Property Report – April 2015

One of the best ways to identify markets likely to deliver price growth is to find the areas where sales activity is rising.

by Terry Ryder.
creator of hotspotting.com.au

Introduction
One of the best ways to identify markets likely to deliver price growth is to find the areas where sales activity is rising.

This is not hard to do, if you are prepared to pay for the raw data on sales. Unfortunately this is expensive. But we’ve done the job for you.

Every quarter, the Hotspotting team accesses data on the number of sales in every suburb and town across the nation. We analyse sales pattern to determine which markets are rising (prices likely to increase), which markets are falling (prices likely to decline or, at best, stop rising) and which markets have a steady record of consistent sales (likely to show solid price growth over time).

This edition of the Quarterly Market Report is devoted to helping you identify the locations which have rising sales momentum – as these are the places most likely to deliver price growth in the near future.

I also pinpoint the locations destined to experience price decline, because sales activity has deteriorated.

For analysis of markets nationwide, click on the topics below …

 

National Overview Sales volumes are more revealing than median price movements
Adelaide & SA Adelaide has more momentum than most cities.
Brisbane & QLD Qld regions rising; Brisbane set to challenge Sydney on price growth.
Canberra & ACT The national capital has stagnated – but no major decline.
Darwin & NT The December Quarter sales spurt is a little misleading.
Hobart & TAS Showing signs of life, but lukewarm at best.
Melbourne & VIC Melbourne likely to subside somewhat but specific areas will shine.
Perth & WA Perth is longer pumping, but remains solid.
Sydney & NSW Sydney still surging in defiance of downturn predictions.
Conclusion Don’t rely on median price data to chart markets and make decisions.

 

National Overview
Sales volumes are more revealing than median price movements.

The property industry measures market movements by median price changes – but this is a flawed tool for depicting real estate fortunes. Changes in sales volumes are far more relevant and useful: medians record the recent past for prices, while sales volumes predict the future.

Sales volumes data tells us the number of sales of houses and units. History shows there is a correlation between sales volumes and price movements: the number of sales changes first and prices react – with a time lag. This is true whether markets are rising or falling.

In the current up-cycle in some of our cities, price rises have been preceded by increases in the number of dwellings sold. This means investors can buy ahead of price growth, by finding locations where sales volumes are rising but prices have not yet moved.

The problem with median prices is that they are prone to create statistical absurdities. It’s possible to find areas where median prices are rising while, at the same time, property values are falling. Writers misinterpret a 10% rise in the median price as a 10% rise in property values. Often it means nothing of the sort.

Distortions in median prices can be caused by small sales samples, or by a short time frame, or by increased activity at one end of the market, or by the marketing of upmarket development (causing the local median to rise) or budget property (causing the local median to fall, even though values may be rising).

Medians often record the type of property selling, rather than movements in values.

All the major research sources claim to have methodologies which weed out the anomalies but the record suggests otherwise. We often have situations where the ABS records a rising market in an area where Domain reports a declining market. Did the Darwin unit market rise strongly in 2013 or decline significantly? Domain recorded an 8% rise in the median unit price for Darwin, while RP Data’s index claimed a 4% decline.

The misuse of median prices and price indexes confuses and misinforms more than it enlightens.

But there is no disputing sales volumes data recorded by government departments.

By charting changes in sales activity, it’s possible to pinpoint areas where prices are most likely to rise – or fall, in the case of suburbs or towns with declining sales volumes.

House prices rose, on average, about 6% in the Brisbane metropolitan area in 2014, with specific suburbs rising considerably more. These price rises were preceded by significant upticks in sales volumes in 2013, a process that generally continued in 2014.

I would suggest that the fairly moderate average price rise in Brisbane last year is just the beginning and that there will be more price growth in 2015. Brisbane has been displaying a typical pattern – it takes time for prices to react to the upturn in market activity.

The patterns of sales numbers in the major cities suggest the following likely outcomes in 2015:-

  • Sydney’s growth is set to continue, with no decline yet evident.
  • Brisbane will challenge Sydney as the national price growth leader.
  • Adelaide will also rise up the price growth pecking order.
  • Melbourne will subside a little.
  • Hobart will do better, but will not reach any great heights.
  • Canberra will continue to struggle.
  • Darwin and Perth will be moderate performers.
  • Specific regional cities will record good price growth, particularly in New South Wales and Queensland.

The sales activity patterns also suggest markets where prices are likely to decline. Most of these locations are former boom areas where developers built too many new dwellings and oversupplied local markets. In some cases, this coincided with a decrease in resources-related demand.

We have already seen sharp decreases in sales numbers, followed by falling prices, in cities like Gladstone in Queensland, the Hunter region in New South Wales and Port Hedland in Western Australia.

There are a number of locations, mostly in Queensland and WA, where this will continue in 2015.

 

Adelaide and South Australia
Adelaide has more momentum than most cities

Adelaide is our most under-rated capital city. It’s seen as a place that lacks the oomph that Perth and Brisbane get from dynamic state economies and strongly growing populations.

Yet Adelaide has a solid track record over time in delivering price growth. If you’ve been absorbing media hysteria over Sydney’s property boom recently, you may be surprised to learn that Adelaide has delivered stronger growth rates over the past 10 years than Sydney has.

And right now there is considerable momentum in the Adelaide market. Sales volumes have been rising steadily for a year or so – and in the second half of 2014 we saw the first signs of solid price growth.

There are growth markets right across the Adelaide metropolitan area. While the number of rising markets is reducing in some other cities (including Perth, Darwin and Melbourne), Adelaide is maintaining its upward trajectory.

Most of the standout markets are the more affordable ones, headed by the Salisbury LGA in the north of the city. Real estate snobs would never buy there because it’s stigmatised as downmarket and decidedly bogan, but this precinct ticks many of the boxes for home buyers and investors: affordable, good transport infrastructure (both road and rail), good amenities like schools and shops, and proximity to major jobs nodes.

One thing that counts against Salisbury is the impending closure of a major car plant which is a significant employer. Often such events are portrayed in media as the death of the local property market, but it’s seldom true. This municipality contains many other big employment precincts, including major industrial estates and the Edinburgh military precinct, and it will survive the car plant closure.

As an example of the growth markets in Salisbury, in the suburb of Parafield Gardens quarterly sales have risen from 47 to 49 to 57 to 74 to 88. That kind of sales uplift leads to price growth.

The neighbouring municipality of Playford is another affordable northern area with a significant number of growth suburbs, in terms of rising sales volumes. Playford and Salisbury together present many suburbs with median prices well below $300,000. They include the Elizabeth precinct (eight suburbs, all with Elizabeth in the name) where sales in consecutive quarters have been 140, 162, 178, 153, 180, 194 and 198.

In the far south of the Adelaide metro area is another municipality with a lot of forward momentum: the City of Onkaparinga, which is Adelaide’s leading population growth precinct. It includes seaside villages, a noted wine district and new growth suburbs. It benefits from upgrades to rail and motorway links and is well set up to deliver price growth.

A middle market area with good growth prospects the LGA of Campbelltown, which includes numerous suburbs with median prices in the $400,000 to $500,000 range. They include Campbelltown (the suburb), Athelstone, Rostrevor and Paradise.

The Adelaide CBD is a notable growth market. Gradually the number of options for the inner-city apartment lifestyle is growing and there is a steady rise in apartment sales. So far, there’s no indication of the over-building that’s happening in Melbourne and Brisbane.

Overall, Adelaide’s apartment market has been growing steadily since the middle of 2012. The number of unit sales has grown in almost every quarter since then. In the Adelaide CBD, sales levels have risen from around 60-70 per quarter in 2012-13 to above 100 per quarter in the two most recent quarters. Seaside Glenelg also has a rising apartment market: quarterly sales since March 2013 have been 34, 37, 38, 41, 43, 49, 42 and 54.

There are growth markets in regional South Australia as well, headed by Mount Gambier and Murray Bridge. Both are places that few people outside of the state would know much about, but there are good prospects.

Mount Gambier, for example, has some significant infrastructure projects and a number of emerging projects in the resources and energy sector. It is also gaining recognition as a mecca for jazz music.

 

Brisbane and Queensland
Queensland regions rising, while Brisbane set to challenge Sydney on price growth

There is little doubt that Queensland is a growth story in real estate. Brisbane has been rising steadily over the past 18 months and that started to be reflected in price growth data in 2014. There is more to come, I’m sure.

But the biggest Queensland stories are outside the state capital. Toowoomba, Cairns and the Sunshine Coast are the markets that really stand out, both in terms of sales volumes and price escalation.

All three cities are undergoing transformation in various ways and that has propelled their property markets forward.

The Sunshine Coast and Cairns are both what I call transition economies. Both have traditionally relied on tourism, which is a fragile and sometimes volatile sector. Property markets underpinned by tourism and retirement never produce major capital growth long-term (they may have short-term spurts but they underachieve long-term).

But both the Sunshine Coast and Cairns are being revolutionised by infrastructure spending, emergence of new business sectors and local councils proactively seeking development and commerce. At the same time, tourism has been going through a growth patch.

Both cities have numerous suburbs where sales activity has grown over the past 12-18 months and that increasingly is translating into price growth. Cairns is a little ahead of the Sunshine Coast in the cycle and has numerous suburbs which delivered double-digit growth in median prices last year.

The Sunshine Coast is starting to follow suit and I expect plenty of capital growth this year and beyond.

Toowoomba has a different story. It is a long-term solid citizen boosted by economic diversity and a strategic location – but is now propelled to greater achievement through a major new sector, the coal seam gas industry. Toowoomba is the capital city of the Surat Basin resources province and the new business that has generated has allowed events such as the creation of a new airport. There’s a lot more to come in terms of infrastructure spending.

Other regional cities with solid prospects, but yet to deliver a spurt in sales, include Townsville and Hervey Bay. There are signs these locations are starting to move.

Queensland, conversely, has many locations with sales trends that suggest prices going backwards. Just as rising sales volumes produce price growth, sharply falling sales activity usually causes prices to fall, sometimes alarmingly.

The places thus afflicted in Queensland are all centres impacted by the resources sector but it’s not the mining downturn that’s hurt these markets. They’ve declined because of developer over-building and the growing use of fly-in-fly-out workforces accommodated in temporary workers camps.

The Surat Basin towns are a case in point. Our research shows that about 15,000 of the current population are resources sector personnel – and developers built lots of houses in towns like Dalby, Chinchilla and Miles in anticipation of big rental demand. But virtually all of those 15,000 workers are FIFO personnel living in workers villages, not in the conventional rental market.

The outcome is 21% vacancies in Chinchilla and 30% in Miles. Ouch.

Similarly afflicted are Gladstone, Mackay, Emerald and coal-miming towns like Moranbah, Dysart and Blackwater. Do not buy in these places unless you hate money.

Logan City is the growth leader in the Greater Brisbane area. It has more growth markets than any other sector, although the Brisbane North precinct continues to challenge.

The Greater Brisbane area is covered by five municipalities – the Brisbane, Logan, Moreton Bay, Redland and Ipswich council areas. Because of the size of the Brisbane City municipality, for the purposes of this analysis we divide it into the north, south, east, west and inner precincts.

All of these nine general precincts in Greater Brisbane (with the exception of Brisbane West) have substantial numbers of growth markets. Even the least prolific ones, like Ipswich City in the south-west and Redland City in the east, have strong markets. Ipswich has 11 ranked suburbs, including five Rising Steadily and six Consistencymarkets, while Redland has five growth markets and five marked by consistent sales.

But this is dwarfed by the performance of the most impressive precincts – Brisbane North (37 ranked markets), Moreton Bay (28), Brisbane South (24) and Logan (27).

Examples of the growth suburbs in Logan City include Woodridge, which has recorded a remarkable pattern of growth over the past two years. Sales in consecutive quarters have been 44, 50, 62, 64, 75, 77, 74 and 82. Rochedale South is a rapidly ascendant market, with sales rising from 63 to 79 to 110 in the past three quarters.

The northern outskirts of the Greater Brisbane area, covered by the Moreton Bay Regional Council area, continue to present growth markets. This is a precinct of affordable suburbs, many with train links south to central Brisbane and north to the Sunshine Coast.

Traditionally not a strong performer on capital growth, the Moreton Bay precinct is coming into a period of price growth – it has 10 Rising Steadily and 18 Consistency markets. The suburb of Caboolture, for example, has lifted sales from previous levels of about 70 to 80 sales per quarter in 2012-13 to levels above 130 sales per quarter in the latter part of 2014.

 

Canberra and the ACT
The national capital has stagnated – but no major decline

Canberra is a fine example of how sales momentum impacts on price performance. Canberra has had no growth in sales activity for the past 18 months or so, and prices have gone nowhere.

Canberra has traditionally been a very solid market. I liked to call it “boringly consistent”, at one time dubbing it the Goldilocks market – not too hot, not too cold, just right. A city created for governance evolved into a place with the lowest unemployment and the highest average incomes in the land. Ergo, a very steady property market.

Then along came Tony “Dead Man Walking” Abbott and his slash-and-burn government. They say that the Liberal Party is bad for Canberra real estate while the market thrives when Labor is in power. Presumably this is because Labor means bigger government and more public servants, while a Liberal regime means the opposite.

So with public servants being sacked or relocated to cheaper regional areas, or under threat of such, confidence has been wounded and real estate demand has contracted.

There has been a steady decline in the number of dwelling sales in Canberra over the past two years. It’s almost impossible to find a growth suburb. The only places showing a glimmer of growth in activity are outlying areas with new estates selling house-and-land packages.

But overall it’s a story of stagnation and contraction.

The overall Canberra dwelling market peaked in the June 2013 Quarter, with around 2,100 residential sales, Since then it’s been a case of slow but steady decline, with 1,800 sales in the September 2014 Quarter and just over 1,700 in the December 2014 Quarter.

The house market has held up the best. It has declined, but not much.

On the other hand, the apartment market looks rather unwell. Sales numbers have dropped and dropped, quarter after quarter. In 2012, Canberra typically sold 800-plus units per quarter. But in the past five consecutive quarters, there have been fewer than 680 sales, dropping to about 500 in the December 2014 Quarter.

The point is well illustrated by Kingston, the single biggest apartment market in Canberra. Its sales levels have fallen sharply in the past two years. Comparing the past three September Quarters, there were 102 sales in 2012, 76 in 2013 and 35 in 2014.

In another major apartment market, in the suburb of Braddon, unit sales in the past six consecutive quarters have been 64, 64, 38, 28, 37 and 27.

It’s a good market to avoid.

 

Darwin and the Northern Territory
The December Quarter sales spurt is a little misleading

At first glance, looking at the sales figures for the December Quarter, it might appear that Darwin had arrested earlier decline and was growing again. But closer examination reveals otherwise.

The total number of dwelling sales did indeed rise in the most recent quarter. But this is because of the new developing suburbs in the satellite city of Palmerston. Most of the population growth in the Darwin metropolitan area happens in the City of Palmerston because it has land for new estates.

There are new suburbs under development, including Johnston and Zuccoli – plus the longer-established Durack. Whenever new stages are released to the market, there’s a surge in sales. That happened in the December Quarter, when Johnston, Zuccoli and Durack jointly recorded 210 house sales, well above the norm.

This explains why there were 350 house sales in Palmerston, compared to 180 in the March 2014 Quarter and 193 in the September 2014 Quarter.

Beyond those new growth suburbs, there are few rising markets across the Darwin metropolitan area.

In the City of Darwin, residential sales in the December Quarter represented a small rise on the June and September Quarters, but were below the March Quarter total of sales.

Apartment sales in the city of Darwin have fallen away since their peak in the December 2013 Quarter.

Overall, the Territory unit market declined in 2014, compared to the much higher sales levels in 2012 and 2013. Unit sales totalled above 300 in most quarters in those two years. The December 2013 Quarter recorded 353 apartment sales. But in 2014 quarterly sales were 280, 290, 260 and 280 – consistent, but below the levels of the previous two years.

Outside of Darwin, in the sparsely populated Northern Territory, both Alice Springs and Katherine look to be steady markets, without any major growth momentum. Tennant Creek produces too few sales to show any discernible pattern.

 

Hobart and Tasmania
Showing signs of life, but lukewarm at best

There are growing signs of revival in the Hobart property market. During 2014 we saw increases in sales activity – nothing spectacular, but a steady improvement. This was reflected in minor growth in the city’s median house price.

I’m expecting that process to advance in 2015. Tasmania has been hindered for a long time by a lack of economic impetus and an absence of decisive government. There seems now to be improvement to both those factors. There has also been stimulus from the State Government with generous grants for first-time buyers building new homes.

Tasmania has been on a slow but steady rise for the past two years. There was a pause in the progress in the September 2014 Quarter but a recovery in the December Quarter.

In the Hobart metropolitan area, there has been that same pattern of steady increases in activity, throughout 2013 and early 2014, a pause in the September 2014 Quarter, then a revival after that.

The overall pattern of gradual improvement has brought a small increase in prices. According to Domain, there was a 3% annual rise in the median house price for Hobart in 2014.

The City of Hobart LGA, which includes the Hobart LGA and nearby inner-city suburbs, had generally elevated sales levels in 2014, compared to the year before.

But there have been more encouraging signs in the City of Clarence, which covers suburbs on the other side of the River Derwent. In this precinct, sales activity has gradually increased since mid-2013 and recorded its highest levels in the December 2014 Quarter. The area has some suburbs showing good forward momentum, including Howrah and Lindisfarne.

The City of Glenorchy, which covers a range of cheaper suburbs north of Hobart CBD, is also trending in the right direction. Four suburbs in the Glenorchy LGA have rising activity, including Moonah,  Claremont, Glenorchy and Lutana.

Launceston tells a similar story to Hobart. Overall, the trend is one of slow but steady growth in sales activity and Tasmania’s second city has some suburbs which are rising markets.

So overall, Tasmania presents as lukewarm rather than hot. I expect some price growth this year, but it won’t be a boom market.

 

Melbourne and Victoria
Melbourne likely to subside somewhat but specific areas will shine

Melbourne has not managed to match Sydney over the past two years. Melbourne has recorded solid growth, but at levels roughly half those in Sydney.

Nevertheless, there have been growth markets spread throughout the Melbourne metropolitan area. There isn’t a single market leader, but strong precincts north, south, east and west of the Melbourne CBD.

Local government areas that feature strongly include Brimbank in Melbourne’s west; Monash in the mid south-east; Casey, Kingston and Greater Dandenong in the far south-east; Mornington Peninsula in the far south; Whitehorse in the east; Darebin in the mid north; and Whittlesea in the far north.

Upmarket areas such as the Boroondara LGA and the Glen Eira LGA feature, , but most of the standout precincts are middle market and bottom end suburbs.

Melbourne’s up-cycle began in 2013 with the inner-city and the prestige suburbs of the inner south-east. But in 2014 the momentum spread increasingly to the middle ring and outer ring suburbs.

Whittlesea in the north of the metropolitan area is a strongly emerging precinct, with a number of suburbs with rising activity. The key feature for the suburbs in this precinct is affordability, coupled with good transport links and access to major jobs nodes.

The Darebin municipality in the mid north is another rising precinct, with suburbs like Preston, Thornbury and Reservoir delivering solid upward trends.

The Brimbank LGA in the western suburbs continues to stand out. Again, it’s the power combination of affordability, good infrastructure and jobs nodes that is driving this precinct. The suburb of Sunshine is the nucleus of this precinct – its infrastructure includes a major transport hub, a major hospital and university campuses

Similar forces are pushing the market in the Casey LGA in the south-east and nearby Greater Dandenong.

The Kingston LGA, which includes middle market suburbs such as Cheltenham and Parkdale, continues to emerge with a number of rising markets and other marked by consistent sales.

Other middle market areas that continue to feature are the Monash and Whitehorse LGAs. Monash City includes suburbs such as Oakleigh and Chadstone, while the Whitehorse LGA east of the Melbourne CBD includes upwardly-mobile suburbs like Box Hill, Mont Albert and Blackburn.

Market momentum in the Melbourne metropolitan area spreads down to the Mornington Peninsula in the far south, where there are numerous suburbs with rising sales or consistent markets. Transport links have undergone a number of major improvements in recent years and that helps those markets.

Overall, Melbourne looks to be slowing a little, compared to the previous two years, but the areas mentioned above are likely to deliver solid results for property owners.

 

Perth and Western Australia
Perth no longer pumping but remains solid; some regional centres rising

Perth was the first capital city to get on a roll, alongside Darwin. That was in 2012, well ahead of the rise of Sydney which has so captivated the media. Perth started 2013 competing with Darwin as the capital growth leader among the capital cities, before Sydney took over in the middle of 2013.

In terms of sales activity, Perth peaked in the March Quarter 2013. Its price growth slowed after that. The gradual decline in sales volumes continued in 2014 and by the end of the year, annual price growth had dropped to just 1% or 2%, depending on whose figures you believe.

So whereas in 2012 and 2013 Perth had many growth suburbs across the metropolitan area, the number of rising markets deteriorated throughout 2014. But Perth remains a very solid market. Many of the former growth suburbs have not declined markedly – they have tapered off and become what we term “Consistency” markets.

Perth now has only a small number of suburbs with rising sales volumes but many “Consistency markets”.

But the WA capital is a good lesson in the dangers of generalising about markets. While the median price for metropolitan Perth rose only 1% or 2% in 2014, a number of individual suburbs had solid growth, including some with double-digit increases in their median house prices.

And equally, while the dominant characteristic of Perth today is suburbs with steady sales rather than growing sales, there still remain some noteworthy growth markets.

Mostly, these are suburbs that fit a basic formula for price growth: affordability plus infrastructure plus jobs nodes. Cheaper areas in the middle and outer ring suburbs with good infrastructure, particularly transport links, and proximity to employment nodes, are still doing well.

There are growth suburbs still to be found in the municipalities of Armadale in the south-east, Joondalup in the north, Wanneroo in the far north and coastal Rockingham in the far south. Another precinct with still vibrant markets is the Stirling LGA, which includes suburbs such as Balcatta, Doubleview, Innaloo and Mount Lawley.

The Armadale LGA ranks No.1 on the number of growth suburbs, which include Kelmscott, Mt Nasura, Seville Grove, Roleystone and Armadale (the suburb).

Wanneroo is close behind, with growth suburbs including Butler, Banksia Grove, Tapping and Yanchep, as well as a significant number of “Consistency” markets.

Outside Perth, the leading regional centres continue to be Mandurah and Busselton. Both had good price growth last year and both have elevated sales activity, suggesting more growth in 2015.

Geraldton has emerged recently as a growth market. This very solid regional city north of Perth has a diverse economy, with some impact from the iron ore industry, but without dependence on it. Many though Geraldton would fall away when the proposed Oakajee port project stalled, but the city has other assets and its property market is steadily growing.

 

Sydney and New South Wales
Sydney still surging in defiance of downturn predictions

Media commentators, notably economists with limited knowledge of real estate, keep calling the end to the Sydney boom – but the sales figures suggest there’s still plenty of life in Sydney markets.

There continue to be growth markets spread across the metropolitan areas, with renewed momentum in Top End markets, as well as growth in the middle ring and outer suburbs.

Sydney City is very prominent, as are the prestige areas covered by the Woollahra and Warringah municipalities, but equally there is exceptional activity in outer areas such as Penrith and Blacktown in the west, and Camden and Campbelltown in the far south-west.

One feature is the revival of Top End suburbs, which surged in 2013 and peaked in the December Quarter of that year, before subsiding somewhat in the first half of 2014. But there was a marked revival in many of the millionaire suburbs in the December Quarter of 2014.

Mosman, for example, rose throughout 2013, with quarterly sales of 162, 203, 230 and peaking with 260 in the December 2013 Quarter. Sales dropped to 189 in the March 2014 quarter but revived later in the year, reaching a new peak of close to 300 sales in the December 2014 Quarter.

Others with similar patterns include Randwick, Neutral Bay, Vaucluse, Seaforth, North Bondi, Paddington, Roseville, Queenscliff and Rozelle, The Woollahra and Warringah LGAs stand out, each with six suburbs rated at Rising Steadily.

The Sydney City LGA continues to be highly active with buyers of apartments.

At the same time, some markets in the outer reaches of the metropolitan area have become market leaders. The far south-west of the Sydney metropolitan area is the leading precinct. Both the Campbelltown and Camden LGAs have strong markets.

Harrington Park in the Camden LGA has had quarterly sales since March 2013 of 35, 48, 56, 63, 63, 72, 73 and 85 – while Leumeah in the Campbelltown LGA has recorded sales of 45, 54, 65, 65 and 90 in the past five consecutive quarters.

The City of Penrith, the far west, was our rising star of 2014, and still looks strong, boosted by infrastructure spending and an ambitious local council. The Blacktown LGA, which was another leading Sydney sector throughout 2014, continues to deliver growth markets.

One of the features of 2014 was the emergence of markets in regional New South Wales. The momentum has continued and there are now growth suburbs and towns throughout the NSW regional areas.

This started early in 2014 in locations close to Sydney, including Gosford, Wyong, Newcastle, the Blue Mountains and Wollongong. Towards the end of last year, we observed more distant markets stirring to life, including Tamworth, Port Macquarie, Albury and Dubbo.

We can now add Orange, Goulburn, Ballina, Coffs Harbour, Tweed Heads and Wagga Wagga to the list of NSW regional centres with growth markets. In addition, a number of markets in the wider Newcastle area are showing life.

In some cases, we are seeing strong market activity in areas (such as Port Macquarie and Gosford) which have been dismal performers on capital growth over the past 10 years, but are now recording significant upturns in market activity, with prices following.

The Gosford and Wyong areas, which were among the first to rise in regional NSW, continue to be among the strongest precincts. Unit sales in the suburb of Gosford have been 31, 47, 52, 54, 62 and 86 in the past six consecutive quarters.

The wider Newcastle area continues to deliver growth markets and others marked by admirable consistency. The LGAs of Newcastle, Lake Macquarie and Port Stephens jointly have 19 ranked suburbs. Cardiff in the Lake Macquarie LGA has seen dwelling sales rise from 26 to 48 to 70 in recent quarters.

There are also glimmers of life in some of the nearby Hunter Valley areas, which have been suppressed recently by developer oversupply and a reduction in coal-related demand. The Maitland LGA in particular appears to be mounting a revival and now has threeRising Steadily markets, while nearby Cessnock has two growth markets.

The Tweed municipality in the north of the state continues to emerge with growth markets, while south of Sydney the Wollongong and Shoalhaven area have numerous ranked markets.

In Goulburn, near Canberra, sales have totalled 116, 120, 144, 145 and 160 in recent quarters.

 

Conclusion:
Don’t rely on median price data to chart markets and make decisions

It’s important for real estate consumers to understand the fickle nature of median data.

Anything that is measured with a median – including prices, rents and yields – is subject to anomalies and, sometimes, outright absurdities.

Too often, research companies spit lists based on medians out of their computers and send them to newspapers and magazines, which publish them without oversight or scrutiny. The outcome is misinformation, which results in consumers making bad investment decisions.

One research company regularly sends out a list which claims to show the best places to buy in Australia for the best median rental yields. This contains so many absurdities it’s embarrassing.

It includes locations with high vacancies, falling rentals and markets generally in decline, but the computer doesn’t discriminate – it just coughs up the list what was ordered.

Before long consumers are reading that you can get great rental returns in locations such as Port Hedland, Kambalda, Moranbah and Chinchilla – all places with property market conditions ranging from poor to dangerous to disastrous. For some owners in these places, the rental return is zero, because they can’t find a tenant at any price.

Medians most often produce inaccurate data when the sales sample is small or the time frame is short. Medians do have their uses but they must be treated with caution, always.

There are much better ways to determine the solid places to consider for investment – and charting sales activity is one of the best.

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