Hotspotting

Prepare to embark on an exciting journey into the realm of hot property markets with Terry Ryder and Tim Graham! Terry & Tim from Hotspotting, are dedicated to providing the most accurate and unbiased research to help investors make informed decisions on where to buy. The Hotspotting Podcast brings you the latest data, trends, and market statistics, along with in-depth discussions on growth areas and the larger factors impacting Australia's property landscape. Terry & Tim regularly feature special guests from around Australia to share their industry insights and expertise to help investors cut through the noise. Whether you're a seasoned investor or a first-time buyer, this show is a must-listen for anyone looking to build their knowledge and make smarter investment choices. Terry Ryder, with over 35 years of experience as a specialist researcher and writer in residential property, offers expert insights that are completely independent and free from outside influences. Tim Graham has been a buyers agent and mortgage broker for over 13 years along with working in real estate all over the world. Join us on the Hotspotting Podcast and discover the hottest opportunities in the Australian property market today!

Rent Confusion 01/17/2025

Rent Confusion If you’re confused about what’s happening with rents in Australia, you can be forgiven. That’s especially so if you use news media as your main source of information about residential real estate. The information – or perhaps more correctly, misinformation – in news media is highly confusing and in many cases contradictory, with one headline saying the complete opposite to another. Here are two headlines that appeared on the same day, the 10th of January: The worst is over: slowest rise in rents in four years Affordability crisis: tenants feel the pinch as rents surge So, as usual, Australian real estate consumers need to look elsewhere, somewhere other than mainstream media, to find out what’s really happening in housing markets. One of the strange things about residential rents, which pops up regularly in news media, is the bizarre notion that if the latest stats suggest that the rate of growth in rents is slowing, then tenants across the nation are celebrating. They’re apparently popping champagne corks because the rate of rental growth currently is less than it was last year. Let’s be clear: the greatest wish of tenants is NOT slower growth in rents. It’s NOT for rents to stop growing. And contrary to the apparent belief of The Greens, they don’t want a rental cap. What they want is for rents to FALL. People who rent in Australia, about a third of households, want to see a bigger choice of places to live in – in other words, they want higher vacancies. And they want rents to come down. There are two main reasons why that isn’t happening and cannot happen: (1) because vacancies are at historic lows, as they have been now for three years, and there are no remedies in sight; and (2) because interest rates are persistently high and the owners of rental properties need high rents to cover their costs. Having said that, it’s clear that - in some locations - rents have reached a ceiling and are unlikely to go much higher in the short term. Tenants cannot keep paying higher and higher rents – and higher and higher proportions of their incomes – on rental accommodation. That is why the rate of growth in rents has slowed in SOME – but certainly not all – locations across Australia. But the true wish among tenants – for rents to decline – is highly unlikely to happen any time soon. SNIPPET: There’s a lot of confusing and conflicting information in mainstream media about what’s happening with residential rents. Some headlines have declared that the worst is over for tenants because the rate of growth in rents is slowing down – as a national average. But other headlines have claimed that rents continue to surge higher and tenants continue to be in a world of pain. The reality is that rents are still rising, although in SOME locations the rate of growth is slowing down. But with vacancy rates continuing to be at historic lows in most places across Australia, and interest rates stubbornly high, we don’t have the conditions for rents to fall any time soon – particularly as there are no solutions in sight for the shortage which is causing rents to be high and rising. /episode/index/show/hotspotting/id/34889850

Albanese Housing Denial 01/17/2025

Albanese Housing Denial The Prime Minister is suffering from a serious case of denial if he believes that his press conference soundbite about building 1.2 million new homes is plausible, credible and achievable. Anthony Albanese had his big media event in August 2023 when he stated this objective of 1.2 million new homes in five years – but almost 18 months later it’s abundantly clear to everyone except members of the government that it’s not going to happen – indeed, was NEVER going to happen. It’s almost as if the PM and his cohorts believed that staging the publicity event in 2023 was all they needed to do - make the announcement of a target which has never been achieved in the nation’s history and then sit back and watch it happen. Job done. Here we are in 2025 and all the official data shows that building approvals - and in particular building commencements - are so far behind the levels needed to reach the target, that it can already be dismissed as fanciful – indeed, almost childlike in its naivety and idealistic stupidity. In the past 12 months building approvals totalled around 170,000 – but approvals don’t always translate into actual construction, particularly right now with all the problems in the home building industry. So we are so far short of where Australian needs to be to meet the target that there is really no realistic hope of achieving it. And it’s noteworthy that the original target date was mid-2029 and now, quietly, hoping that no one notices the Federal Government has moved the target date to 2030. But when challenged by journalists about the stark lack of results, the PM becomes angry and defensive – as he has done at recent press conferences. The Federal Government appears to think that the industry should just go out and build the homes because the Government says they should – and is oblivious to the long list of serious problems which are preventing it from happening. Building companies are going broke at the rate of nine per day and that is happening for a reason – but you have to wonder if the Federal Government is even aware of this reality. The cost of building new houses and in particular new apartments has become so high, so catastrophically high, that in many instances it’s not economically feasible to build them because the average buyer won’t pay the increasingly high price for new dwellings. Is the PM remotely aware of that? To build homes you need a healthy supply of tradespeople – but the industry has a chronic shortage and needs tens of thousands more to be able to create the dwellings needed – and there aren’t enough apprentices coming into the industry. One of the reasons the home building industry can’t find the tradies it needs – and why the ones that exist are increasingly expensive – is because federal and state governments have initiated record levels of investment in infrastructure – and there were over $500 billion in projects happening in 2024 and more to come this year and beyond. This has removed tens of thousands of tradies from home building - to work on the more lucrative headline projects initiated by politicians facing looming elections. Is the Prime Minister aware of that? Because it’s one of the key reasons his media soundbite home-building target will not be achieved. Does Anthony Albanese know that the average time it takes to build a house or an apartment has blown out enormously in recent years, thanks to bureaucracy and political interference in the process? That the cost of building has escalated enormously because of new rules imposed by the various levels of government? And those factors, plus persistently high interest rates, are the key issues that are sending building businesses broke at the rate of nine per day. Australia has never created 1.2 million new homes in any five-year period in history and it won’t be happening in the five years following the August 2023 publicity stunt by the Prime Minister. Sadly, Anthony Albanese is in denial about it, so the problems are unlikely to be fixed. SNIPPET: The Prime Minister is in denial if he believes that his press conference soundbite about building 1.2 million new homes is plausible, credible and achievable. Anthony Albanese had his big media event in August 2023 when he stated this objective of 1.2 million new homes in five years – but almost 18 months later it’s abundantly clear to everyone - except members of the government - that it’s not going to happen – indeed, was NEVER going to happen. Here we are in 2025 and all the official data shows that building approvals - and in particular building commencements - are so far behind the levels needed to reach the target, that it can already be dismissed as fanciful. And it’s noteworthy that the original target date was mid-2029 and now, quietly, hoping that no one notices, the Federal Government has moved the target date to 2030. But when challenged by journalists about the stark lack of results, the PM becomes angry and defensive – as he has done at recent press conferences. Let’s be clear: Australia has never created 1.2 million new dwellings at any time in its history and it’s not going to happen in this five-year period – so the shortage will persist well into the future. /episode/index/show/hotspotting/id/34889840

Price Data 01/08/2025

Building Collapses 01/08/2025

Approvals V Construction 12/18/2024

Approvals V Construction Two 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 , 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. /episode/index/show/hotspotting/id/34480265

Webinar Replay: Reflections & Projections - A Deep Dive into Real Estate Trends & Forecasts 12/18/2024

Webinar Replay: Reflections & Projections - A Deep Dive into Real Estate Trends & Forecasts In this insightful webinar, Terry Ryder, founder of Hotspotting, and Tim Graham, Hotspotting’s General Manager, analyze the surprises and trends of 2024 in the Australian property market and share their projections for 2025. With decades of combined experience, they provide investors with actionable advice on navigating the coming year. Key Highlights 2024 in Review Defying Predictions: Despite high interest rates and inflationary pressures, property prices rose by an average of 5.53% nationally in 2024. Perth led with an astonishing 18.7% growth, followed by regional Western Australia, Adelaide, and Brisbane. Surprise Winners: Hotspotting’s 2024 National Best Buys Report proved remarkably accurate, with 9 out of 10 selected locations achieving growth three times the national average. Shift to Apartments: Demand for attached dwellings surged, driven by affordability and lifestyle preferences, with some unit markets outperforming houses in capital growth. 2025 Projections Second Wind Markets: Regions like the Sunshine Coast, Albury-Wodonga, and Ballarat are emerging from a "pause phase" and are primed for growth, fueled by rising sales volumes and infrastructure developments. Avoid Frenzied Markets: Perth, Adelaide, and regional Queensland hotspots like Townsville are reaching their peaks. Investors should seek opportunities in undervalued markets with long-term growth potential. Surprising Contenders: Cities like Darwin and Launceston, as well as regional Victorian areas, are poised for unexpected growth, offering affordability and strong rental yields. Emerging Trends Affordability Focus: High interest rates are amplifying the appeal of regions with lower entry prices and strong rental yields. Infrastructure Impact: Areas benefiting from large-scale projects, such as Toowoomba and inland rail hubs, continue to attract growth. Changing Investor Mindsets: Long-term strategies and careful market selection are replacing speculative approaches. Special Offers National Top 10 Best Buys Report: Just $249. Best of the Best Bundle: Three premium reports for $399 (save $200). Exclusive Property Course: Register now for early bird discounts on Hotspotting’s comprehensive new property investment course launching in 2025. Special Offers National Top 10 Best Buys Report: Just $249. Best of the Best Bundle: Three premium reports for $399 (save $198). Exclusive Property Course: Register now for early bird discounts on Hotspotting’s comprehensive new property investment course launching in 2025. Register your interest for early-bird specials: /episode/index/show/hotspotting/id/34497680

Best Buys Result 12/17/2024

Best Buys Result You don’t have to be super rich or invest $1 million to make big capital gains in residential real estate: you just need to follow Hotspotting’s signature report, the National Top 10 Best Buys report. Those who followed the tips in our report of a year ago could have made close to $100,000 in capital gains spending as little as $400,000 – or $180,000 in gains after investing $630,000. In December 2023 we published our National Top Best Buys reports for Summer 2023-34. Our top 10 locations for investors to consider covered a wide range of price points, from less than $300,000 and above $1 million. And all 10 regions suggested in that report a year ago include suburbs which have delivered spectacular gains in the past 12 months. Many rose by more than 20% in 12 months, compared with the national average rise of just 5.5%. In Bunbury in Western Australia, you would have paid below $350,000 for the typical house in suburbs like Carey Park and Withers – and seen your investment grow by $90,000 or more, following annual growth between 25% to 30%. Even a modest investment of less than $300,000 for a small unit in Carlton in inner-city Melbourne would have shown excellent capital growth, out-performing the generally flat Melbourne market. Those with more to spend late in 2023 could have achieved over $200,000 in capital growth by buying houses at the median price in locations such as Punchbowl in Sydney and Carrara on the Gold Coast, or apartments in Elizabeth Bay in Sydney. More mid-range were units in Kangaroo Point in Brisbane or at Runaway Bay on the Gold Coast; and houses in Tea Tree Gully in Adelaide or Fairy Meadow in Wollongong – all delivering $100,000 or more in gains for those who bought around the median price for those locations. The average situation arising out of our National Top 10 Best Buys report a year ago was investing $640,000 and achieving a 21% rise in value, which means capital gains of $146,000. We’ve recently published our National Top 10 Best Buys report with our selections to launch 2025. And, in keeping with our tradition of seeking to identify the future hotspots – which means locations with potential for strong price growth, but before those markets rise strongly and become competitive – the new edition of Best Buys does not include already hot markets like Perth, Adelaide and key regional markets in Queensland. We’ve identified places where you can buy sensibly, with due diligence, and look forward to excellent capital growth over time. /episode/index/show/hotspotting/id/34480040

Listings Rise 12/12/2024

Listings Rise The greatest complaint heard most often in real estate across Australia is that there are plenty of buyers, but a shortage of listings. The number of properties for sale has been well short of the levels needed for a balanced market, particularly in the boom cities of Adelaide, Brisbane and Perth. But that is steadily changing. According to SQM Research, total listings of properties for sale nationwide grew 7.6% in November and are now more than 10% higher than a year ago. Perhaps most significantly, there were major rises in November in those three boom cities, with the number of listings up 20% in Perth and close to 17% in Adelaide, with Brisbane recording a rise of 8.6%. That follows significant increases in October also. The rise in listings nationally in November was driven by a 6.4% rise in old listings (stock on market over 180 days) and a notable 22% rise in properties being on the market between 30 to 90 days. SQM Research commented that this strongly indicated that the spring selling season had been a disappointing period for vendors and agents. Cities with significant annual increases in listings included Sydney, Melbourne and Hobart – all up 16 to 17 per cent – and Canberra, up 23% in annual terms. Comparing the current situation with recent history, national listings of properties for sale are still below the levels common before 2021, but have been generally rising since July. In Sydney, listings are the highest they’ve been since 2019 and in Melbourne they’re the highest since November 2020. In Canberra they’re close to the peak levels of 2019. In Perth, Brisbane and Adelaide they’re still well below historic levels but have been rising steadily since mid-2024, with particularly large increases in November. The rise in the number of properties for sale coincides with evidence that the rate of price growth is reducing in those market-leading cities. The big exception in all this is Darwin, the only capital city to record a reduction in the number of listings in November – and it remains 17% below the levels of a year ago. The figures provide further evidence of change in individual markets, with a growing number of indictors that the Perth boom has passed its peak and that there may be stronger price performance in places like Darwin in 2025. /episode/index/show/hotspotting/id/34409530

Media Absurdities 12/12/2024

Media Absurdities Things are constantly changing in real estate nationwide but the one factor that never changes is this: we can always rely on news media to distort the facts and deliver a steady flow of misinformation to Australian consumers, all in the interests of attracting readership, with little regard for accuracy, honesty or fairness. The past week or so has been chockful of media nonsense. If you can believe the headlines, the national property boom is over, house prices are plunging, the rental boom is over and the North Queensland city of Townsville is a mining town. One of the constants of my 40-plus years charting Australian real estate is that there are lines and lines of idiots scrambling to be the first to declare that a boom is over, usually long before it actually is. This is often fed by data research entities like CoreLogic where the key people never let the facts get in the way of good headline and free publicity. So Australia has been resplendent lately with strident headlines declaring that the national property boom is over or words to that effect. Here’s the first problem: we don’t have a national property boom so it’s rather odd to declare that something which doesn’t exist is finished. We have certainly had a boom in Perth, Adelaide and Brisbane among the capital cities, but certainly nothing remotely resembling a boom in the other five state and territory capitals. It’s a similar scenario in the regional markets, with a variety of different situations ranging from downturn and stagnation to moderate growth and, in some cases, strongly rising prices. But nationally growth in house and unit prices has averaged 6 or 7 percent throughout 2024 – and lately the annual growth rate, as a national average, has been 4 or 5 percent. Only in the fertile imaginations of media headline writers would that constitute a boom. But, according to various media outlets, this mythical boom is over – even though the latest figures for annual growth in three of our capital cities and three of our state regional markets are still well above 10%. The only places where the evidence suggests the boom is over are the ones where a boom never took place – like Melbourne, Hobart, Darwin and Canberra. But not only, according to media, is the fictional national boom over, but property prices are plunging. One headline in Fairfax media claimed to reveal Why property prices are plunging across Australia – amid warning they could slide even further. A close examination of the article underneath this startling headline discovered there was no evidence in the story to justify the headline. Quite simply, the headline was a blatant fabrication – which, sadly, is all too common in today’s news media. The article revealed that Sydney’s median price was 0.8% lower than three months earlier but 3.3% higher than a year earlier, while Melbourne was down 1% over three months. Nothing in those figures goes even close to “prices plunging”. In the other major cities prices were still rising and indeed were still growing at boom time rates. House prices were also up in the Combined Regions in the latest month, the latest quarter and the past year– and unit prices were also up nationally, both in the cities and the regions. So, there was very little sign of even minor decline in prices anywhere and certainly no evidence at all of price plunging. So this was yet another instance of a headline which was an outright and blatant lie. And who wrote this rubbish? well, it was the champion of negative media about residential real estate, the endlessly sad Shane Wright who has devoted his career to writing nonsense about property markets. But wait, there’s more. Not only is the fictional national price boom over, but apparently the rental boom is over as well! There have been strident headlines and soundbites inferring that rents are no longer rising. As is so often the case with these big sweeping media statements, the claim was based on a single month’s figures from one source. Nationally, rents rose only 0.2% in November, according to CoreLogic, therefore the boom is over in the simplistic minds of attention-seeking analysts and journalists. And, yes, once again, the source of this myopic and shallow analysis is CoreLogic, a business which publishes lots of major real estate data but is quite dreadful at analysing what it all means. So CoreLogic’s head of research Tim Lawless said: “At 5.3% annual growth, rents are still rising at more than twice the pre-pandemic decade average of 2.0%, but given the weak monthly change the annual trend is set to slow further from here. “It will be interesting to see if the rate of rental growth rebounds through the seasonally strong first quarter of the year in 2025, but beyond any seasonality, it looks increasingly like the rental boom is over”. But other sources tell a different story. SQM Research records a monthly rise of a tick under 1% as the national average for residential rents, with Adelaide up 1.1%, Perth rising 1.9% and Canberra up 1.5%. The national vacancy rate remains a fraction above 1%, essentially unchanged from three years ago, so can anyone justify a claim that the rental shortage crisis and rising rents is all done and dusted? Hardly. Another startling set of headlines resulted from the latest Regional Market Update from CoreLogic which declared that the highest capital growth was occurring in Queensland and WA mining towns. I was truly perplexed because I know there has been little price growth recently in mining towns like Karratha, Port Hedland and Newman in WA and Moranbah in Queensland. However, the headlines resulted from CoreLogic boffins – yes, it’s CoreLogic again - re-defining major regional cities as mining towns. Apparently Townsville, which has one of the most diverse economies in regional Australia, with only minor influence from the resources sector, is now a mining town. So is the key Central Queensland of Mackay, apparently, despite being 2-3 hours’ drive from the nearest coal mine. In WA, the key regional city of Geraldton is also, apparently, a mining town, according to Core illogic, although the nearest iron ore mine is an hour’s drive away. All of this, and a whole lot more, reinforces our view that there is more misinformation than actual information in mainstream media. And that any real estate consumer who bases a decision on the content of media reports is at risk of making a very bad decision. /episode/index/show/hotspotting/id/34409490

2025 Predictions 12/12/2024

2025 Predictions Rumours of the death of ‘the national property boom’ are greatly exaggerated – especially since we didn’t have a national property boom in 2024. Rather, over the past 12 months, we have seen differing market cycles in many locations - as is the usual state of play in real estate throughout Australia. Strong property price growth was recorded in Perth, Adelaide, and Brisbane in 2024, but not in Melbourne, Sydney, Canberra, Darwin or Hobart. Similarly, in the regional areas, there were declining and stagnating markets, as well as some where prices were showing good price growth. This is situation normal in Australian real estate. It’s a big country and real estate markets are very local in nature. So, a national property boom? We haven’t had one. So you ignore headlines declaring that the national property boom is over. So, what can we expect in residential real estate in 2025? Firstly, the major bank economists will predict price declines in 2025 – as they did at the start of 2023 and again at the start of 2024 - and will be proven wrong yet again because it they fail to understand the basic dynamics that drive prices in residential real estate. Politicians will continue to scapegoat their traditional targets of foreigners (migrants, international students and foreign investors) as well as mum-and-dad Australian investors – and enlist the help of shallow journalists to infer that these cohorts are the cause of all the problems in the housing markets. The reality is that investors, local and foreign, are not the problem – they are the solution. They hold the keys to solving the housing crisis. Meanwhile, most State Governments will continue to make the housing crisis worse with anti-investor policies - with the negative ramifications of recent rental reforms to become more apparent as 2025 unfolds. Vacancy rates will remain low, but the rate of rental growth generally will slow because markets have hit a ceiling due to limits in the capacity of tenants to pay more. However, restrictive rental legislation by various state and territory governments will continue to motivate some investors to sell up – thereby making the rental shortage worse. The Greens will continue to embarrass themselves and lose voter support with anti-investor rants, with the Federal Election due early in the year likely to see their influence reduce even more. Investors will continue to pile into the frenzied markets, mostly in regional Queensland -however, the smart money will target locations early in the growth cycle, not at the end. Evidence that the Perth market has passed its peak will become more apparent with a similar slowdown forecast for regional WA. The solid economic and market fundamentals in Adelaide means it will continue to show solid growth next year as well as Brisbane and regional Queensland. Melbourne did not have a good year in 2023 or in 2024, but I believe it will start to rise next year, thanks to the price differential with Sydney and its high population growth. This will occur despite Melbourne having the worst state government and the highest taxes in the nation. Darwin will be targeted by investors and will begin to show some price growth next year, too. More and more indicators are favourable for the Northern Territory capital, with investors seeking its affordable houses and high rental yields. The Exodus to Affordable Lifestyle will continue, boosting many regional markets, as more big city residents seek a different and more affordable way of living, enabled by technology and the ability to work remotely. What we have termed the ‘second-wind markets’ will ignite. These are locations where the market sprinted (with major price growth) from 2022 to 2024, has been catching it breath since then, and now, having got its second wind, is starting to run again. They include regional cities such as Albury-Wodonga and Tamworth in NSW, the Sunshine Coast and Hervey Bay in Queensland, Bendigo and Ballarat in Victoria, as well as Launceston and Burnie in Tasmania. There will continue to be a lot of conjecture about interest rates next year, but the potential impact of any rate reductions will be largely irrelevant and greatly over-rated by many economists and news media. As we’ve learned from the past two years, trends with interest rates are not the major influence on real estate outcomes. If they were, prices would have fallen everywhere over the past two years. And that, clearly, has not been the case. /episode/index/show/hotspotting/id/34409465

Regional Investment Boom 12/05/2024

Regional Investment Boom Victoria’s real estate market is witnessing a significant shift as young first-home buyers increasingly seek affordable housing in regional areas. According to recent data from the Australian Bureau of Statistics (ABS), first-home buyer loans in Victoria soared to 4,202 in July – the highest number in nearly two years. This surge reflects growing confidence among young buyers and a trend towards exploring housing options beyond Melbourne. Nationally, the Commonwealth Bank of Australia and the Regional Australia Institute report that the flow of people from cities to regional areas is now 16 per cent above pre-pandemic levels. The Regional Movers Index indicates a 27 per cent increase in people moving from cities to regional areas compared to those moving in the opposite direction during the June quarter. Over the past year, 11.2 per cent of movers have relocated from cities to regions, with three-quarters settling in Victoria or NSW, up from half of all movers last year. Government incentives such as the First Home Owner Grant and stamp duty exemptions are boosting this trend. Regional Victoria hotspots such as Ballarat, Bendigo and Geelong are seeing heightened interest from first-home buyers eager to take advantage of lower property prices. Greater Geelong, in particular, has emerged as the most sought-after regional LGA in Victoria. And this affordability attraction has equal appeal to property investors. In contrast to Melbourne’s median house price of more than $900,000, regional Victoria offers numerous more affordable options. Geelong’s median house price is $720,000, while Ballarat and Bendigo are even more budget-friendly at $550,000 and $490,000. This affordability makes ownership accessible for buyers who might be priced out of Melbourne’s market. The work-from-home trend, enabled by technology and accelerated by the pandemic, has also contributed to this shift. Many Victorians now have the flexibility to work remotely, making it feasible to live in regional areas while maintaining their careers. This flexibility enables buyers to enjoy a better lifestyle balance without sacrificing their job connections in Melbourne. For investors considering buying in Regional Victoria, and concerned that prices have not increased recently, it’s worth remembering that longer term Victoria has an exceptional track record on capital growth. Regional Victoria ranked fifth in the nation in the recent PIPA research into where the best capital growth has occurred in the past 20 years – ahead of Perth, Sydney, Melbourne, Canberra and the regional markets of NSW, Queensland and Western Australia. According to the PIPA research, home values in Regional Victoria grew 187% over the past two decades. Another factor in favour of investors is that Victoria’s rental market is shrinking, which means there are fewer vacant properties. New data from Victoria’s Department of Families, Fairness and Housing reveals a sharp contraction in the state’s rental market, with active rental bonds dropping by 21,712 in the year to June 2024. This marks the first decline in recorded history since 1999, representing a significant shift in market dynamics. PropTrack has attributed much of the contraction to Victoria’s rising property taxes, stricter rental standards and sustained high interest rates, which has made rental property ownership less attractive and more expensive for landlords. While around 50,000 new loans were made to investors during the 2024 financial year, PropTrack noted that the influx was insufficient to offset the exodus, leading to a net loss of rental properties. The data also indicated that the churn rate for sales by investors was significantly higher than a typical year, further intensifying the decline. While there are clear reasons why investors have been deterred from investing in Victoria, the trends present opportunities for investors who are interested in Regional Victoria’s long-term growth record, its relative affordability and the growing shortage of rental properties. /episode/index/show/hotspotting/id/34298515

Units Beat Houses 12/05/2024

Units Beat Houses Hotspotting was among the first to identify and highlight the most significant change in the Australian real estate scene – the emerging trend which we document in the quarterly editions of the report titled The Rise and Rise of Apartments., published in association with Nuestar. This trend has turned upside down the dominant paradigm in real estate, that houses out-perform apartments on capital growth. There is now growing evidence that attached dwellings are mounting a strong challenge to houses. It has long been believed that land content was the big thing in driving property values and that units lacked this quality. Increasingly, it’s clear that this theory about capital growth needs to be re-considered and to acknowledge that attached dwellings like apartments have qualities that houses don’t have and which are important to growing numbers of buyers. The latest Housing Affordability Report, jointly released by CoreLogic and ANZ, has observed that capital city unit prices increased more over the three months to October 2024, than did house prices over the same period, suggesting a growing preference among home-buyers and investors for units as an affordable option in getting into the market. The growth difference was small, but it’s merely the latest in a growing set of figures showing the rising performance of units. In the month of October, the median price growth for units was higher than for houses in the nation’s five biggest cities and also for the combined regions. This was also the case for the October quarter. In annual terms, price growth has been better for units than houses in the three capital cities leading the nation on market growth – Brisbane, Adelaide and Perth. Units have also out-performed in the regional markets of Queensland, WA, NSW and Victoria. The annual growth in median unit prices, according to CoreLogic, has been 18% in Adelaide, 19% in Brisbane and 24% in Perth. Those are spectacular increases and provide compelling evidence to disprove the notion that attached dwellings don’t perform on capital growth. There are also growing numbers of suburbs around Australia where unit price growth is higher, both in the short-term and the long-term. The Hotspotting Research Hub shows that at Noosa Heads on the Sunshine Coast, the five-year growth average is 10% per year for houses and 17% per year for units. At Surfers Paradise on the Gold Coast, it’s 8% per year for houses and 12% per year for units. There are many other similar examples across the nation. REA Group, which publishes realestate.com.au, has recently highlighted locations where unit price growth is outpacing houses. “Historically, house values have risen at a faster rate than units, but with affordability pressures, units are being preferred by many homebuyers.” “In certain suburbs,” she says, “unit prices have grown at more than double the rate of houses over the past year.” Searches for units on realestate.com.au have also been trending upwards since mid 2020. They now make up close to 40% of all buy searches on-site. Lieu says that, while the strong performance of units has been evident nationwide, there are areas where demand for units has been particularly high, resulting in significant price increases compared to houses. In New South Wales, for example, the annual growth in unit values in , and has outpaced houses by around 6 percentage points. In Victorian, , and are examples of locations which have experienced stronger growth in their values compared to houses by considerable margins. The largest difference in value growth between units and houses in Queensland was observed in the Brisbane suburbs of , and . Units in Waterford and Waterford West increased at more than twice the percentage of houses in these suburbs in the past 12 months. PropTrack says that, with housing affordability at its lowest level in three decades, it's to be expected that people are turning to more economical options, especially in suburbs where the gap between house and unit values is significant. But Hotspotting analysis shows that affordability is NOT the only reason that demand for units is rising. More buyers are choosing attached dwellings for location, for lifestyle and also for safety and security at a time of growing concerns about escalating crime levels. For all those reasons, each quarter Hotspotting publishes a national report titled The Rise and Rise of Apartments, in association with the leading real estate marketing company Nuestar. And it proves, emphatically, the units are now a strong option for buyers seeking not only affordability, but strong capital growth as well. /episode/index/show/hotspotting/id/34298455

Why a Buyer’s Agent Is a Game-Changer for Property Investors | Featuring Chris Graham 12/03/2024

Melbourne Market Myths 11/27/2024

Melbourne Market Myths Melbourne’s property market remains the great under-achiever of the nation but that may be about to change. A number of key indicators suggest better performance by the Melbourne property market is imminent. One pointer to better times is the latest Property Sentiment survey by API magazine, which recorded a major turnaround in investor attitudes towards the Victorian property market. The survey asked: Which state or territory do you regard as having the best property investment prospects for the next 12 months? Mid-year Melbourne and Victoria attracted only 8.6 per cent of respondents who felt it was the best state for property investment. Three months later in the new survey there was a remarkable turnaround, with 25 per cent identifying Victoria as having the best property investment prospects for the next 12 months. This ranked Victoria No.2 - above New South Wales and Western Australia, and close behind Queensland in the investment popularity stakes. One of the attractions of Melbourne is its relative affordability, thanks for the absence of price growth in the past two years. The latest Home Price Index from PropTrack shows that Melbourne is currently cheaper than Canberra and Brisbane, as well as being well behind Sydney. Melbourne’s median dwelling price is on a par with Adelaide and Perth now. Sydney’s median dwelling price is $1.1 million, compared to $790,000 in Melbourne. There is a growing perception that Melbourne is now affordable and poised for capital growth that would return it to its more familiar spot sitting a little ehind Sydney as the country’s priciest market. Indeed, the latest PropTrack price report notes recent evidence of a turnaround for Melbourne. It says: “Price falls have started to reverse in Melbourne, with buyers out in force for the peak of spring selling season. Prices rose 0.5% in October, the highest monthly growth rate among the capital cities.” Other factors suggesting that Melbourne is due for a period of stronger property market performance include population growth (fuelled by overseas migrants and international students), a solid economy and a significant program of major infrastructure developments. The latest edition of the State of the States report from CommSec ranked Victoria No.4 among the state and territory economies, ahead of NSW, the ACT, Tasmania and the Northern Territory. The report said the greatest strength of the Victoria economy is the level of construction work. The latest population data from the ABS shows Victoria had the second highest growth rate among the states and territories in the year to March 2024, rising 2.7% compared to the national average of 2.3% - and bettered only by Western Australia. In raw numbers, Victoria added more to its population than any other state, ahead of NSW and Queensland. Jacob Caine, President of the REIV, says Victoria has always been an attractive destination for overseas and interstate migration. Caine says: “Melbourne’s reputation as one of the most liveable cities is well deserved. “We have a growing population and growing demand for rental properties with new residents more likely to rent before buying. “The challenge in Victoria is a lack of housing supply, and the need for Government to build a stronger policy platform that will to meet the needs of the market.” One positive policy from the State Government is the recent announcement that the has been extended to investors - and the price cap removed for home buyers, albeit temporarily. This has been largely welcomed by the sector, as offering a much-needed boost to development. New data from off-the-plan property portal, urban.com.au, has shown a “massive spike in interest” for Victorian off-the-plan projects after the concession’s announcement, reporting an immediate 123 per cent increase in direct online enquiries, and a fivefold increase in online traffic volume. Another factor in favour of investors is the reduction is the number of rental properties available, putting upward pressure on residential rents. For the first time since records began in 1999, Victoria’s active rental bonds dropped significantly over the 12 months to June 2024, signalling a significant shift in the state’s rental market. There are now 22,000 fewer rental properties in the market than a year ago. Victoria’s high property taxes and stricter rental property standards have made owning investment properties less attractive. These factors, combined with sustained higher interest rates, have driven many landlords to sell off their properties. Melbourne’s metro areas have experienced the largest declines, with more than 20,000 fewer rental properties, a 3.7% year-on-year decrease. Regional Victoria saw a smaller drop of around 1,000 properties. Every Melbourne LGA saw rents rise in the past year, with some regions experiencing increases of nearly 20%. Overall, rents are (on average) 7.5% higher than a year ago, creating affordability challenges for tenants. Another positive for the state is that Victoria currently leads the nation in first-home buyer activity, accounting for 32% of new loans. Victoria’s population is projected to grow significantly over the next five years, further increasing demand for rental properties. The shrinking rental market, combined with rising construction costs and fewer new developments, could exacerbate housing affordability issues for both renters and buyers. The Australian Financial Review reported earlier this month that “Melbourne’s housing market could outperform Sydney and other capital cities once it emerges from its current downturn, boosted by a marked improvement in affordability after years of weak growth”. Nicola Powell, Domain’s chief of research and economics, says: “In the next cycle, we’re likely to see because it has underperformed significantly compared to other capital cities since March 2020.” AMP capital’s chief economist Shane Oliver says he expects Melbourne prices to grow more than Sydney’s in the next upswing. Oliver says: “ for some time, but this has made the property market relatively cheap compared to Sydney and the other cities. Because of its relative underperformance, it could bounce back a little bit quicker and sharper.” At Hotspotting, our assessment is that many of the key parameters and indicators are lining up to boost the growth prospects for Melbourne and Regional Victoria in 2025. The city and the state generally are overdue for a period of price growth. /episode/index/show/hotspotting/id/34152995

Interest Rates & Prices 11/26/2024

Interest Rates & Prices I have frequently highlighted the poor track record of economists in predicting outcomes in real estate markets across Australia – and in particular the embarrassingly bad record of economists working for the Big 4 banks and for other major institutions like AMP Capital. Their forecasts for house prices at the beginning of each of the past five years have been so far off the mark, it’s puzzling that the big-name economists who made these blunders have kept their jobs. Because what these outcomes mean is that these boffins have a very poor understanding of residential real estate – and that, after all, is a significant part of what they are paid their fat salaries to be good at. The most puzzling thing is that there’s a clear and obvious reason they always get it wrong – they think that the major determinant of house prices is what’s happening with interest rates. Big bank economists cling to their pet theory that if interest rates are high and /or rising, prices will fall. And if interest rates are low and /or falling, house prices will rise. In the mindset of these over-rated and over-paid bureaucrats, nothing else is in play. Not economic growth, not government stimulus, not population trends, not major infrastructure investment, not basic supply and demand factors, nor new and emerging trends like the Exodus to Affordable Lifestyle or the Rise and Rise of Apartments. For them, it’s just interest rates. I know primary school kids with a more sophisticated understanding of real estate dynamics. If the bank boffins were worth their salaries they would have noticed what happened with national property prices in 2023 and again in 2024, in both cases years of solid growth, in defiance of their forecasts that prices would crash because interest were rising or persistently high. But beyond recent history, a quick study of past decades shows that their theory about interest rates and property prices is a false and failed philosophy. Throughout the past 40-50 years, property markets in Australia have pretty much done the opposite to what the modern economist mindset suggests SHOULD happen. The highest interest rates in my lifetime occurred in the 1980s. Throughout that decade mortgage rates were commonly above 10% and went as high as 17-18% towards the end of the period. And yet some of the biggest property price growth in the nation’s history occurred during that period of insanely high mortgage rates – with the capital city median dwelling price rising 141% - from $59,000 in 1980 to $142,000 in 1990. The growth in the second half of that decade, when interest rates were at their highest, was 75% - with the median dwelling price lifting from $81,000 to $142,000. Interest rates were much lower during the 1990s, but dwelling values grew at a much slower rate in that decade, rising just 46%. So, to repeat, prices grew 141% in the 1980s with record high interest rates (up to 18%), but grew only 46% in the 1990s with interest rates much lower, down as low at 7%. The early part of this century was another period of rising interest rates, but price growth picked up – rising 114% from 2000 to 2010. Interest rates were considerably lower between 2010 and 2020, but the rate of price growth slowed significantly, compared to the previous decade when mortgage rates were higher. The median dwelling price rose only 20% between 2010 and 2015, and just 23% between 2015 and 2020, despite mortgage rates getting down to around 3%. Since 2020, we’ve seen dwelling prices grow much faster – up 36% overall in four years, despite the recent period of high and rising interest rates. It’s pretty clear, isn’t it – so clear, in fact, that even a bank economist could understand it. Since 1980, dwelling prices have done the opposite to what bank economists say they should do – they have risen most strongly when mortgage rates have been high and the price growth has been weakest when interest rates have been low. There have been one or two exceptions and aberrations along the way, including in 2021 when we experienced high price growth at a time of low interest rates, but that was generated by a host of other major influences, including government stimulus measures. Beyond that, what the data tells us again and again, is that we’re more likely to have rising property prices when interest rates are high and rising. And, when you think it through, it makes perfect sense – we get rising interest rates when the economy is strong, unemployment is low and consumers are spending – in other words, the sort of circumstances when people are more likely to be out buying real estate. For the record, how much have Australian dwelling prices grown in the 44 years since 1980? They’ve grown, on average, 1440 per cent. There’s been some level of growth in every five-year period since 1980, quite oblivious to what’s been going on with interest rates. Right now, there’s lot of speculation from economists and other commentators that when the Reserve Bank eventually cuts the official rate, perhaps early in 2025, it will ignite property markets and cause property prices to rise. These kinds of views, repeated multiple times in news media every day, have resulted in most people believing that property markets are indeed driven by events with interest rates. History, including recent history, proves it simply isn’t so. /episode/index/show/hotspotting/id/34152940

The Property Playbook - Shifting perspective: the key players in Australia’s housing crisis 11/26/2024

Smart Investing Achieve More Than 6% Yield Without Compromising Growth 11/23/2024

Vacancy Rates Remain Ultra Low 11/19/2024

Vacancy Rates Remain Ultra Low It’s been 15 months since Prime Minister Anthony Albanese made his big announcement about fixing the housing shortage – but there has been, as yet, no progress in lifting rental vacancies and suppressing rental growth. The press conference making the announcement that the Federal Government would build 1.2 million new homes in five years was held in August 2023 – but more than a year later it’s clear that little progress has been made and that rental vacancies are not improving. The latest figures on vacancy rates from SQM Research shows the national vacancy rate at 1.2% In October, unchanged from September and only a fraction higher than a year ago. Five of the eight state and territory capital cities actually recorded a month-on-month reduction in their vacancy rates, while two others recorded no change. The only capital city to have an increase in vacancies was Darwin. Overall, the number of properties available for rental has dropped from almost 38,000 in September to 36,500 in October. To put that in context, in December 2016 – the last time Australia had a vacancy rate close to 3% - there were 90,000 homes available for rent across the nation. And Australia has added about three million people to its population since 2016. Compared with a year ago, when the Federal Government was spruiking its big fix to the shortage of homes, five of the eight capital cities still have vacancy rates at similar or the same levels – and one, Hobart, is significantly lower than 12 months ago. The highest vacancy rate among the eight capital cities is Canberra at 1.7% - the same as it was a year ago and significantly lower than the benchmark 3% which is considered in the industry to represent a balanced rental market with stable rents. Now, a year is a long enough time for a government to move the dial on an issue like the rental shortage. Australia could improve this situation almost overnight by implementing measures to encourage and incentivise Australians to become landlords. The big problem, which has been building now for many years, is that the nation has a chronic shortage of people willing to take on the task of being landlords – buying an investment property and making it available for others to live in. Government doesn’t perform this role and neither does big business. Over 90% of the homes that people rent in Australia are provided by mum-and-dad investors – but fewer and fewer people are willing to do it, at a time when the costs of doing so are unattractively high and the rules and regulations keep changing to the distinct disadvantage of the owners. Governments caused this rental shortage and they keep making it worse. So rental vacancies are unlikely to improve in the foreseeable future. And while that remains the case, there will continue to be upward pressure on rents and an absence of choice for people who need to rent or choose to rent. Four years ago, the median weekly rent for a house in Australia was around $440 – today it’s over $700. /episode/index/show/hotspotting/id/33990342

Building Crisis: 5 reasons why things aren't improving 11/19/2024

Building Crisis: 5 reasons why things aren't improving There are multiple reasons why Australia has a housing shortage and why the numbers of new dwellings needed are simply not being built. This is something I have spoken about regularly in the past and will continue to do so, as it’s the core issue creating problems for real estate consumers of all kinds – home buyers, investor buyers and tenants. Here are the latest events and announcements which help to explain why we have a housing shortage with rising prices and rising rents, problems which are not going to be fixed in the foreseeable future … ITEM 1 – BUREAUCATIC DELAYS: Sydney councils are sitting on backlog of almost 8,500 unresolved development applications and requests for development certificates, according to NSW government data. There are over 5,000 unresolved development applications across the Greater Sydney area, plus 3,300 active “complying development certificates”. Five councils each have more than 300 local development applications that are waiting to be finalised. Data from the Department of Planning Housing and Infrastructure lists the Inner West Council as the worst offender, with 456 “active” DAs waiting for a determination. The Northern Beaches, Hills Shire and Cumberland Councils also have major backlogs. Thousands more “complying development certificates” are also adding to the backlog, despite being designed to give faster approvals to developments that meet certain requirements. Some councils are taking more than a year to approve homes. And some developers are waiting up to a decade for projects to be approved. In my view, one of the core issues is that many councils have a NIMBY attitude to development, especially high-density residential. They simply don’t want developments to be built and do everything they can to frustrate builders. ITEM 2 – NOT FINANCIALLY VIABLE: In Perth, the rate of apartment completions has dropped to its lowest levels since records began in the 1980s. A new Property Council report says that, to meet the housing targets set by the National Housing Accord, WA would need to be delivering five times the number of apartments per year that it currently is. The Sky High report says there are more than 10,000 apartments approved for WA but effectively on hold and unable to be constructed. The major issue is that projects are just not financially viable – because the cost of delivering an apartment is generally higher than the market is willing to pay, so projects simply don’t stack up. Only luxury apartments are economically viable projects. The report blames climbing construction costs - driven by labour shortages and competition for labour from government and mining sectors. The report says: “Developers are reporting that construction cost estimates are now almost double the cost of similar developments five years ago.” The Property Council expects that costs will climb even higher as the new national construction code and bargaining agreements imposed by government take effect. This is problem not only in Perth but right across Australia. Developers are scrapping unit projects because the costs are so high, making them financially unviable. The Australian Construction Industry Forum says it’s a worrying trend for a country that – not only apartment towers but medium-rise and townhouse developments in existing suburbs – to tackle the chronic undersupply of housing and to ensure longer-term affordability. The forum’s Construction Forecasting Council chair and chief economist Nerida Conisbee says: “It’s very, very expensive to build apartments. Many projects aren’t going ahead.” ITEM 3 – WORKER SHORTAGES: A recent report reveals that Australia needs 130,000 additional workers to combat labour shortages in the construction sector. This has prompted calls for rapid reforms from both federal and state governments to attract and retain skilled labour. The report says the nation is on track, in 2024, for the worst year in new home builds in over a decade, with an 9 per cent decline in new building starts, totalling just 158,000 when it needs to be 240,000 per year to meet the Federal Government’s fanciful target of 1.2 million new homes in five years. Construction starts for detached houses have dropped by 10 per cent, while higher-density projects have declined by 6 per cent. If this pace continues, Australia could see fewer than 800,000 new home starts over the five years, leading to a shortfall of over 400,000 homes compared to the National Housing Accord target. The decline in apprenticeship numbers further compounds this crisis, with completions down 8 per cent and commencements down 12 per cent in the past year. ITEM 4 – POLITICAL POLICIES: The Housing Industry Association says a home building recovery is possible because buyer demand is rising, but state government housing policies risk stalling the revival. HIA Senior Economist, Matt King, says demand for new homes nationally is accelerating - largely due to high population growth, low unemployment, stable incomes and the absence of interest rate rises for the past year. King says activity generally is picking up, but there are big differences across capital city and regional markets. Sydney remains an outlier and there is still no indication of a near-term rebound in residential building in the big city. King says: “New home building in the Sydney basin remains exceptionally low, primarily due to high land prices and excessive housing taxes and infrastructure charges.” Australia-wide, the HIA says the detached home building sector looks promising, but the unit sector remains constrained and is unlikely to experience recovery before mid-2025. King says: “The sector continues to be dampened by skilled labour shortages, business credit constraints and the aftermath of significant building material cost escalation. “The extent of the recovery in new home building will be determined by the ability of governments to ease the barriers to home building. “Recent state government plans to increased surcharges on foreign investors and introduce taxes on short-term rental accommodation are unhelpful at a time when stability is needed to achieve the target of 1.2 million homes.” King says the rate of home building is being slowed down by government failure to implement policies such as expedited land releases, concessions on property taxation, and accelerated development approval time frames. ITEM 5 – HIGH LAND COSTS: The rapidly prising cost of home sites is one of the biggest barriers to easing the housing shortage. New figures for South East Queensland indicate that the cost of residential home sites has jumped by as much as $120,000 in a year – up 21 per cent in one LGA where it now costs as much for a block of land as the median home did just two years ago. This is the City of Brisbane LGA where land prices rose 8.7 per cent in the September quarter alone, pushing the median price of a block of land to $685,000 – which is $3,000 more than what an established home cost in this area in June 2022. The second biggest annual surge in land prices occurred in the City of Ipswich where the median block rose 15 er cent or by $48,000 to hit $360,000, with the third fastest pace set by Moreton Bay, where prices rose by 10 percent to $415,000. The cheapest blocks of land in South East Queensland are in Logan City in Brisbane’s south, where a third of SEQ land sales are now occurring – with the median price at $350,000 after a rise of almost 10 percent across the year. The Gold Coast had the second highest SEQ land price at $619,000, after an 8 percent rise in the past year. So, you can imagine what a new house on a block of land costs, when the land alone costs well over $600,000 – as it does in the City of Brisbane and on the Gold Coast. Why does it cost so much? Primarily because of bureaucratic delays, governments taxes fees and charges, and high interest rates – all problems created by our elected representatives. /episode/index/show/hotspotting/id/33989567

20 Year Growth Rates: which areas have risen the most 11/19/2024

20 Year Growth Rates: which areas have risen the most If I asked you to nominate the market which had recorded the best long-term capital growth in Australia, what would your answer be? Sydney, the capital city with the nation’s highest property prices? Perth, which has had a booming property market lately and has led the nation on price growth for past couple of years? Brisbane, which always attracts strong demand from buyers of all sorts? Or perhaps Regional Queensland, which benefits from internal migrants moving from others parts of Australia and from investors seeking affordability and strong yields? The correct answer is none of the above. The market jurisdiction which has led the nation on long-term capital growth is: Regional Tasmania. This is the outcome of research conducted by the Property Investment Professionals of Australia (PIPA), which analysed Australian Bureau of Statistics’ data on established median dwelling values over 20 years - from June 2004 to June 2024. The top location recorded growth of 233% while the worst grew 100% over the two-decade period. In comparison, over the past 20 years, the stock market (S&P/ASX 200) increased by 120%, according to investing.com. In general terms, the best capital growth has been smaller capital cities or more affordable regions. The top result was “the Rest of Tasmania”, which means Tasmania outside of the capital city Hobart or Regional Tasmania - where its established median house price rose from $169,000 20 years ago to $449,000 in mid-2024. The best capital city performers were also some of our nation’s most affordable throughout the period with Adelaide, Hobart, and Brisbane taking out the top three city rankings. PIPA comments that property markets are not linear – rather, price growth occurs at varying points over time. Hobart, for example, has experienced a softening of prices over the past few years, but its house price have almost tripled since 2004 – up 193% in 20 years. Adelaide and Brisbane have both had very strong markets in the past two years but both had long periods of flat-lining prices throughout the past two decades. It reflects the reality that real estate consumers get the best results through long-term ownership and PIPA Chair Nicola McDougall says property owners should always adopt a long-term mindset. But PIPA research indicates many investors don’t follow that philosophy. PIPA’s 2024 Annual Investor Sentiment Survey found that 61% of investors who sold in the past year had a holding period of less than 10 years – and 17% of those investors who sold indicated they had owned the property for less than three years. So the rankings from the PIPA research on capital growth over the past 20 years are: 1 Regional Tasmania 2 Adelaide 3 Hobart 4 Brisbane 5 Regional Victoria 6 Perth Sydney ranked seventh and Melbourne 11th, once again disproving one of the real estate’s greatest myths, that you get the best capital growth in the biggest cities – and that prime out-performs affordable. And the worst performers were Darwin and “the Rest of Northern Territory” – but even the remote markets of the NT achieved a doubling of property values over 20 years. /episode/index/show/hotspotting/id/33989212

The Property Playbook - Learn the methods that can predict tomorrow’s property success today 11/18/2024

Interviews with the 1% - Lisa Chapman 11/14/2024

Interviews with the 1% - Lisa Chapman Welcome to a special episode of Hotspotting’s pre-recorded interview series, Interviews with the 1%, where we dive into the strategies and journeys of Australia’s top investors—the elite 0.87% who own five or more properties. Hosted by Tim Graham, this series brings you invaluable insights from seasoned investors who have achieved what many aspire to. In today’s episode, we sit down with Lisa Chapman—a property entrepreneur, investor, and co-creator of the luxury retreat, Eden Yarra Valley. Lisa shares her journey from a high-powered corporate career to becoming a full-time property entrepreneur, carving a unique niche in the accommodation and real estate sectors. What You'll Learn in This Episode: The Mindset of the Top 1%: Discover what separates successful investors from the rest, as Lisa reveals her strategies and lessons learned from owning multiple properties. Lisa’s Property Journey: From buying her first house at 22 to establishing diverse real estate ventures across the Yarra Valley and the Mornington Peninsula. Creating Eden Yarra Valley: Hear the inspiring story of transforming a run-down property into a high-end retreat that caters to milestone events, weddings, and corporate retreats. Navigating Career Transitions: Insights into Lisa’s pivot from a high-stress corporate career in PR and real estate marketing to her fulfilling role as a property entrepreneur. Tips for Aspiring Investors: Practical advice for those looking to build their property portfolio, including lessons from Lisa’s successes and challenges. About Lisa Chapman: Lisa Chapman’s remarkable career spans television, marketing, public relations, and real estate. She managed national and global campaigns, including the iconic launch of Melbourne’s Eureka Tower and Skydeck. After decades of corporate success, Lisa made a bold shift during the COVID-19 pandemic to focus on her passion for real estate and the Experience Economy. Today, Lisa is the proud co-creator of Eden Yarra Valley, a luxury retreat offering bespoke accommodation for up to 30 guests. From weddings to wellness retreats, Lisa’s innovative approach to property investment highlights the value of creating meaningful experiences for clients. Key Takeaways from Lisa’s Story: The Power of Vision: Lisa’s ability to see potential in underutilized properties has been central to her success. The Value of Experience: Transitioning from corporate PR to property entrepreneurship, Lisa leveraged her marketing expertise to create a standout brand. Lessons from Investing: Lisa shares actionable advice for both new and seasoned investors, including how to identify opportunities and manage challenges. Notable Quotes: “We are living in the Experience Economy. Today, people are looking to invest in meaningful moments, not just material assets.” “Real estate is about creating value—whether it’s a luxury retreat or an investment property. The potential is there if you’re willing to look.” Connect with Lisa Chapman: Website: edenyarravalley.com.au Email: [email protected] Subscribe to Hotspotting’s Podcast: Stay tuned for more episodes of Interviews with the 1%, where we uncover the stories behind Australia’s most successful property investors. Don’t forget to like, share, and subscribe on your favorite podcast platform! /episode/index/show/hotspotting/id/33927232

Uncover Hot Markets & Emerging Opportunities in Commercial Real Estate 11/14/2024

Uncover Hot Markets & Emerging Opportunities in Commercial Real Estate Host: Terry Ryder, Founder of Hotspotting.com.au Guest: Steve Palise, Commercial Property Expert and Founder of Palise Property In this insightful webinar, Terry Ryder sits down with Steve Palise to explore the exciting world of commercial real estate. With decades of combined experience, Terry and Steve unpack key trends, strategies, and opportunities in non-residential property investment. Whether you’re a seasoned investor or just starting to consider commercial property, this session is packed with actionable insights. Topics Covered: Why Investors Are Turning to Commercial Real Estate: Higher yields, flexibility, and unique financing options make commercial property an attractive choice. Types of Commercial Properties: Industrial, retail, and office spaces—what to look for and how to assess opportunities. Key Market Trends: Vacancy rates, regional hotspots, and the impact of infrastructure projects on property value. Risk Management: The importance of due diligence, understanding leases, and analyzing tenant dynamics. Investment Fundamentals: How residential market indicators can inform commercial property decisions. Key Takeaways: Superior Yields: Learn how net yields in commercial real estate often surpass those in residential investments. Market Nuances: Discover why regions like Brisbane and Perth offer exceptional opportunities for commercial investors. Educational Resources: Steve shares free tools, checklists, and courses to help investors navigate the complexities of commercial property. 💡 Thinking about investing in commercial property? This webinar will help you understand the landscape and take your first steps toward creating a diversified, high-performing portfolio. 🎧 Listen to the Podcast: Stay updated on all things real estate by subscribing to our podcast on your favorite platform. 🔗 Connect with Us: Visit for more resources. Visit PaliseProperty.com for more information on Steve's business. You can also access Steve's Commercial Property Course by visiting: Use the code word Hotspotting to receive a 100% discount! /episode/index/show/hotspotting/id/33925217

Building Times 11/12/2024

Building Times There are many reasons Australia has a dwelling shortage and affordability problems – including the increased time it takes to build a new home. In recent years, it typically took around nine months on average to build a house in Australia. Today it takes 13 months. It’s worse for businesses which are constructing apartment complexes. Recent analysis from Master Builders Australia has revealed that building times for detached homes and apartments have almost doubled – with a consequent impact on costs. Master Builders says: “It shouldn’t take this long to build a home”. These findings, obtained from recent analysis of Australian Bureau of Statistics (ABS) data, show that it took an average of 13 months to build a detached house in FY2024, marking a 40 per cent increase on the average compared to a decade ago. Master Builders noted that construction times had lengthened even further for apartment buildings, with the average of 33 months from approval to completion in FY2024, representing an 80 per cent increase on the average of 18.5 months observed in FY2011. That warrants repeating: it previously took a year and a half to get the average apartment building completed, but now it takes almost three years. And that’s the national average situation: it’s considerably worse in some states. You don’t need to be a financial genius to understand what that does to the costs of building new homes in Australia. CEO of Master Builders Australia, Denita Wawn, says these extended construction time frames are hindering the industry’s ability to address housing demand and confront the housing crisis. She says: “There are a range of contributing factors including labour shortages, declining productivity, union pattern agreements, supply chain disruptions, complex regulatory requirements, occupational certificate backlogs and critical infrastructure delays.” Wawn points out that, with the advancements which have occurred in technology and construction methods in recent years, “we should be building homes faster, not slower”. Master Builders called for action to be taken to address the bottlenecks and inefficiencies around construction processes. They suggest streamlining government approval processes, encouraging adoption of digital solutions, introducing incentives to grow the workforce through domestic and international means, and strengthening the domestic supply chain. Master Builders chief economist Shane Garrett says that the latest ABS data on home completions indicate the country is on track to fall well short of the National Housing Accord target of 1.2 million homes by 2029 – indeed, by “over 400,000 homes”. /episode/index/show/hotspotting/id/33890922

Queensland Tops, Victoria Drops 11/05/2024

Queensland Tops, Victoria Drops It’s long been the case that the two most populous states, New South Wales and Victoria, have attracted the highest levels of property investment – just by sheer weight of numbers. But Victoria has lost its spot among the big two of property investment and is now being overtaken by Queensland. Meanwhile, Queensland now leads the nation is overall real estate transactions, including purchases by both home-buyers and investors. This is despite Victoria having a population of 7 million, versus 5.5 million in Queensland. It provides further evidence that investors are deserting Victoria because of the raft of anti-landlord measures from the State Government, with more still to come. And that Queensland is where buyers are all kinds are heading. Analysis of ABS figures shows that, a year ago, 26 per cent of investor loans were for Victoria properties and around 22 per cent for Queensland. More recently, the balance has shifted with Victoria dropping to 23 per cent of investor loans and Queensland continuing to rise. Money.com.au says investors are abandoning Victoria for several reasons, including Victoria’s additional taxes on investors, and are flocking to Queensland. Home Loans expert Mansour Soltani says: “Queensland is emerging as the new promised land. It has everything property investors look for including a strong local economy, population growth, expanding regional markets and ongoing infrastructure projects.” Queensland is leading the nation with a 36 per cent year-on-year increase in investor loans, compared with the national average of 21 per cent. Regional markets such as Townsville, Bundaberg, Rockhampton and Gladstone are offering low entry costs and above-average rental yields. Soltani also says: “Queensland is not only leading investor activity — owner-occupied loans in the state grew by 12 per cent year-on-year, while no other market grew by more than 6 per cent, and New South Wales saw no growth.” Realestate.com.au reports that nearly $40 billion was spent on residential property in Queensland in the past quarter, with the state recording the highest number of home sales in the country in the last three months. Brisbane’s median dwelling price has also extended its lead over Melbourne’s — climbing to $885,000 in October, while Melbourne sits at $780,000, according to CoreLogic. New figures from digital settlements platform, PEXA, show over 48,000 home sales were finalised across Queensland in the September quarter, with home buyers spending $38 billion — 27 per cent more than the same period a year ago. The postcodes with the highest number of home sales in the three months were found in Toowoomba, the Gold Coast and Mackay. Homebuyers also moved to regional coastal areas such as Bargara near Bundaberg and Urangan in the Hervey Bay region, as well as new housing development areas in Logan City and Ipswich City on the fringes of Greater Brisbane. /episode/index/show/hotspotting/id/33810732

Rents Aren't Plummeting — Don't Be Misled! 11/05/2024

Rents Aren't Plummeting — Don't Be Misled! Whenever I’m asked for my rules for successful investing, I usually begin my response with this: Rule One – stop reading newspapers. Expressed in a more 21st Century context, stop treating media soundbites as research. People who base their investment decisions on the white noise in news media are running the risk of making very bad moves in the market. My observation of the content of news media coverage of residential real estate is that there is far more misinformation than real, accurate, reliable information. In modern media it’s all about clickbait and I find repeatedly that the headline presented to induce you to CLICK is highly misleading – and sometimes an outright lie. I could provide dozens of examples from this week alone, but here’s just one classic example. The headline above an article published on the news.com.au network, the nation’s biggest news organisation, proclaimed: “Worst is over: where rents are plummeting” This was followed by the following opening statement: “The worst of the rental crisis appears over across much of Australia, with rents plummeting in these areas. But it’s not all good news.” Now the headline in this case is more than a lazy piece of sensationalism – because, not only is it untrue to claim that “rents are plummeting” but the content of the article does not support the claim in the headline. You may have observed that, in the surreal world of journalists, nothing falls or decreases or drops – it collapses, it nosedives, it falls off a cliff – and, yes, it plummets. Even when the decline is a few percent, barely a blip, it will be declared to be plummeting. So having made the statement that rents were plummeting and that the worst of the rental shortage crisis was over, the New Limited article utterly failed to deliver on this very big statement. If it was true, it would be one of the stories of the year. But, of course, it wasn’t true. According to the article, Queensland’s asking rents “have surged again, increasing across 252 Queensland suburbs by up to 15 per cent since June”. I’ve checked my dictionary definition of “plummeting” and it certainly doesn’t apply to the Queensland situation. Next, Victoria. According to this article, there are more than 200 suburbs where rents are now at least $100 a week more expensive for units than in 2021. It said: “Well-connected areas like , , , , and have posted some of the biggest rises in weekly unit rents across the past three years, all of them up more than 40 per cent, according to new PropTrack data.” No sign of anything plummeting in Victoria – where, incidentally, many investors have sold up and got out of the state because of draconian anti-landlord measures by the state government. So we can expect rents to keep rising in Melbourne. In Adelaide, rents have fallen a little in the latest quarter in 17% of suburbs examined by PropTrack, but there’s no sign of plummeting in the other 83% of suburbs. Adelaide, in fact, has had extraordinary growth in rentals in the past year and, with the vacancy rate still hovering around 0.6%, there’s no real basis for declaring that “the worst is over”. In Perth, the vacancy rate remains well under 1% and there is no real prospect of rent relief any time soon. So, looking through the entire article, the only evidence presented to go even close to supporting the noise in the headline is in Sydney. According to this shoddy piece of “journalism”, Sydney has entered a correction phase. PropTrack attributes the market slowdown to more rental homes becoming available and tenant demand dropping as more renters moved to share houses or back in with their parents to save money. Migration has also waned in recent months. PropTrack says: “Demand and supply are working together to see a stabilisation in rental market conditions.” But no evidence was presented in the article to support the notion that Sydney rents are nosediving. So, in summary, only in Sydney is there evidence that “the worst is over” and there is nothing at all in this work of fiction is justify the claim that rents are plummeting – anywhere. So, what is a realistic overview of the situation with the rental shortage crisis. Nationally, the vacancy rate continues around 1% or slightly above 1%, depending on whose figures you believe. None of the eight capital cities has a vacancy rate anywhere near 3%, which is the benchmark for a stable rental market with steady rents. There are no government measures in play which will move the dial on this in the foreseeable future – except decisions which are likely to make it worse, rather than better. In some locations, however, I do expect rental increases to moderate, because a ceiling has been reached in terms of the market’s ability to pay. Amid a cost-of-living crisis, tenants cannot keep paying higher and higher rents, regardless of how many people they jam into a three-bedroom house or small apartment. But rents plummeting? We’re unlikely to see that anywhere, not while vacancies are as low as they are. /episode/index/show/hotspotting/id/33789647

Local Economy Fuels Property Boom 11/05/2024

Local Economy Fuels Property Boom At Hotspotting we believe real estate markets are local in nature and are subject to the strength or weakness of the local economy. While economists cling to their kindergarten theory that markets are essentially driven by interest rates, the stark differences in local markets across Australia suggest that there is something more powerful in play. If it were true that high interest rates mean prices will fall, then everywhere in Australian would have falling property prices in 2024, which is what major bank economists and others like them predicted at the start of the year. The reality that Perth, Brisbane, Adelaide and many key regional centres have had booming property prices indicates that (a) the economists are wrong in their simplistic theory; and (b) there are larger forces of influence, which are local in nature. And the record shows that the local economy is the key factor, over-riding any influence from interest rates, which are the same everywhere in Australia. For that reason, I always take note the quarterly editions of The State of the States report published by CommSec, which is part of Commonwealth Bank. For many years I’ve detected a correlation between the findings of that report and outcomes with property prices in our capital cities and our regional markets. The report uses eight different metrics, including construction work, population growth, retail spending, housing finance and employment data, to rank the eight state and territory economies. The latest quarterly edition of State of the States ranks the states and territories like this: Western Australia 1, South Australia 2, Queensland 3. Not coincidentally, the leading cities with booming property prices are, in order, Perth 1, Adelaide 2 and Brisbane 3. In addition to that, the leading regional markets are Western Australia, South Australia and Queensland. The report finds that the greatest strength for WA is population growth while the greatest weakness is dwelling starts – and those two factors working together would tend to put upward pressure on property prices (and rents). South Australia’s greatest strength is economic growth while in Queensland it’s housing finance. The jurisdictions with the weakest economies – the Northern Territory, the ACT and New South Wales – are also the places where property prices have been weak recently. So if you want a simple method of detecting where dwelling prices are most likely to be strong, keep track of the quarterly editions of the State of the States report. /episode/index/show/hotspotting/id/33789612

Property Powers Australia’s Wealth Surge 11/05/2024

Buying New v Buying Established Webinar Replay 10/30/2024

Think Twice: Negative Gearing Myths 10/29/2024

Think Twice: Negative Gearing Myths In my experience, most people who have a loud view about scrapping negative gearing are people who can’t explain what it is, how it works, why it’s bad and how ending it would solve all the problems in the housing industry. Mostly, what’s in play with this issue is THE POLITICS OF ENVY – that nagging feeling some people have, that others are doing better than they are, or are receiving benefits that they are not, and therefore need to be squashed. As a famous Indian guru once observed, some people try to be tall by cutting off the heads of others. Contrast that with the views that are expressed when they come from people with the expertise and experience to understand what negative gearing is, how it works and what the consequences would be if it was removed. A recent poll of such people found that the disadvantages would outweigh the advantages. Before delving into the comments of experts who have been interviewed by news media about this recently, let me remind everyone that Australia DID end negative gearing in the 1980s and within two years the same Federal Labor Government that scrapped it, did a major backflip and reinstated it. Why? Because it caused a serious shortage of rental properties and higher rents. And it didn’t bring down property prices or improve housing affordability. Let me also remind you that more recently New Zealand put an end of negative gearing tax benefits and right now that nation’s government is reinstating it – because, as happened in Australia in the 1980s, the upshot was a rental shortage and higher rents. In the light of those precedents, you have to wonder why we’re having this debate at all. Now, returning to a recent survey of so-called experts polled by the Australian Financial Review – the majority view, arising from that survey, was that the consequences of changing tax arrangements for property investment are likely to include higher rents. Why? Because investors would exit the housing market, causing a further drop in supply of rental homes at a time when Australia has the lowest vacancy rates ever recorded. Analysts polled in the , overall, painted a “BE CAREFUL WHAT YOU WISH FOR” scenario amid a national debate over the merits of changes to negative gearing and capital gains tax – which is usually described by media, inaccurately and unfairly, as a CONCESSION. Those polls said any benefit to first home buyers from any price falls – which are hypothetical and not based on any precedent or research - as investors exit the market would be modest, potentially short-term and effectively traded off against a consequent squeeze in supply. Here’s one prediction from a respondent to the survey: He says: “By lowering the after-tax return to investors, any move to wind back the negative gearing benefit and increase capital gains tax would lead to a fall in investor demand for housing and a short-term fall in prices, say of 3-4 per cent.” However, those comments from Australia’s worst forecaster of residential property outcomes, AMP chief economist Shane Oliver – so the forecast that property prices would fall is somewhat dubious. That certainly didn’t happen in Australia in the 1980s or in New Zealand after they, more recently, ended negative gearing. In any case, Oliver goes on to say: “However, this (slight fall in prices) is likely to be short-lived as less investor participation in the property market would ultimately lead to a lower supply of new homes to the property market, higher rents and then a blowback to higher prices. “It will do nothing to fix the basic problem which is relative to population-driven demand.” That much he got right. Proptrack’s executive manager for economic research, Cameron Kusher, said the removal of negative gearing and increasing capital gains tax might marginally reduce house prices, but consequent discouragement to investment would reduce supply. He said” “It’s important to look at the taxation system holistically rather than in a vacuum, especially whilst the rental market remains challenged.” In other words, there would be more disadvantages than advantages. Barrenjoey’s chief economist Jo Masters warned of the “unintended consequences” of modifying the current settings. She said: “Negative gearing and capital gains tax reform alone are not a silver bullet and need to be debated both in the context of broad tax reform, and the other levers available to the housing sector, including supply.” Nicola Powell, Domain’s chief of research and economics, said that it was “a common misconception” that the negative gearing and CGT provisions were “primarily enjoyed” by wealthy, older Australians. Powell said most investors own just one property, and a larger share of them are under 50. She said: “If negative gearing were removed or scaled back, – especially those with just a single property – would be the first to feel the impact, potentially leading them to sell. Meanwhile, wealthier investors, who are more likely to be positively geared, have greater financial flexibility and would be less affected.” Like other respondents, Jarden analyst Lou Pirenc says any benefit from the departure of some investors from the market it would come at a cost. He said: “Longer term, growth to new housing supply could be further weakened with less incentives for investors to enter the market, especially as the cost of owning an investment property currently remains unattractive. “This,” he said, “could potentially see house prices RISE longer term as the imbalance between demand and supply exacerbates.” Indeed. So the consensus among those commentators is that removing negative gearing tax benefits and increasing capital gains tax would not provide any long-term improvement in housing affordability but would reduce the supply of housing, particularly rental homes, and PUT FURTHER UPWARD PRESSURE ON RENTS. But try telling that to the Greens, whose draconian anti-real estate policies were a primary reason they were the big losers in the Queensland state election at the weekend. /episode/index/show/hotspotting/id/33657727

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