Property Report – December 2015
There are many others. The best way to stay safe is to question everything you read or hear in mainstream media.
by Terry Ryder.
creator of hotspotting.com.au
Looking ahead to 2016 – changes in the national pecking order.
The year just ending has been a pivotal one in Australian real estate. It has witnessed the end to one boom and the rise of another. As we approach the end of 2015, there is a changing of the guard, with Melbourne poised to overtake Sydney in the national pecking order.
Other things are changing. Regional centres close to Sydney, which caught the boom wave from the capital city, are fading in unison with Sydney – but regional centres further afield are rising.
Cities which have done little to date, such as Brisbane, Canberra, Adelaide and Hobart, are showing signs of getting on a more substantial growth path.
Across regional Australia, there are markets going rapidly backwards, many that are stagnating, some that are rising moderately and others that are showing signs of strong growth.
This is situation normal in Australian real estate: local markets doing their own thing for local reasons. It’s a big country and there is no such thing as “the Australian property market”. There are always opportunities to buy for future growth – somewhere in Australia.
For analysis of markets nationwide, click on the topics below …
|National Overview||What to expect in Australian property markets in the year ahead.|
|Adelaide & SA||Adelaide will present a strong value proposition in 2016.|
|Brisbane & QLD||South-east Queensland presents Australia’s No.1 growth opportunity.|
|Canberra & ACT||The national capital is ready to rise from the doldrums.|
|Darwin & NT||Rock bottom among the capital cities and likely to stay there.|
|Hobart & TAS||Poised to have its best real estate year in a decade.|
|Melbourne & VIC||Melbourne set to overtake Sydney, but market peak is near.|
|Perth & WA||Perth, heading towards bottom, presents great buying opportunities.|
|Sydney & NSW||Sydney growth will be in single digits in 2016, but regional cities will rise.|
|Conclusion||Stand by for another year of media myths and misinformation.|
Here’s what to expect in Australian property markets in the year ahead
If you’re a regular reader of newspapers, you’re likely to have a distorted view of where the real estate industry currently sits and where it will go in 2016.
Do yourself a big favour: stop reading newspapers, clear your head of everything you think you know about real estate and start doing some real research.
You can start by reading this report. Unlike journalists who re-write press releases from a standpoint of little knowledge, I have 33 years experience in researching, analysing and writing about Australian residential real estate.
Everything I say about markets is based on research. I have a team gathering information every day to inform my views about markets across Australia.
Here’s what I know to be true …
- Media talks about “the Australian property market”. There is no such thing. The Australian residential property industry is made up of thousands of individual local markets – and they’re not all moving in the same direction and they’re not all travelling at the same speed.
- Media talks about “the Australian property boom”. No such event has taken place. There has been a boom in Sydney and in a small number of regional markets. Everywhere else has had moderate growth, or no growth, or negative growth. The last time Australia had a genuine nationwide property boom was in 2002-2003.
- Media has declared the end of the property boom. What they mean, I think, is that the Sydney boom is over. I agree. But to declare all Australian property markets to be in a similar space is plain wrong. There are many different scenarios being played out across this very large nation and there will be substantial growth markets to be found in 2016.
- Media talks about growth in “Australian property prices”, attaching a single growth figure to describe the entire nation. This is plainly ridiculous and highly misleading. For much of the past three years, the average growth figure for the capital cities has been around 10% but only one city (Sydney, of course) has had growth that big. Economists, who understand little about real estate, have used that single generalised growth figure to claim a boom existed and indeed a bubble. As is so often the case, they’ve got it wrong.
- Economists have attributed “the property boom” to low interest rates, but record low rates have failed to generate booms in Brisbane, Perth, Canberra, Adelaide, Darwin, Hobart and most of regional Australia. Sydney’s boom has been inspired by other factors, including the buoyant NSW economy, strong spending on infrastructure and 10 years of no growth prior to 2013.
- Sydney has clearly had a boom; Melbourne has been quite strong; Brisbane, Adelaide, Hobart and Canberra has delivered only moderate growth; Perth and Darwin have been going backwards in the past two years; and most of regional Australia has had either small growth or falling prices.
- As we approach the end of 2015, Sydney’s boom is fading fast; Melbourne is rising and is poised to overtake Sydney; Canberra appears to be on the brink of recovery; Brisbane, Adelaide and Hobart all have good prospects for growth; Perth and Darwin are still heading towards bottom; and selected regional centres have good prospects for growth in 2016.
Sydney’s days at the top of the property tree are over. Melbourne is taking over that mantle. At the same time, cities that have delivered little in the way of price growth to date are poised for better results in 2016 – including Brisbane, Adelaide, Hobart and Canberra.
I do not expect Sydney-style booms in these cities. Sydney’s boom has been so strong because the NSW economy is the No.1 economy among the states and territories, by a considerable margin, and because so much is being spent on major new infrastructure, particularly on road and rail links across the Sydney metropolitan area.
The capital cities poised for solid growth next year do not have the same degree of economic impetus, nor the same high level of infrastructure spending, and therefore are unlikely to deliver boom-style price growth.
The biggest price growth in 2016 is likely to be found in selected regional centres. While the media has been obsessing over Sydney’s markets, locations such as Gosford, Wollongong and the Southern Highlands have been recording exceptional growth.
There will be new instances of regional out-performance in 2016, with most of them to be found in New South Wales and Queensland.
In the chapters that follow, I describe the opportunities likely to emerge in the coming years, as well as some of the markets to avoid.
Adelaide and South Australia
Adelaide will present a strong value proposition in 2016
Adelaide, like Brisbane, shows that you need to dig a little deeper to discover growth areas within our cities.
The media charts city markets via changes in the median house price, which is a very blunt instrument to use to measure anything. The data from the main research sources provides a single figure to describe an entire metropolitan market – and that figure disguises diverse activity within that city.
Adelaide in 2015 is a case in point. The generalised single figure provided by sources such as Domain and CoreLogic suggests the city’s house market delivered growth of only 2% or 3% in the past 12 months – but numerous suburbs did much better than that.
Suburbs in all market sectors – the top end, the middle market and the bottom end – recorded double digit growth in their median prices.
Largs North (median house price $455,000) grew 14%, Semaphore Park ($470,000) was up 17% and Cheltenham ($540,000) recorded 21%. At the pricier end of the market, Glenelg East (695,000) managed 17%, Henley Beach East ($800,000) 14% and Royston Park ($855,000) 18%.
There are many other examples. These figures illustrate the point that, while Adelaide has an image as a city that lacks population and economic oomph, there is good growth to be found if you know where to look.
I’m expecting Adelaide to have a pretty good year in 2016. I don’t expect a boom, but there will be pockets around the metropolitan area delivering pretty good numbers.
Most will be middle market and bottom end suburbs.
Hotspotting research for The Price Predictor Index shows that sales activity has been steadily rising in Adelaide over the past 12-18 months and there are plenty of growth suburbs.
Many of the middle market areas that stand out are in the under-rated western suburbs between the CBD and the beaches. They are well-located, have lots of character homes and the prices are attractive relative to the larger cities.
The LGAs of Charles Sturt (which includes Henley Beach, West Lakes and Grange), West Torrens (West Beach, Underdale and Torrensville) and Marion (Glengowrie, Edwardstown and Warradale) stand out, as well as Campbelltown (Rostrevor, Magill and Campbelltown itself) north-east of the Adelaide CBD.
Two affordable precincts stand out: the northern suburbs areas including the Salisbury and Playford municipalities and Onkaparinga in the far south the Adelaide metropolitan area. The northern precinct has numerous suburbs with median house prices in the $200,000s, while Onkaparinga has seaside villages (such as Seaford), a noted wine district and new growth suburbs.
I expect that investors in 2016 will look beyond Sydney and Melbourne and consider the tempting value proposition that Adelaide provides.
There’s not a lot of excitement happening in the regional markets of South Australia.
There will be solid markets in 2016 in Port Lincoln, Mount Gambier, Victor Harbor, Strathalbyn and the towns of the Barossa Valley – but nothing to set pulses racing.
Whyalla, which has been the best capital growth performer in SA over the past 10 years, is currently going through a serious down phase and is a market to avoid at the moment. It’s a regional centre heavily influenced by the resources sector and that, right now, is not a good thing.
Brisbane and Queensland
South-East Queensland presents Australia’s No.1 growth opportunity
Few people realise how much is going on in Brisbane because media reports generalised median price growth figures for the entire city. This indicates prices have grown only 3% or 4% in the past year – which suggests not much is happening.
But, as with Adelaide, you need to dig a little deeper to understand markets. There are individual market segments which have been doing considerably better than those generalised average figures.
When the Brisbane metropolitan area started to get active, about two years ago, the first precinct to rise was the Brisbane Northside precinct – the northern suburbs of the Brisbane City Council area, which is quintessential middle market Brisbane: good solid suburbs with median house prices in the $500,000 to $700,000 range.
Many of these suburbs have recorded double-digit annual growth in median prices, well above the average for the Brisbane metropolitan area.
More recently the momentum in the Brisbane market has switched to the southside – and this is where we expect the most action in 2016.
The leading precinct as we approach the end of 2015 is Logan City, the cluster of affordable suburbs which bridges the gap between Brisbane City and Gold Coast City. This area is being targeted by both home-buyers and investors because of its affordability, strong infrastructure, excellent transport links and proximity to jobs nodes.
Also buoyant is the Brisbane Southside precinct, the southern equivalent to Brisbane Northside – mostly middle market suburbs, with good quality homes and well-connected to services and amenities, not far from the Brisbane CBD.
Ipswich City in the south-west of the Brisbane metropolitan area was just stirring to life in the latter part of 2015 and looks set to have a strong 2016.
Three years ago, Ipswich City was the capital growth leader of the Greater Brisbane area, with a significant number of suburbs having double-digit capital growth rates. That has changed following three down years, but Ipswich is ready for a solid revival. This is another precinct characterised by affordable suburbs, strong infrastructure spending and lots of major jobs nodes.
The exception to the southside theory for 2016 is the Moreton Bay Region in the far north of the Greater Brisbane area. This is the northern equivalent of Logan City, without having quite the same investment appeal.
Queensland has more regional markets worth considering than any other state, except New South Wales. It also has more regional markets that need to be avoided, because of severely depressed real estate scenarios.
Toowoomba has been the strongest in recent years but, after two years of good price growth, has passed its peak and attention is now switching to other locations.
The Gold Coast is rising strongly and this creates a danger situation for investors. You can make a strong case that the Gold Coast is a good place to buy because sales activity is rising strongly, there is lots being spent on infrastructure and the 2018 Commonwealth Games is expected to provide a boost.
But the Gold Coast has a terrible track record on capital growth. Most of the beachside apartment suburbs, like Surfers Paradise and Broadbeach, have median unit prices lower today than they were 10 years ago.
The market has been undermined by massive oversupply in the past – and another glut is looming, with more projects and larger projects than ever before, most of them designed for sale to Asian investors. Anyone taking a long-term view would steer clear of this market.
The Sunshine Coast presents much better prospects for future growth and is a safer option than the Gold Coast long-term. The Sunshine Coast is transitioning from a tourism economy to one with a broader base and this will drive real estate growth in the future.
A similar process is happening in Cairns in the far north. Cairns is spending a lot on infrastructure – roads, hospital, airport, sea port and other facilities – and offers the strongest rental yields anywhere in Australia at the moment. Returns in the 7-8% range are readily available on apartments.
Townsville, one of the strongest regional economies in Australia, has been dormant for a few years, weighed down by previous over-supply. There are signs of it beginning a comeback and I expect 2016 to be its best year for some time.
The markets to avoid are the ones oversupplied by developers who went overboard during the resources boom. Most are mining towns or regional centres with major impact from the resources sector.
The big issue was not so much the resources downturn but the high level of new developer product and the modern trend of resources companies using FIFO workforces staying in temporary accommodation camps. The result – in places like Gladstone, Mackay, Emerald and Dalby – was high vacancies, which led to falling rents and falling prices.
There may be signs of stabilisation in some of these centres in 2016, particularly Mackay and Emerald. Gladstone, however, may get worse before it gets better.
Smaller towns more directly linked to the mining sector – like Moranbah, Chinchilla and Miles – are basket-case markets, where extremely high vacancies have caused values to drop considerably.
There is no respite in sight for these unfortunate towns.
Canberra and the ACT
The national capital ready to rise from the doldrums
Canberra is set to deliver much better outcomes next year, compared to the past two or three.
While Sydney has been raging Canberra, three hours down the road, has been stuck in neutral, undermined by Federal Government down-sizing of the public service, which has reduced demand and impacted confidence.
But Canberra appears to be over the worst of its malaise.
Sales activity in the September Quarter confirmed my previous assessment that the market had arrested its earlier decline, after two years of stagnating or decreasing sales in its markets.
There have been improvements in house sales levels over the past 12 months, but the unit market remains weak. This is reflected in the latest price growth data from CoreLogic RP Data, which shows a 5.1% annual rise in the House Value Index but a 2.6% annual decrease for units.
In terms of total sales in the ACT, including both houses and units, every quarter this calendar year has recorded higher sales than in the same quarter in 2014.
This is despite a general decline in apartment sales. In the housing market, each of the past four quarters has recorded more house sales than the corresponding quarter a year earlier.
Typically in Canberra, the December Quarter is the strongest period for house sales – and we expect the current trend of gradually rising sales activity to continue into the December 2015 Quarter.
Further reinforcing that view is the fact that the number of growth suburbs (those will steadily rising sales numbers) in the ACT has almost doubled.
All this bodes well for price growth in 2016.
The strongest markets are mostly found in the north of the city, especially the far north. Seven of the growth suburbs are in the “Canberra-far north” precinct and three more in the “Canberra-north” precinct.
Suburbs with decent momentum heading into 2016 include Amaroo, Bonner, Gungahlin, Dunlop, Kaleen, Macgregor and Ngunnawal.
Darwin and the Northern Territory
Still rock bottom of the capital city lists and likely to stay there
Darwin has by far the weakest market among the capital cities as we near the end of 2015 and it’s difficult to see what will turn it around next year.
All the major research sources record substantial decreases in the median house price, the median unit price, the median house rent and the median unit rent. The vacancy rate is the highest among the capital cities.
The only difference among the major research sources is the degree of decline.
The apartment market, which has suffered from oversupply, is particularly weak. According to CoreLogic RP Data, the median unit price dropped 13% in the 12 month to November, while the median unit rent fell almost 10%.
Prices and rents are down in the housing market as well, though not as much as for units.
Sales in the house market in the Darwin City precinct fell away steadily in 2015. There were 305 house sales in the March Quarter, 242 in the June Quarter and around 200 in the September Quarter.
The Darwin market has pronounced seasons so it’s important to compare quarters with the same period the year before – and in the past four quarters, each one has recorded fewer sales than in the same quarter a year earlier.
The September Quarter this year was the worst September Quarter in the past four years.
The house market in the Palmerston precinct has seen a quite dramatic decline in sales. In the past four consecutive quarters, house sales have totaled 350, 193, 93 and 89.
So, overall, the reality for the Darwin metropolitan area is that the market is generally in a slump. It’s a far cry from 2012, when Darwin (and Perth) led the capital city markets on price and rental growth. But back then the resources boom was still raging and the impact of the massive Inpex gas project was just starting to be felt.
I expect the Darwin market to hit bottom in 2016, but at this stage it’s hard to see what will drive recovery. The city’s economy needs another major new project to create economic activity, jobs and demand for real estate.
It is, however, important to keep in mind that Darwin has one of the best long-term capital growth rates among the capital cities and still has the highest rental yields. It’s been a good performer in the past and will be again in the future.
The only major Northern Territory markets outside the Darwin/Palmerston metropolitan area are Katherine and Alice Springs. Both continue to present solid property markets.
Katherine in particular has a strong future with expansion of the RAAF Base and activity across the WA border in the nearby Ord River Scheme likely to be major catalysts.
Hobart and Tasmania
Poised to have its best year in a decade
Throughout the second half of 2015 I have been alerting real estate consumers to the growing attraction of Hobart and Tasmania.
This has been prompted by an accumulation of positive economic indicators, government policies to generate growth and a slow but steady rise in property sales activity.
After years of being last or second last among the states and territories on most economic indicators, Tasmania is at last starting to shows sign of positivity and growth.
Numerous economic reports, including those by National Australia Bank and MyState, have noted the improvement in Tasmania’s situation. The tourism sector in particular is showing strong growth and business investment levels are rising.
There have been some positive numbers coming out the residential property market as well. According to CoreLogic data for the 12 months to November, Hobart’s median house price was up 3.4% and the median apartment price rose 7.5%, the second highest growth rate (after Sydney) among the capital cities.
Hobart was also the No.1 city for rental growth, with the median house rent up 6.5% in 12 months.
I’m expecting Tasmania to have a positive year in real estate in 2016, possibly the best it’s had in a decade, as investors realise that markets are rising and that the value proposition is attractive. The median dwelling price in Hobart is $325,000, compared to $600,000 in Melbourne, $800,000 in Sydney and the combined capital cities average of $590,000.
The leading upmarket suburb, Sandy Bay, has a median house price of $630,000 and most of the other near-city suburbs have median prices in the $400,000s and $500,000s. That looks appealing to investors familiar with prices in the bigger cities – provided you believe there is growth in Hobart’s future.
Those on a tight budget can target the northern suburbs around Glenorchy, where you are paying in the $200,000s for typical houses.
It’s not all about Hobart. Launceston is also showing positive signs of generating growth markets in 2016. And, again, you will be paying somewhere in the $200,000s for solid houses.
Melbourne and Victoria
Melbourne set to overtake Sydney, but the market peak is near
While Sydney ends 2015 with its markets fading, Melbourne remains buoyant and looks set for another good year in 2016 – although I expect the market to peak some time in the first half of the year.
It’s clear that the Top End of the market, the auction frenzy suburbs, have lost some of their spark but there remains plenty of life in the Middle Ring and Outer Ring suburbs.
The latest price growth figures show Melbourne poised to overtake Sydney. The growth rate for Sydney is falling while Melbourne’s is rising.
For much of the past three years, Sydney has recorded double-digit annual growth rates while Melbourne has managed around 7% or 8%. But, as 2015 progressed, Melbourne’s growth rate rose and is now consistently above 10%.
Hotspotting research for The Price Predictor Index shows there are over 100 suburbs with growing sales volumes across the Melbourne metropolitan area, which points to likely future price growth.
The growth suburbs are a mix of Middle Ring and Outer Ring suburbs, but with a greater leaning towards the cheaper areas further out.
This is an indication that while there is still life in the Melbourne market, the city is approaching the peak of the cycle.
This cycle, as is often the case, started in the inner-city areas and has gradually rippled out from the centre over the past 2-3 years. When the outer suburbs are leading market growth, you know the peak is nigh.
The top of the cycle will be reached some time during 2016, I would expect – most likely in the first half of the year (in terms of sales volumes).
In the meantime, expect good growth in outer areas such as the Whittlesea local government area in the north, where suburbs like Epping, Thomastown and Lalor are buoyant.
In the west the Brimbank LGA based on Sunshine will continue to go well, while in the south-west Wyndham City suburbs such as Point Cook, Werribee and Tarneit will be busy.
I suspect that most of the Middle Melbourne areas that have been market leaders in the past 12-18 months have almost run their race. They include the LGAs of Whitehorse (Box Hill, Burwood and Forest Hill) Monash (Chadstone, Hughesdale and Mulgrave), Moreland (the Brunswick suburbs, as well as Coburg) and Knox (Rowville, Scoresby and Wantirna).
The vibrancy in the Melbourne market hasn’t really transferred to the regional markets to any great extent – with the notable exception of Geelong, which has lots of momentum in its market, no doubt catching the wave from Melbourne while generating a few growth drivers of its own.
The Macedon Ranges area (which includes Gisborne, Kyneton and Woodend) also has some growth markets, as does the Latrobe Valley (Traralgon, Moe and Morwell) east of Melbourne.
The cities of Bendigo and Ballarat did not spark to life in 2015 but I expect them to be stronger in 2016, partly because they will feel the benefits of the new Regional Rail Link, partly through the impacts of other major spending on infrastructure and partly from major business successes, such as the $1.3 billion Defence contract awarded to Thales Australia, based in Bendigo.
Perth and Western Australia
Perth, heading towards bottom, presents good buying opportunities
It’s a sad truth in real estate that most investors achieve only mediocre results because they fail to think and act independently.
Most investors are herd animals and will buy in markets when they read that a boom is under way. This means they buy after prices have risen. Far too many buy at or after the peak of the market, which is what thousands have been doing in Sydney this year.
The relatively few who achieve great success with property investment are those who detach from the herd and act counter-cyclically. They buy in good areas when the market is down, which means there is little competition from other buyers and they can negotiate a good price.
Investors with that mindset will be considering Perth right now.
Perth and Darwin were the market leaders on price growth and rental growth in 2012, well ahead of Sydney’s rise. Perth’s market peaked in the first half of 2013 and has been winding down steadily ever since.
To illustrate the degree to which Perth and WA has declined, total residential sales were 16,811 in the March 2013 quarter and they have dropped in each quarter since, reaching 12,752 sales in the June 2015 Quarter.
Median prices and median rents for Perth have fallen in the past 12 months, both for houses and for apartments. The median weekly rent has dropped 6.5% for houses and 6.3% for apartments.
This market is still falling and will touch bottom some time in 2016, which makes it a great time to be considering an investment there. You just have to believe that Perth and WA have a future.
Keep in mind that the two weakest markets right now, Perth and Darwin, have the best records for long-term capital growth among the state and territory capital cities. Both markets will recover in time and the best time to buy there is when they are at rock bottom.
There are markets with potential right across the Perth metropolitan area, especially in the middle market and bottom end locations. Perth is a high-population-growth city and this drives the more affordable areas, like the Wanneroo LGA in the north, Rockingham City is the south-west and Armadale City in the south-east.
The one area that must be avoided is the inner-city apartment market. Vacancies are already high in and around the CBD – and they will get bigger as major new projects are completed. As in Melbourne, Brisbane and the Gold Coast, developers in Perth believe they can flog excess unit stock to Asian investors.
Developers can always find compliant consultants to write favourable reports about their market. We’ve recently seen reports purporting to be independent research giving glowing tributes to inner-city apartment markets like Perth’s. Do not duped – many of Perth’s inner-city suburbs already have vacancies in the 5-6% range, and they will get worse.
Regional markets south of Perth have been busy in 2015, notably those around Busselton and Mandurah. There has been moderate price growth and this is likely to continue in 2016.
The major markets north of Perth are mostly those impacted by the resources sector and they remain depressed. Values have fallen markedly in Port Hedland, Karratha and elsewhere, but these markets may fall further in 2016.
The median house price in Port Hedland has dropped from $1.2 million to about $850,000 over the past three years. It’s still too high to provide good value. Meanwhile, rental yields have reduced from double digits to about 5%, which is far too low to compensate for the high risks of buying in these kinds of volatile locations.
I would steer clear of Port Hedland, Karratha, Newman and anywhere else where prosperity relies on the resources sector.
Sydney and New South Wales
Sydney growth rate will be in single digits in 2016 but regional cities will rise
It’s been a great party but, after three buoyant years, Sydney is well past its peak and is winding down.
Hotspotting research shows that, in terms of sales activity, Sydney’s market peaked towards the end of 2014 and has been gradually declining throughout 2015. We first called the end of the city’s boom back in April.
It has taken time for this to be reflected in median price data, but the rate of growth in the published figures is now dropping, as are auction clearance rates.
The Price Predictor Index published by Hotspotting has recorded the steady decline, quarter by quarter, in the number of growth suburbs across the Sydney metropolitan area since late in 2014. The data for the September Quarter 2015 revealed only 27 suburbs out of the more than 700 across Sydney remain as growth markets, with rising sales levels. A year earlier, there were more than 100.
The few that remain are mostly in the outlying areas, like the Campbelltown LGA in the far south-west.
It’s been a great run, though not as prolific as 2001-2002-2003, and now the party is over.
People who still want to invest in Sydney should follow the infrastructure trail – and in Sydney at the moment that’s a very big trail. Tens of billions of dollars are being spent on roads, rail links and hospitals – and there’s a lot more to come.
Some of it is related to the Badgerys Creek airport but most of it involves motorways and train links independent of the new airport.
The places to target are the Liverpool, Camden and Campbelltown LGAs in the south-west, and areas in the north-west such as the Rouse Hill precinct.
But, as Sydney fades, regional NSW rises. Some locations, notably those closest to Sydney, have already had a big run and probably have passed their peak. But further afield there is an array of strong regional centres with rising markets and good prospects for capital growth.
The ones to watch in 2016 include the Newcastle and Hunter Valley region. Newcastle has been busy for a while and now the surrounding LGAs, including Lake Macquarie, Port Stephens, Maitland and Cessnock are showing increasing signs of life.
The Hunter region (which includes Maitland and Cessnock) has struggled for the past 2-3 years because of developer oversupply at a time of downturn in the coal industry – but vacancy rates have dropped to more acceptable levels and sales activity is rising again.
Port Macquarie has been rising steadily for the past two years, boosted by improvement in the tourism industry and major spending on infrastructure.
Other coastal markets that look to have prospects in 2016 include Coffs Harbour, Forster-Tuncurry, Ballina and Tweed Heads.
There are numerous strong centres inland, including Dubbo, Orange, Bathurst, Goulburn, Queanbeyan, Wagga Wagga, Lismore and Tamworth.
Centres like Parkes and Narrabri will be boosted once work on the Inland Rail project gets under way.
The twin cities of Albury-Wodonga either side of the border with Victoria comprise a particularly strong regional centre with good momentum in its markets as we enter 2016.
Stand by for another year of media myths and misinformation
As 2016 progresses, Australian consumers will be beset with a barrage of media furphies.
Here’s what you are likely to be told, but should not believe, in 2016:-
- The boom is over and prices will collapse. Much of our major media comes out of the Sydney and extrapolates Sydney situations nationwide. While Sydney is fading, other markets are rising. Price collapse is unlikely in Sydney – history shows that when city booms end, prices stop growing but do not decline (or not much).
- The Great Australia Dream is dead. Whenever journalists are faced with a slow news period, they roll out this hardy annual, the facts notwithstanding. NAB research shows that 26% of sales of established homes are made to first-time buyers, as well as 29% of sales of new properties. A recent Mortgage Choice survey found that two-thirds of first-home buyers are so comfortable with the mortgages they could handle at least four interest rate rises.
- Australian homes are over-valued. Economists and others desperate for cheap publicity can always rely on this to generate some media profile. The general view is that because Sydney prices are high, all of Australia is over-valued. A typical year usually has half a dozen periods when this old storyline gets a run, with “bubble” in most headlines, and 2016 will be no different.
- An interest rate rise means prices will fall. The simplistic worldview of economists is that low interest rates mean real estate will boom and rising interest rates mean prices will fall. There is no precedent in history for this to be so. Most major national booms have coincided with rising interest rates and we are most likely to have low interest rates when the economy is struggling and consumer confidence is low – i.e. the conditions least likely to generate a widespread property boom.
- Negative gearing is a tax lurk for the rich and causes prices to rise. Most people who claim negative gearing tax deductions are Australians earning average incomes, according to ATO figures. If negative gearing causes escalating prices, values would be rising constantly right across Australia because negative gearing has been around a long time and applies equally everywhere – but only Sydney has had booming prices. Most of Australia has had little growth in the past five years.
- There’s a chronic housing shortage. The developer lobby has put this furphy out there so often over recent years that most people accept it as the truth. Developers have been campaigning for concessions so that they can make more money faster. Their proposition is this: There’s a shortage and the way to fix it is to give us everything we’ve ever dreamed of. The reality is that the biggest concern in Australian real estate is the opposite problem: a serious over-supply of dwellings, especially in the inner-city apartment markets.
There are many others. The best way to stay safe as real estate consumers is to question everything you read or hear in mainstream media.
There are no real estate experts on staff at any of Australia’s major media organisation – just poorly-resourced journalists re-cycling press releases.
Protect yourself by treating all property media with skepticism