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What’s Hot, What’s Not?

What’s Hot, What’s Not?
May 20, 2019 Simon Pressley

Did you know there are 550 local government areas across this nation, with the clear majority of them being outside of our two biggest capital cities?

Some of these places are quite well known, such as Noosa and Port Hedland, and often for different reasons as these two examples highlight.

Others, however, are generally only on the radar of locals, or genuine property investment experts who bother to consider every single location when researching the best places to buy.

This research report outlines the best and worst performing real estate markets across Australia over the three months to February this year. Blow me down with a feather – most of the top performers are regional locations that plenty of people would struggle to find on a map!

Some of the worst performers, on the other hand, are locations that are well-known and well-populated to boot.

I chose to analyse quarterly changes in median prices, as opposed to monthly, because the larger sample size is better for data integrity, and it gives us a greater appreciation for current trends.

The hottest of them all

Using official data from our friends at Core Logic, I’ve analysed the property market of each of Australia’s 550 local government jurisdictions. According to the data, the hottest property market of them all right now is Whyalla.

Do you even know where that is?Well, it’s the third largest city in South Australia and is located on the picturesque Eyre Peninsula, however, the region’s natural beauty is not the reason for its strong real estate market performance.

Propertyology’s regular followers might recall, at the start of this year, that we flagged Whyalla as a candidate for 2019’s Australia’s Most Improved.

At the time of making that bold prediction, the latest data showed a 7.4 per cent decline in Whyalla’s median house price. But if we fast forward to the quarter ending February 2019 it has produced a spectacular 13.3 per cent increase in median house price in just three months.

Why?

Clearly, its median house price of less than $200,000 is attractive but the region is also set to be the beneficiary of a number of projects that will supercharge its economy.

The biggest one is a plan to build one of the largest steelworks in the world in a city that has long been associated with steel production.

The plan for a “mega” steel plant by GFG Alliance has already progressed to signed contracts worth more than $600 million as part of the transformative project.

That project, plus a $45 million hotel built on the Whyalla foreshore, a $145 million horticulture development and a $6 million recycling business has resulted in predictions of the region’s population exploding from 22,000 to 80,000 in just 10 or 20 years.

Hot literally – and sometimes figuratively

The second hottest market in Australia right now is Charters Towers in Northern Queensland, which is located about 130 kilometres southwest of the more well-known city of Townsville.

It’s warm there, and so is its property market at present.

The city is an important hub for a number of industries including beef and education, as well as boarding schools catering for remote rural families.

One of the reasons for its strong market upswing, though, is the resurgence in the mining sector over recent years, with Charters Towers home to significant gold deposits in particular.

In fact, Citigold has an ambitious plan to grow into a 218,000-ounce a year gold producer underground at Charters Towers.

All of these factors, as well as affordability, are behind its median house price increase of 7.5 per cent to $190,000 over the February quarter.

The improving conditions in the resources industry generally are also a factor behind the solid performances of the Port Hedland and Karratha markets in Western Australia.

Actually, there has never been a bigger roller-coaster property market in Australian history than Port Hedland. From $50,000 in 1990 to a peak median house price of $900,000 in December 2013 – it was then easily Australia’s most expensive location – Port Hedland bottomed out at $210,000 in late 2018.

However, it, along with Karratha, are now back in the upswing market cycle.

More red-hot markets

Of all the states in Australia, Victoria currently has the highest volume of strong real estate markets. The state’s hottest market at the moment is Alpine, which has produced 6.4 per cent growth over the year ending February 2019, and much of that (4.2 per cent) over the February quarter. If Alpine maintains this pace, that’s annualised growth of 16.8 per cent. Wow!

Among Victoria’s other regional locations that performed strongly over the quarter were Ballarat (2.2 per cent), Mildura (1.9 per cent) and Bendigo (1.5 per cent).

After already seeing a 23.9 per cent increase in median house price over the past three years – twice as much growth as Sydney – the regional NSW location of Gundagai is currently the strongest property market in the state.

Other strong markets in NSW over the year ending February 2019 include Lithgow (8.9 per cent), Orange (7.9 per cent), Lismore (6.4 per cent) and Dubbo (5.1 per cent). Did someone say regions never grow?

Related article: The rise and rise of satellite cities

While these regions are kicking goals, in Tasmania it is a mix of capital city and regional locations that are performing the strongest.

Derwent, Sorrell and Glenorchy – all are among the seven municipalities that make up Greater-Hobart – remain in the strongest top 10 per cent of LGAs in Australia right now.

Yes, Hobart’s property market is still producing growth, but there is no doubt that double-digit price growth has become increasingly rare during this period of all-time record tight credit supply.

In the north of Tasmania, the strength of markets like Launceston has defied all odds. Its 11.4 per cent growth over the year ending February 2019 makes it one of Australia’s strongest property markets right now.

What’s not hot

At the other end of the scale, though, we have a number of locations with numbers that are as appetising as a cold pie on a winter’s day.

Melbourne’s growth cycle came to an abrupt end in November 2017. In fact, the biggest decline in median house prices is in the Melbourne City municipality – losing 25 per cent in the past 12 months alone. Ouch!

Since the November 2017 peak to the end of February 2019, Port Phillip’s median house price has declined by $327,000, or 20 per cent, while Monash has so far lost $118,000, according to CoreLogic.

Some of the worst performers over the February quarter were located in Melbourne where prices have declined between 3.6 and 7.5 per cent depending on the location.

In Sydney, which commenced its downturn in July-August 2017, the median house price over the last 18 months has declined by $225,000 in so-called ‘blue-chip’ Balmain and in Sydney’s middle-ring Parramatta. The declines are milder in more affordable locations like Blacktown (down $75,000).

It’s anyone’s guess when the Sydney property market will find a floor. Clearly, the return of sensible credit will play a big role in that.

From wannabe homeowners, to property investors, to state government revenues, and the national economy, the entire country is being held to ransom by APRA’s insane insistence that banks use an interest rate of 7.25 per cent to assess loan applications.

Banks want business are have recently been slashing interest rates to prove it. But a borrower rate of 3.5 per cent is little more than window dressing if a property buyer can’t prove to a bank that they can afford loan repayments that are twice as expensive as the actual repayment. Crazy!

One has to question whether APRA’s ears are painted on. Grr!

I digress.

Australia’s sixth most expensive city, Wollongong, is now officially in a downturn with a 2.6 per cent decline over the last quarter, plus Newcastle’s growth cycle is also well and truly over with a 0.8 per cent decline over last quarter.

Here is the data of some of the top and bottom performers for the quarter ending February 2019. Capital city locations are in blue.

South Australia

Hot Markett

Whyalla – 13.3%
Clare & Gilbert Valley – 6.3%
Loxton Waikerie – 5.7%
Prospect – 4.3%
Holdfast Bay – 3.8%

Not Hot

Port Lincoln  (-5.2%)
Berri (-4.3%)
Murray Bridge (-2.1%)
Norwood Payneham  (-1.4%)
Campbelltown (-1.0%)

Victoria

Hot Markets

Alpine  (4.2%)
Moorabool (3.8%)
Golden Plains (3.7%)
Corangamite  (3.6%)
Melton  (0.4%)

Not Hot

Melbourne City  (-7.5%)
Port Phillip (-4.5%)
Monash (-4.1%)
Bayside (-4.1%)
Boroondara (-3.6%)

Queensland

Hot Markets

Charters Towers  (7.5%)
Biloela (Banana) (4.4%)
Mossman (Douglas) (2.4% )
Noosa (1.9%)
Moreton Bay  (0.9%)

Not Hot

Roma (Maronoa) (-7.9%)
Burdekin (-5.9%)
Ingham (Hinchinbrook)  (-4.8%)
Rockhampton (-1.9%)
Townsville (-1.5%)

New South Wales

Hot Markets

Gundagai (7.0%)
Lithgow  (4.3%)
Bellingen (2.9%)
Mosman  (2.1%)
Parkes (1.4%)

Not Hot

Lane Cove (-6.7%)
Rockdale (-4.0%)
Kiama (-3.2%)
Wollongong (-2.6%)
Inner-West Sydney (-2.3%)

Western Australia

Hot Markets

Port Hedland  (3.7%)
Esperance (3.0%)
Karratha (2.6%)
Subiaco  (2.3%)
Fremantle (2.1%)

Not Hot

Nedlands  (-3.1%)
Augusta-Margaret River (-3.0%)
Bayswater (-1.9%)
Canning  (-1.9%)
Victoria Park  (-1.7%)

Tasmania

Derwent Valley  (3.5%)
Northern Midlands  (3.3%)
Sorrell  (3.0%)
Glenorchy (1.9%)
Burnie (1.8%)

Not Hot

Waratah-Wynyard (-1.9%)

Northern Territory & Australian Capital Territory

Hot Markets

Palmerston  (3.7%)
Canberra (0.8%)

Not Hot

Darwin City  (-1.1%)
Litchfield (-0.8%)

Propertyology is Australia’s premier property market analyst and award-winning buyer’s agency. Every capital city, every non-capital city, we 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.

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