58 Australian locations where property prices are on the rise
Discovering where prices will rise next is the Holy grail of the real estate game.
After a lacklustre couple of years of property prices across the board, one property research firm has revealed 58 locations on the cusp of stronger price potential.
The number crunchers at Propertyology have analysed the fundamentals of Australia’s micro markets across more than 500 municipalities, taking into account leading indicators such as the average time to sell a dwelling, the volume of dwellings sold, vacancy rates, and a number of employment metrics.
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The lag in property data meant prices were yet to strengthen significantly on paper in many of the locations cited in the study, but positive macro changes meant the signs were there, according to Simon Pressley, Propertyology’s head of research.
“Since 2015, the property sector was whacked with a series of blows that culminated in a spiralling reduction in national transaction volumes. It worked directly against the grain of all efforts to improve economic conditions and wage growth,” he said.
“In fact, the past 12 months were the worst that Australian real estate has experienced in 30 years.”
But looking forward, Mr Pressley said the theme was clear for those locations where things are looking up.
“The common denominators among the economic profiles of each of Australia’s strongest property markets right now include regional tourism, agriculture, mining and infrastructure investment,” he said.
“In a lot of cases, local employment growth is drawing internal migration, and placing extra pressure on property prices.”
“Affordable housing and controlled housing supply always go a long way towards underpinning solid property market performance.
“Strong or improving economies then become the driving force for real estate buyer confidence and price growth.”
“The analysis found that fundamentals of Hobart and Canberra continue to be the best of all capital cities, with recent positive macro changes for their property sectors likely to see their price growth rates accelerate,” Mr Pressley said.
He said Perth, Brisbane and Adelaide were all at the “right stage” of the property cycle with balanced supply and housing affordability.
“While Propertyology believes they will all produce some growth over the next 12 months, it’s unlikely to be anything spectacular until such time as there is tangible proof of a meaningful lift of private-sector job growth,” he added.
When it came to the two biggest metropolitan markets of Sydney and Melbourne, Mr Pressley said dwelling values were now back to June 2015 and October 2016 levels respectively.
While recent auction clearance rates had been strong, he noted that the volume of transactions is still too small to be making any bold predictions.
The most likely future for Sydney and Melbourne, according to Mr Pressley, was a prolonged period of little capital growth and low rental yields.
However, if interest rates were to fall further, prices would come under more pressure.
REGIONS GETTING READY
The research showed that several regions held hope for capital growth with affordability being just one piece of the puzzle.
“One such example is the NSW university city of Armidale in the New England region,” Mr Pressley said.
“It has already seen a significant reduction in real estate selling times, tightening vacancy rates, and has an admirable list of major projects, which is fuelling job growth and community confidence,” he said, adding that the median house price in Armidale had increased by an annual average of 6.2 per cent over the past 20 years to $350,000.
Other regional NSW locations with positive property trends included Wagga Wagga, Coonamble, Parkes, Murrumbidgee, and Dubbo.
Commodity prices have been rebounding for several years, and the job market is stronger in many regional markets which is also boosting property values.
“Regional property markets which support precious metals such as gold and copper are strengthening and include Mount Isa, Charters Towers, Orange, Cobar, Swan Hill, Bendigo, Kalgoorlie, and Roxby Downs,” Mr Pressley said.
The coal sector is also heating up in areas such as Mackay, Moranbah, and Emerald in Queensland and Musswellbrook in NSW, so all signs show price potential in these locations as well.
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“Likewise, expansion within Western Australia’s iron ore and lithium resources sector is fuelling improved property market performance in Port Hedland, Newman, Karratha and Bunbury.”
In Victoria, the analysis found that Bendigo was a standout for its tight vacancy rates, growth in job ads, and the reduction in days on market.
It took houses an average of 62 days to sell in 2017 compared with a more impressive 38 day by mid-2019.
“Wangaratta, Shepparton, Bairnsdale, Colac, Benalla, Swan Hill and Latrobe are other Victorian locations displaying some positive signs, while Mildura ticks many of the right boxes. However, the growth cycles in Geelong and Ballarat are nearly over,” Mr Pressley said.
Heading north to Queensland, and a wave of large projects either under way, or in the pipeline around Cairns, combined with very tight housing supply, is a sign prices will be improving. Mr Pressley also mentioned that property markets were also tightening in Hervey Bay, Gladstone, Rockhampton, Townsville and Mackay. He added that Beaudesert, Lockyer Valley and Warwick warranted consideration.
Propertyology has named these 58 locations as ones to watch where pressure is building and price growth looks positive:
New South Wales