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The Phenomenon Of The Intangible

The Phenomenon Of The Intangible
March 7, 2023 Propertyology Head of Research and REIA Hall of Famer, Simon Pressley

On the ‘demand’ side and on the ‘supply’ side of the real estate equation, there are umpteen factors that collectively influence the performance of a property market. Many of these factors are measured numerically using a wide range of data, but some factors with the biggest impacts on property markets are intangible.

The analytical brain likes to analyse ‘what’ has happened. They are drawn mostly towards lagging data and generally have a default interest in explaining the results of the recent past.

The science brain likes to understand ‘why’ something has happened. Our interest goes much deeper in dissecting a bigger bunch of inputs and outputs to uncover proof which supports the cause and effect of things. The more this skill is refined, the better the science brain is at analysing leading indicators and possible future performance.

There are as many as 100 different metrics (both leading and lagging data sets) which Propertyology draws upon for each of the 400 townships in Australia.


Case Study

Using just 2 of those metrics, the graphic below provides insights into both ‘what’ has happened and one reason as to ‘why’ it happened.

The green columns in the graphic plot the median house value (a ‘lagging’ figure) for Adelaide, Brisbane, Melbourne and Sydney over the last 11-years.

The pattern of those green columns is very similar for Sydney and Melbourne.

Adelaide and Brisbane have a different pattern.

One of the biggest influences on the degree of change in asset values is the volume of housing supply available for willing buyers – the blue line running from left to right in this graphic.

Put simply, whether the volume of properties listed for sale at a particular point in time is above or below the historical equilibrium means buyers either have a lot or very little to choose from.

Low levels of resale supply listings produce an environment wherein the competition from buyers for a tight number of properties generates capital growth.


Related research: 80 locations that outperformed Sydney and Melbourne


In the first graphic, the level of the blue line (supply volume) directly influenced the very different rates of capital growth that were produced in different years for these four different capital cities.

And the current level of supply will have a leading influence in what happens to asset values in the near term.



It seems quite ironic that it was a collection of ‘intangibles’ which led to the pressure that started Hobart’s property market growth cycle in 2015 and another intangible of a very different kind which is influencing the performance right now.

Back in 2014, a majority of the metrics for Hobart were horrible. The state was crawling its way out of recession, local confidence was shot, the property market was dead, and the volume of housing supply was elevated.

Despite that backdrop, I personally invested in Hobart real estate in mid-2014, leading the way for 100 other Propertyology clients over the following 2-years.

While the lagging indicators were weak in 2014, a big bunch of announcements (intangibles) left us with no doubt that significant improvement in Hobart’s economy was just around the corner. After lots of cross-referencing and analysing our evidence, we got as many investors into the market as we could.

Progressively, Tasmania’s economic ranking improved from 8th out of 8 in 2014 to top billing just 6-years later.

What were initially ‘intangibles’ had materialised into a spectacular increase in jobs, from 100,000 to 120,000 over the 6-years leading up to the pandemic.

The sustained economic growth led to improved household incomes and confidence, fostering a supportive environment for homeownership, upgrades and migration from mainlanders.

The increase in buyer activity saw housing supply volumes (the blue line) consistently fall to record low after record low, pushing Hobart house prices 130 percent higher over 8-years to March 2022.

The latest ‘intangible’ is the earlier (and sharper) than expected action by the RBA along with the subsequent response to interest rate increases from Hobart buyers.

RBA’s actions surprised everyone and affected buyer confidence all over Australia. But analysis of a few key metrics suggests a bigger retraction in buyer activity in Hobart than most locations.

The rise of that blue line in the Hobart graphic since the May 2022 is steep.

I believe the cause is a phenomenon which I call ‘buyer fatigue’ – a rather rare intangible. But it is very rare for any property market to run so strong for so long.

Digging into the detail, the volume of properties added to Hobart’s market ‘for sale’ in each of the last 12-months is quite normal.

In fact, the 3,800 properties extra properties listed for sale during the 6-months of last Spring and Summer is around 10 percent less than the same period in 2014 and 2015, when 34,000 fewer people lived in Hobart.

But reduced interest from buyers means properties are taking longer to sell and the total volume of supply has therefore accelerated, although the current total listing supply of 2,500 remains historically very low still.


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

In real estate as with life in general, every outcome is a result of a collection of inputs. In Hobart’s case, the inputs which typically produce a decline in asset values currently are not apparent.

  • The Hobart economy is still roaring with everyone who wants a job gainfully employed and plenty of other jobs waiting to be filled. And wages are now rising at the fastest rate in a decade. So, the size and stability of household incomes is literally in best-ever territory. Tick.
  • The size of a typical household mortgage is relatively low compared to many parts of Australia and household equity is extremely high. Big tick.
  • Hobart is 1 out of 4 capital cities enjoying a net gain in internal migration. Another tick.
  • The rental vacancy rate has been locked below 1 percent for 7-years. The current volume of advertised rental stock is less than half what it was when this period began back in 2014.
  • Hobart’s major project pipeline is healthy. Meanwhile, the growing likelihood of the state entering a team in the national AFL competition with a new world-class stadium and entertainment precinct will be a gamechanger for economic growth, the city’s profile (domestically and globally) and extra energy for the community.

Hobart’s property market fundamentals are therefore still very good.

It’s just that buyers have decided they need a rest. This is a phenomenon that has neither ‘leading’ or ‘lagging’ metrics for any of us to measure.

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.