator’. More home loans mean more properties being purchased. More buyers equal more competition and upward pressure in asset values.

The previous home loan record has been obliterated. The November figure is 23 percent higher than a year earlier when, for those who might have forgotten how real estate markets were performing directly before the toilet paper hording commenced, property prices were really heating up.

As the blue trend lines in above charts illustrate, property markets are currently being driven higher in every state by really strong activity from owner-occupiers.

Property markets in large parts of Australia are *today* running at double-digit growth pace.

This is occurring at a time when Australia’s population growth rate has taken a significant dip and the national unemployment rate is close to 2 percent higher than a year ago.

Let this set of facts be yet another lesson to everyone that there’s a big bunch of stuff that are more important to ‘housing demand’ than population growth and that an unemployment rate only ever tells a very small piece of an economic story.

There’s no question that international border restrictions and things like JobKeeper cause understandable concern for some Australians. But, from a property market perspective, these are two tiny pieces of a very big jigsaw puzzle.

Right now, the full picture is 95 percent blue sky with a couple of small, white clouds.

The all-time record high home loan activity [a measurement of ‘housing demand’] is underpinned by cheaper and more accessible credit. This is one of a long list of property market drivers that includes another 38,000 Australian expats due to return home during H1 2021.

The strong demand is occurring at a time when many parts of Australia have an all-time record low volume of properties for sale [a measurement of ‘housing supply’].

Nationally, there were only 272,999 properties listed for sale at the start of January 2021, the lowest on record. For perspective, this is 6 percent fewer than a year earlier when property markets in most of Australia were heating up.

This time 4-years ago when Sydney, Melbourne and Hobart were booming, resale housing supply was 17 percent more than right now. Are you picking up what we’re putting down, folks?

The volume of rental supply in 5 out of 8 capital cities and pretty much every Australian region is at an all-time record low [read our research report]. Rents are already under extreme upward pressure and are destined to soar much higher.

The chronological sequence of insights shared by Propertyology over the last 12-months is now an official declaration that Australia’s property boom is here. The seagulls are well and truly munching on the chips!

Australia is now in an era of accelerated rates of homeownership and wealth creation. This will become Australia’s biggest property boom for a generation.

There are a few locations with vulnerabilities for people to be cautious about but, as reported by Propertyology in previous reports, it is now an incredibly exciting time for every Australian to become active participants in real estate.

Here’s how Propertyology can help you to invest in your future

From a property investor’s perspective, the absolute best opportunities for capital growth and cash flow are beyond capital city property markets.

The information contained in the graphic below is one of many metrics to support why Propertyology feels so strongly about our forecasts.

 

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.

 

We walk-the-walk. Here’s a recent example of our work for a client.

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