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Property Boom Before Christmas

Property Boom Before Christmas
September 30, 2020 Propertyology Head of Research and REIA Hall of Famer, Simon Pressley

Make no mistake, property markets in large parts of Australia will be booming by summer! Several locations in different parts of the country have already produced double-digit capital growth over the first 9-months of this calendar year and there are umpteen others with fast growing momentum.

Anecdotal evidence from research conducted by Propertyology suggests that property markets are already booming in locations such as Noosa, Canberra, Orange, Dubbo, Burnie, Bendigo, Mildura, Mount Gambier, Coffs Harbour and Karratha. That’s ten towns in seven states and territories.

The cast of thousands who, during the March-April national lockdown, were forecasting a real estate Armageddon score an epic ‘Fail’.

That same cast of thousands have now kicked their ‘fiscal cliff’ can down the road to the new year. They are obsessed with the end of Job Keeper, a freeze on overseas migration, with unemployment rates, and with federal budget deficits.

While it is their role to monitor these things, the important thing for property markets is to look at all of the pieces of the property puzzle, not just a select few.

As forecast by Propertyology at the start of this year, the relationship between the supply of housing for sale (and rent) and numerous inputs which influence buyer activity is resulting in intense property market pressure across much of Australia.

Australia has become accustomed to living with this new germ and, with a variety of economic stimulus initiatives due to kick in plus the federal government’s September announcement for credit supply improvements on the way, real estate momentum is set to ramp right up.

Frankly, I don’t care what all those economists say, I am doubling down and calling a SUMMERTIME BOOM. Call me an idiot if you want, but 20 percent price growth over the next 12-months in several locations will not surprise me in the slightest.

There is a 5-month lag between the day a property contract is signed until the transaction is captured as part of published median house price movement data. But the world has changed so much in the last 5-months.

By the time the Australian public have access to data that alerts them to the fact that real estate prices are **seriously** on the move they will have already missed out on double-digit growth.

I personally spent countless hours during the last week of September phoning umpteen real estate professionals from thirty (30) different cities. The common theme reported at the coal face is that there is an extreme shortage of properties (also verified by Propertyology’s data analysis), strong buyer activity and fast-growing asset values.

The current list of boom property markets is likely to expand significantly within just a few months. Australia is on track for its first widespread boom era since the turn of the century!

The buyer frenzy will be akin to seagulls fighting over a chip.

Folks, get your finances organised (right now) and beat the next flock of seagulls!

Here’s a summary of what’s happening right across Australia right now.

 

QUEENSLAND

NOOSA QLD: “…year-to-date price growth exceeds 20 percent in the eastern beaches,” according to Tyron Clein of McGrath. Local owner-occupiers are trading up, there’s an increase in people relocating from Brisbane to work-from-home, and the rental market is tight.

GOLD COAST QLD: Tony Coughran of Simply GC said his buyer’s agency has seen an influx of Melbourne residents looking to bring forward their retirement plans by relocating now for lifestyle purposes. While he has not observed any price growth so far this year, he said values have held firm on the Gold Coast.

BRISBANE QLD: “… Brisbane hasn’t been like this since 2006… the pressure is fever pitched,” according to Stone Real Estate’s Tristan Rowland, one of Brisbane’s best agents. When asked to comment about buyer confidence he said younger buyers are carefree, others are cautiously optimistic. “Families are keen to upgrade but they have very few properties to choose from… we are selling properties at prices well above vendor expectation because there’s no stock.” Mr Rowland also noted that the large blow-out in the time banks are taking to finalise finance applications, “…they can’t keep up with demand.”

TOWNSVILLE QLD: Damien Keyes, Keyes and Co said “…August was my strongest month in 8-years… house values have increased by 5 to 8 percent over the last year…”. Mr Keyes said he has observed an upward shift in the market since late last year and momentum has continued through the Covid period. There’s lots of job-creating projects, local owner-occupiers are trading up, first home buyers are very active, and they’ve had some interests from Melbourne and Sydney residents to relocate there for lifestyle and affordability.

CAIRNS QLD: Brian Reichardt of Cairns Property Office said “… prices have increased over the last 3-months.” Remax Cairns have reported their most successful six months ever and enquiry levels are 10-times higher than at the start of the year. “In a time where your lifestyle is being so much affected by the health concerns, I think our market is going to get better and better. More people are going to want to share in what we’re lucky enough to live in up here,” according to Stacey Quaid of Colliers International. Vacancy rates in Cairns as at the end of August were a very low 1.4 percent.

SUNSHINE COAST QLD: “…expats have returned and are buying back into the market… people are upsizing to permanent work-from-home (WFH) properties… Melbourne and Brisbane relocators are active…” according to Daniel Mendes of Amber Werchon Properties. Mr Mendes said multiple offers are frequent and he’s seen a few cash buyers. He feels that house price growth of roughly 10 percent has occurred this calendar year.

 

TASMANIA

BURNIE TAS: “… confidence is high, we’ve seen 10 percent growth already this year, supply is very tight…” said Matt Grice at One Agency.

HOBART TAS: Tony Collidge of PRD Hobart said “…August was our second-best month for sales in the past year and July was our best month for property management income. We were really only impacted in April and May, but the market bounced back in June.” The value of a standard house had increased slightly over the September quarter. Local buyer sentiment is buoyant, and they have an insufficient supply of sales listings to keep up with buyer demand. Conditions are cherry ripe for a second wave of Hobart real estate price growth.

LAUNCESTON TAS: According to Richard Bailey of Bushby Real Estate, “… prices have definitely increased over the last few month.” There is a major shortage of properties for sale in Launceston and there’s a series of exciting infrastructure and lifestyle projects in the construction pipeline. Tasmania has been Covid-free for a few months; it is business as usual.

 

CANBERRA

The Canberra apartment market continues to be significantly over-supplied, but the value of a quality house has already increased by circa 10 percent this calendar year, according to Claire Corby of Capital Buyer’s Agency. “It’s regular for properties to sell before auction and for vendor expectations to be exceeded. The buyer demographic is a mix of locals buying bigger houses to WFH, Sydney retirees are relocating here, and first home buyers are busy,” said Ms Corby.

 

NEW SOUTH WALES

ORANGE NSW: “… all of our restaurants and booked out through to Christmas and tourist accommodation is choccas.  Our real estate market keeps going nuts… we can’t keep up with the demand… we are well into another year of double-digit price growth and rents are roaring,” according to Ash Brown of One Agency.

Matt Ward of Aspect Buyers Agents concurred while adding “…  there’s a real shortage of stock in Orange, houses are selling within a few days without any formal marketing, local owner-occupiers are upgrading.” Mr Ward noted that while there are good suburban houses for under $500,000, seven-digit sale prices are no longer uncommon. An increasing number of Sydney residents are buying lifestyle acreages, some have brought forward their retirement plans and are relocating to Orange to WFH, including accountants, lawyers and doctors.

DUBBO NSW: “… when Covid started, the doom-and-gloom predictions made me ponder which staff I might need to lay-off but, within a couple of months, I have the opposite problem and need to employ more to keep up with demand… it’s insanely busy, Dubbo is firing on all cylinders,” said local agent, Matt Hansen. He said it was a healthy mix of buyer demographics and described local property market conditions as being “on the fringe of a boom” with year-to-date double-digit house price growth. “Our agency has had up to 30-groups applying to rent a house, some landlords had recently received a $50 weekly rent increase.” The August vacancy rate was 0.7 percent.

NEWCASTLE NSW: According to Tiron Manning of Newcastle Buyer’s Agent, “…first home buyers are very active… detached houses are under-supplied, and we’ve seen mild price growth, but apartments remain over-supplied.” Mr Manning has witnessed some Sydney escapees relocating to the Hunter and noted that Maitland’s property market is also strong.

COFFS HARBOUR NSW: “… I’ve seen people in tears because they can’t find somewhere to rent [refer ‘Australia’s rental vacancy’]… a standard house is today worth up to 10 percent more than at the start of the year… expats are coming home… the market is crazy… Covid has had the opposite effect to what people said,” according to Scott Nolan of Nolan Partners. Mr Nolan said multiple offers and properties selling within a few days was now the norm, $1 million sales are more common. “People are relocating from Sydney, Melbourne residents are planning their move while in lockdown, WFH is already a permanent thing for lots of people.”

ALBURY-WODONGA: “…buyers keep asking me two common questions – does it have a study and is the internet speed strong?” Virginia Scholz of Ray White has observed keen interest from Sydney and Melbourne residents looking to relocate to enjoy the region’s relaxed lifestyle, local wineries, great restaurants, and great communities to raise a family. She said “…our property market is strong. Owner-occupiers are very active, while investors are also chasing our strong yields and low rental supply.”

SYDNEY NSW: While acknowledging Sydney’s problematic inner-city apartment market, Kate Hill of Advisable Buyer’s Agents said “…activity picked up over the last couple of months in middle and outer-ring suburbs… it is rampant in some pockets… much of the general media reporting is bollocks… there are no bargains to be found… it feels like things are about to really heat up.”

WOLLONGONG NSW: “… price growth this year has been mild, but we’ve got no stock to sell, it’s nothing like the crash that economists forecast,” said Matthew Crockett of One Agency. He said his agency has no rental vacancies, standard houses were selling quickly, and first home buyers were particularly active.

 

VICTORIA

MILDURA: Ben Ridley of Collie and Tierney told Propertyology that “… from what I’ve seen first-hand, house values have already increased by 15 percent just this year.” Locals are trading up, first home buyers are jumping in, and he has taken several enquiries from Melbourne residents who are looking to relocate. “I’ve never seen anything like it… 16-contracts on one property… sale prices well above vendor expectations.” A former Melbourne resident himself, Mr Ridley said incredibly low rental vacancies kept pushing rents up and he has seen some investors cash in their shares for the safety of real estate. Propertyology flagged the fundamentals of Mildura’s property market last year.

BENDIGO QLD: “…you can’t buy a block of land at the moment, it’s all gone… The sub $450,000 established house market has probably moved up by 15 percent since January… we frequently have multiple offers from both buyers and tenants,” said Luke Goggin, Luke Goggin Real Estate. He has noted strong upgrade and first home buyer activity. For many years, Bendigo has consistently attracted people relocating from Melbourne, but Mr Goggin already senses an increase acceleration from this demographic. “Buyer questions now include WFH considerations.”

MELBOURNE VIC: Talented buyer’s agent, Cate Bakos, described Melbourne’s market as ‘stagnant’ and was optimistic about activity as soon as the state government allows the real estate industry to operate again. Melbourne has now had 2-months of lockdown, but the supply of properties for sale is still low. “Buyers are more concerned about missing out and rising house prices than they are concerned about falling house prices,” said Ms Bakos. Lisa Parker of Parker Buyer Advocates also noted that enquiry volumes from buyers during the lockdown had been very encouraging.

GEELONG VIC: “Real estate prices today are much the same as the start of the year. Buyer confidence has fallen a little bit in recent months, but last year’s federal election and the Banking Royal Commission caused much more grief for the market than what Covid has done,” according to Terry Cleary from Ray White Lara.

 

SOUTH AUSTRALIA

MOUNT GAMBIER SA: “It’s the strongest that Mount Gambier’s property market has been since way back in 2003… houses are frequently selling for prices well over the list value and within a week,” said Imogene Ryan of SAL Real Estate. Ms Ryan said locals were using the federal government’s HomeBuilder package to construct their dream home while first home buyer activity was also strong. Other buyers included people relocating to Mount Gambier from Darwin and Melbourne.

ADELAIDE SA: According to Dale Grey of Ouwens Casserly Real Estate, “…we have more buyers than sellers in the Adelaide Hills market… buyers are a mix of owner-occupiers and some investors, we’ve had a surprising number of parents paying cash for their adolescent children returning home from overseas.” Ms Grey said asset values definitely had not declined and guesstimated 2 to 5 percent growth over the 9-months this year.

 

WESTERN AUSTRALIA

MARGARET RIVER WA: Kelly Donaldson of Margaret River First National said that his market in Western Australia’s south has continued the improvement that started last year. “Local buyer sentiment has been strong for a while here. Older listings that accumulated during our lean years have been cleared out and momentum is building. We had an understandable 2-month lull during the national lockdown, but activity since June has been strong. Property prices certainly have not gone backwards.”

GERALDTON WA: “June and July were our agency’s best ever months in 30-years of real estate… sale prices are starting to exceed asking prices,” said Lara Sadowski of Geraldton Property Team. First home buyers and people buying renovators are the most active segments. Some people have already relocated from Melbourne and purchased beautiful beachfront homes for $600,000.

 

There you have it, folks. No crash. Indeed, the opposite – it’s the beginning of a national property boom!

Add to what is already happening on the ground that we’ve got various stimulus packages yet to kick in, commitments for infrastructure investment is off the charts, banks have just been directed to accelerate credit supply, and money is dirt-cheap.

While the glass-half-empty economists reckon they see a ‘cliff’, the view out of my front windscreen contains blue skies and lots of mountains.

It is a fait accompli that buyer activity and real estate values will gain more momentum each month!

While Covid was entering Australia in March, Propertyology wrote “…This is far from Armageddon, but it won’t take much for those with simple minds to believe otherwise… Propertyology maintains our initial stance that property market conditions right now are the best that they’ve been for more than a decade. The fundamentals have not changed… When the flock of seagulls come out and start fighting over that chip, they’ll drive property prices higher, making the biggest beneficiaries those who ate their chips before the flock arrived.”

For all of the disruption that Covid has caused, here is something positive that one can have to show for it. Get organised and get in the game. Contact us here.

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?

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