Hotspotting
Household wealth in Australia keeps rising and the key reason for that is residential property – which accounts for 68 per cent of the total wealth of Australian households. New data from the Australian Bureau of Statistics (ABS) shows that total household wealth has reached $16.5 trillion. Now, that number doesn’t mean much to the average observer, so here are some other numbers that give it some context. That household wealth figure represented a 1.5 per cent rise in the June quarter and the current level of the highest on record. It’s 9.3 per cent higher than a year ago, and it means...
info_outline ANZ's Late Price GuessHotspotting
ANZ, the worst forecaster on property price outcomes in the nation, has just published its forecasts for what will happen with house prices in 2024. Yes, that’s right. They’ve published, in October, forecasts for house prices this year, a couple of months before the end of the year. Why have they done this? Because it’s the only chance ANZ has of getting it right with its property price forecasts. Essentially what it has done with these “predictions” is take the existing situation and extrapolate it two months into the future. So, you will be amazed to learn that they’re...
info_outline Unit Surge UnstoppableHotspotting
The biggest paradigm-changing trend in Australian real estate, the rise and rise of apartments, is confirmed by the latest price data from the usual suspects – and is reflected in our choices for the latest edition of our most popular report, the National Top 10 Best Buys report. The latest price data from CoreLogic shows that unit prices are rising faster than house prices. While news media, in its predictable fashion, focussed on the perceived negatives in the CoreLogic Home Value Index published in October, my analysis of the figures is that they provide further evidence that rising...
info_outline Mastering Property Management in Today's Market with Corinne Bohan of Image PropertyHotspotting
Join us for an insightful and essential webinar hosted by Terry Ryder, Founder of Hotspotting, and Corinne Bohan, Managing Director of Image Property, as they dive into the crucial role of professional property management in today’s rapidly changing rental landscape. In this engaging session, you'll discover: Building Your Winning Team: Learn why investors must focus on assembling a strong management team before growing their property portfolio and how a first-rate property manager can be a game-changer, especially in the face of evolving regulations. Navigating the Rental Market: Gain...
info_outline Price Predictor Index Spring Edition: Units ThrivingHotspotting
The new Spring edition of The Price Predictor Index provides emphatic confirmation of the most compelling trend in Australian real estate: the escalating demand for apartments and their challenge to houses on capital growth performance. We have been speaking about the rise and rise of apartments for the past 18 months and there is a growing body of evidence which confirms that more and more buyers are opting for attached dwellings: units, apartments and townhouses. Our analysis of sales activity data for the latest quarter for the Spring edition of The Price Predictor Index reveals that this...
info_outline Canstar: The Dream Is AliveHotspotting
Affordability is the most-debated and the most confused issue in residential real estate. While the rental shortage and rising rents occupies the minds of many, the property issue that occupies the most space most often in news media and in the minds of Australian consumers is housing affordability. It has been this way for years, indeed for decades. And while the so-called Great Australian Dream is often declared dead, with young people doomed to a lifetime of renting, the evidence suggests otherwise. I recently finished working on a report with financial comparison website Canstar which...
info_outline The Art of Buying Against the Grain with Arjun Paliwal of InvestorkitHotspotting
In this episode of the Hotspotting Podcast, Tim Graham sits down with Arjun Paliwal, the Managing Director of Investorkit and a two-time REB Buyers Agency of the Year winner. Arjun shares insights on his unique approach to property investment, focusing on "buying against the grain." Here are some of the key topics discussed: Episode Highlights: Introduction to Arjun Paliwal: Arjun kicks off by talking about his journey in the property industry, how he scaled Investorkit, and the importance of innovation in finding investment hotspots. The Concept of 'Buying Against the Grain':...
info_outline Listing LeapHotspotting
Australian real estate has been characterised by three different types of shortage which have put upward pressure on rents and prices. Those are the shortage of rental properties, the shortage of new dwellings under construction and the shortage of homes listed for sale. While the shortage of rental homes and the under-supply of new homes persists, there has been recent improvement in the number of homes listed for sale by vendors. SQM Research finds that the number of residential property listings nationwide rose by 8% in August, bringing the total to almost 250,000 properties, up from...
info_outline Airbnb FurphyHotspotting
State governments across Australia have no meaningful policies for easing the chronic under-supply of rental properties – but they do have a talent for using the rental shortage as an excuse to raise extra revenue from the housing market. One of the primary tactics they use is to scapegoat a section of the community and blame them for the problem that they, the politicians, have created – and then hit the demonised group with new taxes and pretend that they’re doing it to deal with the rental shortage. The worst offender in this regard, although not the only one, is the State Government...
info_outline CoreLogic IllogicHotspotting
CoreLogic is one of Australia's leading sources of data on residential real estate matters, although increasingly overshadowed by other, smarter data organisations like PropTrack. CoreLogic has lots of statistics about housing markets but when it comes to analysis and commentary, CoreLogic is very often a source of illogic. Their problem, like so many companies that comment on Australian housing markets, is that they employ economists to analyse real estate and the outcome very often is kindergarten analysis. Here’s a recent example: According to , property markets outside the capital...
info_outlineTop economists are unanimous in believing Australia's housing market is in crisis, according to a new poll.
And I have to say, Wow, we had to go to a group of “top economists” to achieve that startling revelation.
It comes from a survey in which the Economic Society of Australia offered these top economists a choice of 14 measures identified by as likely to restrain prices for buyers and renters – in other prevent property prices and rents from continuing to rise.
Therein lies the first problem: they polled economists rather than real estate experts.
If there’s one thing we’ve learnt in the past four or five years of observing real estate analysis and commentary is that economists, generally and collectively, have a very poor understanding of real estate markets, which is why they are so incredibly bad at predicting outcomes.
But, ignoring that reality, the survey asked 49 people described as “leading economists” to respond to this question:
"Here is a list of measures governments could take to increase housing affordability (to reduce the cost of purchasing or renting relative to wages). Which would you most support? Pick up to three."
Among them, apparently, are former heads of government agencies, a former Reserve Bank board member, and former Treasury, International Monetary Fund and Organisation for Economic Co-operation and Development officials.
Sadly, but rather typically, the poll didn’t include any property experts. Just a group of individuals who have typically occupied ivory towers a long way from the coal face of property markets.
And here’s the next problem with this process:
the tick-box options presented to the leading economists did NOT include the only measure likely to ease the rental shortage and therefore restrain rental increases – providing incentives for people to become landlords.
You have to wonder why not.
So, whoever designed the poll – yes, a group of economists – failed to understand the problems they were exploring.
Of the options the panel of non-experts were given to choose from, two-thirds of them picked "ease planning restrictions" as most important fix. Almost as many picked "provide more public housing".
So, most believe that creating more dwellings will fix everything. Which, again, shows a fundamental lack of understanding of the problems, how they were created and where the solutions lie.
But it gets worse.
About one-third wanted to "tighten negative gearing and capital gains tax concessions".
You have to wonder about the thought process here. How does causing a major deterioration in the financial position of the people who provide the homes tenants occupy cause rents to fall?
And given that investors are less than 20% of the buyers competing in the market, how does this stop prices from rising.
Surely you would have to introduce measures to curtail home buyers, who comprise almost 80% of buyers competing in the market, if you wanted to stop prices from rising.
Back to the survey: about a third of the respondents wanted to "replace stamp duty with land tax applying to family homes".
Okay, so that’s a measure that might slow down home buyers a little.
Also popular were removing barriers to building prefabricated homes (31 per cent), fast-tracking the training of h ome builders (18 per cent) and fast-tracking the immigration of home builders (14 per cent).
Again, all are measures to increase housing supply and this appears to assume that building more dwellings will stop prices and rents from rising.
Ten per cent of those surveyed wanted to include the family home in the age pension assets test, 8 per cent wanted to remove first homeowner grants and concessions, and 6 per cent wanted to apply capital gains tax to family homes.
So, those measures at least at targeted on home buyers and appear to recognise their part in causing prices to rise, but these were the least popular of the tick-box choices.
The most popular were all measures which assume that building more homes and curtailing property investors will fix all problems.
But doesn’t explain how clamping down on the providers of rental homes will cause rents to fall – or stop prices from rising