Hotspotting
One of the many ways media misinforms Australian consumers is their misunderstanding of the difference between building approvals and actual construction of new dwellings. Right now, at a time when we have major dwelling shortages and construction costs are so incredibly high, there is a very important distinction between the number of dwelling approvals and the number of homes actually being built. The difference between the two is quite stark and it speaks to the biggest single problem amid the housing crisis – approvals often are not translating into actual construction of homes, because...
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The Great Australian Dream still exists, it’s just that - for many - it now means owning an apartment, not a house with a white picket fence. As property prices continue to grow, the dream of owning a freestanding house has morphed into the dream of owning an apartment - for more and more Australians. Apartment living is no longer just a financial choice, but a conscious decision to seek out a different way of living - a more affordable and low-maintenance lifestyle. The percentage of Australians who live in a freestanding house has been declining since the beginning of the new...
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Brisbane was one of the nation’s boom markets in 2024 and likely to do even better this year. The price data shows that Brisbane delivered a strong performance last year, both with house prices and in particular unit prices – but was third in the capital city growth rankings behind Adelaide and Perth. Figures from PropTrack and CoreLogic show Brisbane house prices overall were up 10% last year and unit prices around 15%. In 2025 we expect Brisbane to have another strong year and to overtake those other cities to be the national leader on price growth. ...
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🏡 Australia's Housing Crisis: Causes & Solutions With housing affordability at record lows and supply failing to keep up with demand, how did Australia's property market reach this crisis point? More importantly—how do we fix it? In this special episode of The Property Playbook, Tim Graham is joined by an expert panel to tackle one of the most pressing issues facing Australian homeowners, investors, and renters: 🎙️ Panel Guests: ✅ Michael Sukkar – Federal Shadow Housing Minister ✅ Kelly Ryan – CEO of the Real Estate Institute of Victoria (REIV) ✅ Terry Ryder –...
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Some investors are attracted to the cheap house prices and very high rental yields in resources sector towns but recent events in two of the nation’s iconic locations demonstrate why this can be a strategy fraught with peril. Hotspotting methodology dictates that a diverse economy is a core factor in any location we are willing to recommend – which means locations dominated by one industry sector seldom make it to our hotspots reports. A country town solely reliant on agriculture, a coastal enclave where everything depends on tourism and mining towns are all places we shy...
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I sometimes despair for Australians trying to make sense of real estate markets, when the standard of analysis and commentary in news media is so poor. Knee-jerk responses to short-term data sets from economists, journalists and often from the big-name research houses create a mass of confusing, conflicting and contradictory commentary. The commentary around price data is the worst example of this. For a long time, the biggest problem for consumers trying to make sense of market events has been commentators putting too much importance on short-term results. ...
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Regional Queensland had a pretty good year for price growth in 2024 but I’m predicting it will have an even better one in 2025. There’s mounting evidence that the combined weight of internal migrants moving to Queensland and investors increasingly pivoting from Western Australia to Queensland will drive significant price uplift this year. In 2024, according to PropTrack figures, the median house price for Regional Queensland increased 10%, which was well above the national average (4%), and better than our three biggest cities, but was slightly below the level of growth achieved in...
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Since the start of the pandemic in 2020, many of Australia’s property markets have experienced some extraordinary price growth. Many locations, both city-based and regional, achieved unprecedented price increases with median house and unit prices soaring as demand hit new highs. Where once a million-dollar house or unit median was unusual, that recent growth launched many locations into that club for the first time. As of January 2025, there were 1,194 suburbs or towns with a median house price or median unit price of $1 million or more – 50 more than in September 2024. These figures show...
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Was the Federal Treasurer being serious when he suggested that investors pass on the new interest rate cut to tenants in the form of cheaper rents? Has Jim Chalmers lost the plot completely or was he making a shallow pitch to voters on the eve of a Federal Election? To suggest that investor owners are in a position to hand out financial benefits to tenants because of this one, very small, isolated reduction in their costs suggests that Chalmers is either divorced from reality or he’s having a cheap shot at landlords to win favour with renters and maybe a few extra votes. I have to say that...
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One of the most significant housing stories in the past year has slipped under the radar of news media, with very little commentary. The latest official data from the Australian Bureau of Statistics shows that it now costs over $500,000 to build the average house in this country. That’s the cost of construction of the dwelling and doesn’t include the land price. Given that the price of residential land is also escalating to record price levels, the reality is that the typical house and land package in a capital city is beyond the reach of most young buyers. This, in...
info_outlineTwo very different headlines have summed up the problems for Australia’s ongoing housing shortage.
One of the recent media headlines declared that building approvals were at a two-year high and that things were improving for the nation’s housing shortage.
The other described why building approvals are almost irrelevant – it said that project deferrals are occurring at a record rate.
The reality of the current crisis is this: it doesn’t matter how many houses and apartments are approved for construction – and it doesn’t matter how many re-zonings state governments push through or what incentives they hand out to first-home buyers.
Most real estate developments are not proceeding because they’re not financially viable.
One of those media headlines read: Building approvals hit two-year high as apartment construction surges.
This was incorrect - apartment construction is not surging – approvals are, but many projects are simply not being built because they’re not viable in the current environment.
It’s so expensive to build that the end price for the dwellings would be far too high for most buyers – and therefore not financially feasible.
In October, Australian dwelling approvals reached their highest level in 22 months - with nearly 15,000 new homes approved for construction during the month.
ABS data showed total dwelling approvals rose 4.2 per cent for the month, with approvals for apartments and townhouses jumping 25 per cent to over 5,800 units, the highest since May 2023 – but private house approvals fell 5.2 per cent.
The AFR showed a startling lack of understanding of the problems in the industry when it declared in a headline: Worst has passed for new home building
The article said: “The worst has passed for Australia’s medium- and high-rise housing sector, economists said on Monday, after a jump in approvals of new apartments, townhouses and semi-detached homes.”
KPMG urban economist Terry Rawnsley said:
“The bad times are starting to end … Even with interest rates being unchanged for the year, they still have that confidence that if they can get a project out of the ground they’ll be able to sell it at a profit.”
But that, we think, was rather naïve – and others were less optimistic.
The Property Council of Australia pointed out that apartment approvals were still at half their level of the development boom under way in FY2018.
And Oxford Economics Australia senior economist Maree Kilroy said: “While the latest approval result for apartments was positive, we continue to expect a materially higher dropout rate to commencement.”
In other words, many approvals would not translate into construction. She referred to utility connection bottlenecks and trade labour shortages as problems in the sector.
Matthew Kandelaars of the Property Council said:
“We need to get back to the construction levels seen nearly 10 years ago. We are now six months into the National Housing Accord’s ambitious target of delivering 1.2 million new homes and we cannot allow the target to slowly fade into the background over the next 4½ years.”
According to a new report, money is still flowing into the construction industry but more and more of it is being dedicated to renovating.
KPMG released analysis of spending in the residential construction sector, revealing that while spending on renovations has boomed over the past five years, new residential construction on a per-capita basis has hit a low not seen since 1988.
Over the past five years, spending on new home building has dropped 14 per cent, adjusted for inflation. By comparison, the amount of funding flowing into renovations has increased by 6.5 per cent.
KPMG said:
“For every nail hammered and brick laid in residential construction, 40 per cent of it is going into renovating a pre-existing home.”
So the underlying problem remains. Regardless of how many dwellings are approved, far too few are proceeding to construction – so the fundamental shortage continues and there will continue to be upward pressure on prices and rents.