Australian Property Market Shows Growth – August 2019 Property Update
The Australian property market has actually grown for the first time in 15 months! Since way back in March of 2018. Let’s take a deep dive into the data and why this is happening in this August property market update.
0:00 – Introduction
0:35 – This trend has been coming since December 2018
1:04 – This is led by the major capital cities growing
1:42 – Why is this happening?
2:47 – Monthly sales seems to be finding it’s floor
3:44 – Sydney market update
5:46 – Melbourne market update
7:39 – Brisbane market update
10:05 – Adelaide market update
10:55 – Perth market update
12:44 – Hobart market update
14:00 – Darwin market update
15:27 – Canberra market update
16:00 – Will this growth be sustainable?
17:33 – Things holding us back from a massive boom
the australian property market has actually grown for the first time in 15 months since way back in march of 2018 so in today’s monthly update we’re going to look at these figures talk about why the market is growing and try and look at the data and see if we can see any trends about what’s going to happen in the future hey i’m ryan from onproperty helping you achieve financial freedom and every month we sit down and we look at the australian property data see where things are at and what’s happening and if we look at this monthly trend we can see that all the way back since december back in 2018 so over six months ago now we started to see this trend where the market was still declining but it was declining less and less every single month and i said back when i started doing these updates we’re going to watch this because if this continues eventually it’s going to go into the positive and that’s exactly what has happened this has led primarily by sydney and melbourne both drying obviously being the biggest capital cities with the most volume we can see they’re both grown by about 0.2% we can say brisbane the third biggest capital city also had its first month of growth as well since declining i think it started declining back in november of 2018 so seeing rises there also rise in hobart and a strange out of character rise in darwin as well of 0.4% so five of the capital cities growing there over the month so there’s a whole bunch of factors as to why this is happening and it’s not just one thing so we’ve got the lowering of interest rates so the rba cut interest rates two basis points or by 0.5% these are the lowest interest rates we’ve had in history so obviously lower interest rates means people can borrow money at cheaper prices and makes housing more affordable you’ve got easier lending as well with abra releasing some of the criteria that banks need to look at in terms of lending they used to assess people i think it was on seven or 7.25% and now the banks have some flexibility with that many people who couldn’t previously get loans may now be eligible for loans as well there’s improved sentiment in the market there’s been tax cuts and looking at the stock market as well there’s not significant amounts of stock flooding to the market making it a buyers market so people listing there’s been less listings which means there’s less options there so they improve sentiment with the less options obviously helps push the prices up for that we can see here that the monthly sales with a six month moving average has started to find a floor here and actually move upward so back in the last two housing downturns we can see around here the monthly sales figures we can see we dip just below that but it looks like we’re trending upward so this will be something that we need to watch and this is actually a really interesting data point that i wish i knew more about imagine back in july of 2013 you started seeing these figures and how many sales were moving up and you can see obviously 2015 2016 into 2017 was when we had that big boom in melbourne and sydney and then things started to slide off down a cliff so this could be a really good early indicator of where the market is going as a whole and so as you see this start to trend up that can be a positive sign by the looks of it let’s jump in now and look at the different capital cities so sydney now saw its second month of growth and is up 0.2% since the bottom of the market they talked about in this video that units had less declined than houses and have actually grown more than houses but they also say that this may actually be because the unit stock was actually sold quite a while ago when the market was higher and is now just settling that these are inflated prices and could be inflating the market whether or not there’s enough volume in here to inflate the sydney market as a whole and cause what we’re seeing as a price increase i don’t actually know about that one i don’t think so because houses are up as well but it’s definitely something to consider and this may dampen price growth moving into the future with units that are actually being sold today or these now finished stock coming on the market at more realistic prices so
what i want to look at as well as the time on market and vendor discount and we want to look for trends in each of the cities so if we have a look at sydney here we can see 2019 going back to march of 2019 here and we can see that the days on market have moved from 74 down to 57 so this is moving in the right direction slowly but it did drop to 50 then 54 then back up to 57 so short term there actually is a trend in the wrong direction there so it’s unclear as to days on market the trend but the vendor discount is definitely decreasing 7.1 6.9 6.7 6.4 6.3 so we’re seeing that moving in the right direction doesn’t currently look like a super hot market if we look at hobart back in 2018 with 911 12 days on market that is super hot so it doesn’t look like a crazy hot market but the trend sort of does look like it’s moving in the right direction there moving on to melbourne melbourne dwellings have gone up 0.2% this month and then now up 0.4% since their bottom sorry sydney was up 0.3% since its bottom not 0.2% melvin’s up 0.4% since the bottom and they talk about the same thing with units here with unit settling that were actually purchased a while ago when the market was higher so melbourne fell a total of 11.1% since its peak and quite interesting is that unit values only fell 4.6% while house values of 14.1% below their peak so it shows a big difference in the dwelling values there but again this may be skewed by new units coming onto the market that were previously sold so let’s have a look at the time on market and vendor discount for melbourne and see if we can see the trend there we can see that the number is healthier than sydney so 49 days on market compared to 57 but can we see a clear trend not really vendor discount is quite stable around the 6.5% and kind of has been hovering around there for some months days on market went from 61 down to the early 40s and short term that trend tends to be looks like it’s moving upwards so even though the price is growing we’re seeing a trend in days on market in the wrong direction there so this is something that i want to keep watching when you have you know mixed signals like this it makes it really hard to make a prediction of what’s happening if the markets growing and you’ve got all these signals and the trends moving in the right direction you can say okay this market is looking to burn but when you’ve got it growing it has been in decline and the signals are moving in the wrong direction is that um i’m not exactly sure with that one now let’s have a look at brisbane which grew 0.2% over the month and they say that brisbane decline has been shallow compared to sydney and melbourne so remember sydney fell i think over 15% melbourne fell just over 11% brisbane fell 2.9% since its peak but also had a much more relatively mild growth cycle where housing values average and the 1.4% per annum over the last five years so i did do a video where we talked about how brisbane is cheaper now than it was over 10 years ago so i’ll link up to that down below that’s because the average growth in brisbane over the last five over the last 10 years has actually not kept up with inflation so inflation has actually outpaced brisbane but brisbane has been declining since november of 2018 much to my own confusion given the market fundamentals there tended to be stronger than sydney and melbourne in my personal opinion but it’s good to see that brisbane is on the rise again and there’s a lot of people out there predicting brisbane to do really well and be one of the best performing cities moving forward so let’s have a look at the days on market for brisbane we can say it’s gone from 68 down to 6055 6064 so no clear trend there and vendor discount 4.8% and around the 5% so no clear trend there the days on market actually worse than sydney and melbourne but vendor discounting is better so i don’t see a clear trend in the right direction for brisbane but working close with the team over pumped on property i do know that some pockets of brisbane are doing really well while other pockets of brisbane aren’t doing very well so if you’re looking at investing in any of these areas it’s just very important that you look at the individual suburbs and which ones are in demand
and which ones are likely to grow because within a city you’ve got some areas that are going to do really well and will outperform the australian market and you’ve got other areas that just won’t do very well or may even go backwards in the current market so it’s very important that you do your suburb research and if you need help doing some research i do have a course on that over on property comdata you forward slash suburb you can learn more About that course over there, purchase it, go through it and learn how to identify those suburbs yourself. Next, we’ll move on to Adelaide. So Adelaide actually dipped 0.3% in July taking the three month trend to minus 0.6%. And the annual reclined is 0.8%. So Adelaide didn’t grow over the month and is actually currently in decline. So it’ll be interesting to see if the whole market is changing, and Adelaide will go along with that. Looking at the time on market and vendor discount trends for Adelaide we can see that has gone from 54 to 43, back up to 50. And discount has gone from 5.2% and is working its way up to 5.7%. So we’re going to negative trend there in Adelaide, which I guess matches to its negative pricing at the moment. So we want to see that trend start to reverse in Adelaide. Perth is another city that showed decline over the month of July going back 0.5%. So Perth has been declining since back in mid 2014. And it hasn’t shown any signs of stopping just yet Perth houses and now the lowest of any capital city. Now that is really interesting because if we look here, this does the cities in order of population and you can see that Perth is actually the fifth most populous city in Australia. So more population than Darwin, Canberra and Hobart but actually more affordable than those three capital cities, which is extremely interesting given how much Darwin has declined as well. So Perth house values are now the lowest with a median of 459, which they say is one of the highlights or is one of the few positives of a sustained market downturn is that housing becomes more affordable in Perth. They’re saying it’s hard to know when the market will turn around. However, there are some positive signs from improved migration rates pick up in jobs growth and unemployment, which is trending lower. So there are some positive signs in Perth looking at the days on market and vendor discount are going from 72 down and then back up. So no clear trend there and vendor discount hovering around the 6.9% as still relatively high days on market at 66. That means it’s taking over two months to sell a property. So properties aren’t selling very quickly in Perth. So I would like to see a reversal of this trend before I would personally consider looking at the Perth market again, looking at this you know it still may have a ways to go next looking at Hobart, Hobart bounce and grew 0.3% I think that means the last two months have Hobart have grown, meaning that over the last three months, it’s grown slightly by 0.1%. Now I have been honest with Hobart and I do think that Hobart is nearing the top of its cycle. In fact, I thought that Hobart had reached the top of its cycle and will decline. But obviously with so many changes happening and lowering interest rates and all of that, it seems like Hobart is continuing to grow for a little bit longer. I personally don’t see this as being sustained. But I definitely could be wrong, just having the experience that I have now. And then I’m getting over time with market cycles. Hobart had such a solid run up and to see a market like Hobart, being less affordable than a city like Brisbane, just seems wrong to me. If we look at the days on market, we can see 34 down 28 back up to 32. vendor discounts actually moved from 4.3% down to 3.8%. So again, no super clear trend there in Hobart. But I would be wary going into the market just given how good of a run up it had looking at Darwin, Darwin had a rate increase of about 0.4%. So the biggest growth of any capital city in the month.
Now core logic does go on to say that Darwin is a much smaller market and a smaller city. So it does suffer from fluctuations based on just the small number and the small volume of sales that is being done in Darwin. So they don’t actually predict that this is something that’s going to continue to grow. They think it’s just an anomaly. So units actually down 41% since their peak houses down 25%. But economic and demographic indicators aren’t showing any signs of improving, suggesting the monthly rise in July is likely to be short lived. And if we look at the days on market, we can see that they’re actually the highest in the country at 68 days, vendor discounts also the highest in the country as well and is actually moved from 7.8%
you know, down to eight sevens and is back up over 8% again so the trend doesn’t look like it’s moving in a positive direction for darwin the economics the demographics don’t really support this market at the moment so i guess personally it’s not something that i would be looking to invest in but i guess one of the benefits of darwin having declined so much is that cashflow in darwin and rental yields are much higher than in other areas lastly looking at camera that’s had its third decline so it declined throughout the month as well meaning that over the last three months it’s down 1.5% and if we look at the time on market and vendor discount for camera we can say it’s moved from 56 down to 42 and then working its way up so a negative trend there and vendor discounts going from 2.7 rising up to 3.1% so negative trend on camera there which means i’m not bullish on it but it’ll be an interesting one to watch so as we can see the market has grown for the first time in 15 months and if we go all the way back to here we can see it’s actually been 20 months of this declining cycle if you don’t include these two little blip months in there whether or not this growth will continue and how long this growth will be lived you know is yet to be seen as we can see the growth is quite small compared to other months where you’re seeing 1% growth for the market during those times of real growth so very small amount of growth but could it indicate that we’re heading into boom times potentially it could but there’s a lot of factors that are going to go into effect that auction clearance rates are moving in the right direction and available stock is actually trending lower as well so there’s 5% less total stock on market than there was a year ago and fresh listings are down 25% compared to a year ago so less people are actually listing their properties for sale and selling their properties now if we had the opposite where there’s a flood of people listing properties on the market trying to sell them that gives buyers a way more choice and negotiating power which will then dampen the market and decrease prices so seeing the fact that people are holding onto properties and not selling them means there’s limited supply on the market which i guess is stopping a full on crash and stopping the market collapsing and actually helping the market to grow in value because there’s less stuff there for buyers to choose from corelogic then finishes the video saying that don’t see a v shaped recovery where the market decline and then it’s just going to bounce back up again so they say despite credit improvement in credit availability housing credit policies remain much tougher than they were prior to the royal commission so as lenders continue to move away from the household expenditure measure which is basically just an estimate of what people spend they actually examining people’s spending behaviors and expenses more closely which means there’s more of a process to go through in order to get a loan and lenders now have access to more comprehensive credit reporting so lending does still remain tight and it doesn’t look like we’re going to see a massive curve in terms of market growth and a rapid acceleration in the recovery trend they also say that if there was to be that rapid recovery that it’s likely the australian government doesn’t want that that they understand that the australian property market is quite high and that they don’t want to see it go exuberant and crazy higher so if the market started to grow exponentially really high then policy changes might be made to actually dampen that so the fact that they’re talking about this is really interesting and something i probably should have talked about in yesterday’s video where i talked about why i wouldn’t just be looking for capital growth in the current market i will link up to that video in the description down below but at the australian government feels like they want to stabilize the housing market but they don’t want to see it grow exponentially and we’ve seen that they can change policy and abra can change the rules to make lending harder which then affects the property market as a whole and if they’ll do that to stabilize the market will we see the continued doubling of property values every seven to 10 years like we did in the past probably not in the near future so that is a really interesting consideration and something i guess i hadn’t really thought about before that the government may have a plan of where they want property prices to be and we’ll adjust their leavers and change things to make sure that it doesn’t decline too much but also make sure that it doesn’t go up too much so it’s really great to see that the australian property market has some positive news this month and actually has grown over the month really interesting to track and to see whether it continues to grow up tracking declines for so long now but also that lowering rate of decline it just seemed like a matter of time until the property market was going to get some growth again and now we’re seeing it happen what the longevity is of this growth cycle and how much it will grow is completely unknown and something that we’ll continue to talk about as we continue to do these monthly updates because there’s so many things at play here with the local economy or the australian economy with a global economy with policy changes with lowering interest rates with potential quantitative easing all of this sort of stuff so so many different things at play here which will affect prices moving into the future but it’s really interesting to track and i hope that you found value from this i do believe it’s very important if you are investing in property in the current market to have a clear strategy of how you’re going to make money given that this is still turbulent times it does feel at least to me that the days of invest in anything that’s going to go up in value aren’t so much here some areas are going up in value a lot and then in the same city other areas are going backwards in value so you need to do your own research you need to be very specific about your strategy and how you’re going to have success in the current market if you want help creating a strategy that works in the current market then head over to onproperty com au forward slash strategy and you can book in a free strategy session over there there’s a calendar over there where you can book in a time that suits you to get on the phone talk about your situation where you’re at what you’re trying to achieve and what is the best strategy to help you get there and what your next steps are so go to onproperty com au forward slash strategy to check that out i’m going to link to last month property update where we talked about has the market bottomed and i did think the market had
bottomed at least for a time and we saw growth this month so go ahead check that out and also check out the video i did yesterday on why wouldn’t just be investing for capital growth in the current market go ahead watch one of those videos and until next time stay positive