Property Prices Movements – Who Do You Believe? - JANUARY 2019

By Guest Blogger, Terry Ryder, founder, hotspotting.com.au and propertyU.

Media tends to regard changes in median prices as the primary barometer of the health or otherwise of property markets. Right now, it’s reporting this rather blunt instrument for gauging real estate markets in a very negative way.

But there are other important measures on real estate activity which are relevant to consumers – and many of them are highly positive at the moment.

One example is residential land prices, which have been rising in most of the capital cities, led by big increases in Melbourne.

Another is the situation with vacancy rates. In six of the eight capitals, vacancies are trending lower, according to the latest figures from SQM Research.

They’re already well below 1% in Hobart and Canberra, and slightly above 1% in Adelaide. Melbourne sits at 1.6%.

These numbers suggest very tight rental markets, with upward pressure on rents.

Brisbane and Perth, which have been higher than is comfortable in the recent past, are both recording significant decreases in their vacancy rates. Brisbane is down to 2.7% (compared to 3.4% a year ago) and Perth to 3.3% (compared to 4.4% previously).

Only Sydney and Darwin have a trend of rising vacancies, although Sydney remains fairly comfortable at 2.8%.

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The capital city average is a vacancy rate of just 2% in October, down from 2.1% in September.

This data suggests rental markets are tight in most of the major cities – and this is reflected in rental data. Most cities have rising rents, according to the SQM Research figures.

The national average is a 4.2% annual rise in apartment rentals and a 1.6% rise for house rentals.

Hobart and Canberra, the cities with the lowest vacancies, are recording the strongest increases in residential rentals. Canberra is up 7% for houses and 5.7% for apartments, while Hobart has risen 9.5% for houses and 12% for apartments.

Melbourne, Brisbane, Adelaide and Perth have all recorded annual increases in house rents, ranging from 2.6% to 4.4%. It’s similar with apartments rents in those cities.

Sydney, with a trend towards rising vacancies, has seen moderate decreases in average rentals, down about 2.5% for both apartments and houses.

The data on rents and vacancies is, generally speaking, very positive. Sadly but rather typically, these optimistic outcomes for most of our major city markets are being ignored by mainstream media, in its relentless pursuit of negative sensation.

The figures are significant because there are linkages between what’s happening with vacancies/rentals and outcomes for prices.

Often rental outcomes are a precursor to price movements. Hobart’s strong situation is being reflected in price movements and Canberra’s tight market is starting to produce solid price growth, especially in the housing sector.

The improvement in vacancies in both Perth and Brisbane, and the early evidence of a return to rental growth recently, add to improving signals in those markets – and we expect to see stronger outcomes with prices in the near future.

Before deciding on your next property purchase consider getting independent advice from a local buyers agent that understands the market and provides an accurate appraisal of value.

Call propertybuyer today on 1300 655 615 to tap into our market perspective and identify the right areas for your next investment. 

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