Australian politicians are notable for their arrogance and the degree to which they are out of touch with the concerns and problems of ordinary citizens. But if there’s a cohort that’s even more so, it’s powerful bureaucrats. There’s an extra layer of disdain and arrogance with bureaucrats like the boffins at the Reserve Bank or the Australian Taxation Office, because they’re not accountable to the Australian people. They’re appointed rather than elected, and they can enjoy exercising the power they hav eover people’s lives without fear of being turfed out at the next election. The RBA can make big decisions that have huge impacts on families all over Australia without having to explain themselves or face the wrath of the electorate. And so they do. As I have commented previously, most of the members of the Reserve Bank board are wealthy elites, people who typically earn over a million dollars a year. They spend most of their time in their ivory tower offices or luxury homes, and spend zero percent of time speaking to people at street level. If they ever get out and about, it’s usually to speak at a business lunch where they can rub shoulders with other wealthy elites. When Philip Lowe ended his reign of terror as Governor of the Reserve Bank, I celebrated because I saw him as a particularly blinkered individual who frequently lectured the nation that he knew what was best for us … … and that we shouldn’t complain that he’s nonchalantly added over $1,000 a month to the living costs of ordinary families, without achieving the end game – which was to tame inflation. Imagine my surprise and alarm to discover that the new RBA Governor is even more arrogant and out of touch than Philip Lowe. Michele Bullock, who could have a future career an undertaker or possibly an executioner, has made a number of public pronouncements that indicate she doesn’t give a toss about the lives of families with mortgages. According to the RBA’s new Grim Reaper, Australian households are doing just fine. “Households and businesses are actually in a pretty good position,” she announced recently. How has she arrived at this stunning conclusion, because we know she hasn’t been going door to door to speak to people? My best guess is that she’s looked at some graphs on a computer screen, which is what economists tend to do before making inaccurate predictions about the housing market and other pronouncements that leave many Australians shaking their heads.

There are lots of negative forecasts in news media about property prices in 2024, but if you own real estate or are planning to get into the market, do not be alarmed. At this time EVERY year, media is awash for pessimistic forecasts for real estate prices. And most of the time they are proven wrong by subsequent outcomes. Remember when Covid struck early in 2020? Media reports abounded with forecasts that house prices would collapse. But they didn’t – prices rose in 2020. At the start of 2021, most forecasters agreed prices would rise that year, but only 5 or 6 percent. But by the end of the year, house prices had appreciated by an average of 25%. At the beginning of 2023, we were told by bank economists and media commentators that prices would drop at least 15% – because interest rates were rising. And yet again, they were not only wrong, but spectacularly wrong. Prices have grown in most markets across Australia, including price rises above 10% in some cities. So, as we head in 2024, the usual suspects are popping up with their price forecasts – and, you guessed it, they’re mostly pessimistic. And news media is happy to publish them, despite the dreadful track record of so many of the forecasters. Essentially, journalists don’t care about the credibility (or lack of it) of the commentators – anyone willing to stand up and declare that prices will collapse, or plummet, or nosedive, or fall off a cliff, is guaranteed lots of free publicity. Which is why the people putting out press releases usually make NEGATIVE forecasts with dire warnings about real estate matters – they know a screaming negative is the shortcut to a high media profile, content in the knowledge that no journalist in Australia will ever challenge them about getting it wrong all the time. An example of the mindset of the average journalist, and how it translates into misinformation for Australian consumers, is provided by media reaction to the Boom and Bust report published in November each year by experienced analyst Louis Christopher of SQM Research. Each year, this report presents four different scenarios to forecast what might happen with house prices in the coming year. Each scenario assumes different outcomes with interest rates, inflation and unemployment, with various price predictions for each different scenario. Journalists, being the sad, pathetic creatures that they are, will always zero in on the most negative of the four scenarios, and make that their story. So headlines have been screaming that prices will fall in 2024 in the big cities. It’s worth noting that the Boom and Bust report a year ago had fairly pessimistic forecasts for Australian property prices – with prices tipped to fall everywhere except Perth in the worst- case scenario – but prices have been rising steadily in 2023. The senior economists at ANZ Bank, arguably the worst real estate forecasters in the nation, recently popped up with a report described a “triple whammy” of factors that will drag down property markets in 2024. Journalists and bank economists have a number of things in common – they’re pessimistic by nature, they’re not very good at their jobs, they’re slow learners and they’re not interested in helping people. They just want to generate headlines. So if you’re a property investor, and you have a plan, tune out all the media white noise and just get on with it.

The Greater Brisbane market has gone to another level with its recent recovery, following a major surge in the number of suburbs with positive rankings. We’ve just completed our latest quarterly survey of sales activity for Brisbane and it reveals that there are now 83 suburbs ranked as rising markets, compared with 38 three months ago and just 12 six months ago.  It’s the highest number since mid-2022. This represents a notable turnaround from the situation recorded in our Winter 2023 survey six months ago. Now 36% of suburbs are rising markets (compared with just 5% six months ago) and 85% overall have positive rankings (compared with 21% six months ago). Six months ago in our Winter 2023 survey we commented that, then, it was the worst Brisbane market we have recorded in the eight years of our quarterly surveys of sales activity.  But the Spring 2023 survey three months ago recorded the start of a major revival.  And now our new quarterly survey shows further uplift in the Brisbane market. Now 85% of Greater Brisbane suburbs have positive rankings and the number of suburbs with negative assessments has dropped in six months from 181 to just 34.  There are now no suburbs classified as declining markets, compared with 71 declining suburbs six months ago. This is a truly dramatic turnaround in the Brisbane market. All sectors of the Greater Brisbane market are performing, with the Brisbane-inner precinct emerging increasingly as a leader. All but two of the 23 suburbs in our survey have positive classifications, including 11 ranked as rising markets. This reflects a trend evident in all the major cities of Australia, with more buyers opting for apartments in inner-city locations.  The Brisbane-north precinct is pumping strongly: 35 of the 41 suburbs in our analysis have positive rankings, including 20 rising suburbs – suburbs such as Brighton; Bridgeman Downs; Nundah; and Wavell Heights. Neighbouring Moreton Bay region is equally busy: 36 of the 41 suburbs have positive classifications, including 15 rising suburbs. The Brisbane-east precinct has some notable examples of the revival trend, including Bulimba; Cannon Hill; and Manly West. Overall, 15 of the 20 Brisbane-east precinct suburbs have positive numbers. This trend is repeated throughout all the sectors of the Greater Brisbane market, including Logan City in the south, Ipswich City in the south-west and Redland City in the south-east. Overall, the results depict a Brisbane market which has recovered emphatically from the previous downturn and which now presents as a booming market.

There has been dramatic surge in buyer activity in Regional Queensland, converting the recovery we recorded three months ago into a potential boom market.   The number of locations with rising markets has increased significantly, while locations with negative trends have decreased.   Three months ago in the Spring 2023 edition of the Price Predictor Index we commented that    Regional Queensland had emphatically joined the comeback theme which dominated national property markets, recovering from the bottom of the trough experienced earlier in the year.   Our Spring 2023 survey revealed a dramatic turnaround of the rapid downward slide which marked the previous 12 months.    Since then, Regional Queensland markets have gone to the next level, with previous recovering markets converting into rising ones, and locations which were previously plateau or declining markets transforming into recovering ones.   Now, 76% of Regional Queensland locations have positive classifications (rising, consistency or recovering), compared with 67% three months ago and just 32% six months ago.   The number of rising markets has increased from just 16 in the Winter 2023 survey to 37 in the Spring 2023 survey and now 93 in this new Summer 2023-24 survey.   Some of the key Regional Queensland centres are now booming markets, while others are in the recovery phase and heading in that direction. Very few have yet to get on board with the trend of positive markets, with just 13 locations across Regional Queensland classified as declining markets, compared with 86 in our Winter 2023 survey six months ago.   The Gold Coast is at the forefront of the Regional Queensland revival: of the 49 suburbs in our analysis, 46 have positive classifications, including 23 which are ranked as rising markets.   The Sunshine Coast market is on the recovery path but less advanced than the Gold Coast. Of the 46 Sunshine Coast locations in our analysis, 32 have positive classifications, but as yet only 11 are ranked as rising markets, while 18 are recovering. There remain 13 locations with negative classifications, compared with only three on the Gold Coast.   Other regional cities which are well advanced in the return to growth markets include Cairns (20 of 28 suburbs have positive rankings) and Gladstone (12 of 14 are positive).   Key regional centres which are heading towards growth but are dominated at this stage by recovering suburbs include Mackay, Bundaberg, Fraser Coast and Townsville.   Rockhampton remains patchy, though largely positive.   Toowoomba has been a national standout in the past couple of years, but may be moderating: 10 of its 25 locations now have negative classifications. A resurgence is likely when major new infrastructure projects get under way.

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We elect politicians to fix problems and make people’s lives better. But increasingly our elected representatives are doing the opposite. They’re creating new problems, exacerbating existing ones and failing to find solutions to any of the pressing issues. The biggest issues facing most Australian households right now – according to the surveys - are the cost of living and rising accommodation costs. Soaring prices for petrol, electricity and food are a major burden for many families and the shortage of homes, a problem created by politicians, is getting worse – thereby pushing up property prices and residential rents. The Federal Government has taken no effective action to deal with these core problems. There’s a lot they could do to deal with petrol prices, power prices and the shortage of housing, but they’ve thrown up their hands and essentially told us is out of their hands. They’re leaving it to the Reserve Bank to solve inflation by putting up interest rates – a move which has added to inflationary pressures in many key areas, including residential rents. And now we have analysis from the International Monetary Fund, which has concluded that the spending boom on infrastructure by governments across Australia is one of the biggest contributors to high inflation. The IMF says the unusually high level of government spending on infrastructure has helped push the nation’s economy beyond full capacity, which has forced the Reserve Bank to lift interest rates further to tame inflation. In effect, Australian mortgage holders are being forced to bear the consequences of higher interest rates because government spending has over-expanded and is heating up demand that the Reserve Bank is trying to hose down. It’s bizarre, isn’t it? Politicians have made serious errors of judgment which have caused high inflation and the Reserve Bank’s response is to punish the one-third of Australian households which have mortgages.

Are we on the cusp of another substantial rise in real estate values? One of Australia’s best real estate analysts believes we are. Simon Pressley, head of research at Propertyology and one of the best property market analysts in the nation, says Australia is just weeks away from the start of what he calls “an intense surge in housing values”. Before I describe his rationale, let me say that Simon Pressley is right with his forecasts more often than most in Australia – and is infinitely more credible than any of the major bank economists who constantly get it wrong with their house price predictions. Pressley says “the evidence is pointing to a window which is likely to produce capital growth rates that are rarely seen”. He says the evidence says Australian property markets are already booming – prices up 8% in the first 10 months of 2023 – but he suggests that the rate of growth in real estate values is about to accelerate even more. He says: “A logical and objective assessment of a collection of evidence suggests that the quarter starting on 1 January is likely to produce a rate of growth which is rarely seen.” He says that capital growth around 20% on an annualised basis is not out of the question in some locations. Here’s the rationale:- 1. The data shows that growth rates are accelerating already. 2. We still have a very low volume of properties listed for sale – indeed 27% lower than at the same time five years ago, when the population was 1.5 million less than now. 3. In coming months, supply volumes will reduce by a further 10% or so, because we’re coming into the Christmas/New Year period. 4. Buyers have more confidence heading into the start of 2024 and many will buy early in the New Year. 5. Interest rates are expected are begin falling early in 2024. 6. Then there is the ongoing influx of overseas migrants in record numbers 7. All this will put upward pressure on property prices Pressley also observes than even the bears are bullish, noting that the major banks are now forecasting solid price rises in 2024. And I have to say I agree with most of the points he makes. His logic is sound and it confirms our thinking at Hotspotting. Many of the underlying points are also supported by a recent report published by PropTrack. Here’s what PropTrack says ... The 2023 price upturn is firmly entrenched with home prices hitting fresh record highs in many markets in October.   PropTrack says price growth has clearly accelerated since 2022.   Capital city markets have led the price upturn in 2023 while regional areas have had slower growth.   But he pace of growth in regional markets has begun to increase after lagging much of this year and in October, regional prices rose further to set a fresh record high.   Price growth has accelerated right around the country relative to earlier in the year, with the exception of regional SA and NT.   So, the overall picture is one where property prices have been rising since the start of 2023, the rate of growth is picking up – and the pace of price rises is expected to go to another level early in the New Year.

We know that renting can be bad for your financial health, but a new study has revealed that renting is also bad for your physical wellbeing. According to the study, people who rent age faster than people who own their homes. It also indicates that renting is worse for your health than smoking and unemployment. The study was conducted jointly by the University of Adelaide and the University of Essex in the UK and took a sample of 1,420 adults – comparing the impact of various housing elements such as ownership status, building type, location and heating on the ageing process. Biological ageing, the cumulative damage to body tissue and cells that occurs regardless of chronological age, was found to occur more quickly among those who rent. Why? According to the researchers, the stresses of housing insecurity and unaffordability are the most likely factors driving this link. Lead researcher Dr Amy Clair from the University of Adelaide said: “Housing circumstances have a significant impact on biological ageing, even more so than other important social determinants, such as unemployment.” She concluded that “it is therefore likely that private renters in Australia might experience accelerated biological ageing” as long as the rental crisis continues. The University of Adelaide’s professor of housing research, Emma Baker, said that “policies to reduce the stress and uncertainty associated with private renting, such as ending ‘no- grounds’ evictions, limiting rent increases and improving conditions, may go some way to reducing the negative impacts of private renting.” But she failed to factor in the reality that implementing those kinds of policies – particularly rental controls and anti-landlord legislation - will cause even more investors owners to sell up and get out of the market, further reducing the availability of rental properties and worsening the shortage. Not being able to find a rental property at any price is a bigger stress than having a rental home and struggling to afford it.

It’s quite unusual to see major lenders doing something proactive to encourage investors. Generally the big banks, along with all levels of government, treat property investors as cash cows, with higher charges for everything compared with what home buyers are charged. That includes higher interest rates, higher insurance rates, higher council rates, higher rates of stamp duty - plus taxes that home owners don’t have to pay, like land tax and capital gains tax. There’s no justification for any of that, other than the reality that investors are a minority and it’s politically more palatable to slug them and not home-owners. But right now it appears that the big banks believe property investors deserve some encouragement. Evidently, they believe investors will be returning to the residential market in large numbers because rising immigration will lead an extended rent squeeze. The 2023 net immigration number is the equivalent of a city the size of Newcastle being added to the population, with major impact on housing supply – at a time when the national average rental vacancy rate is around 1% and considerably lower in many parts of the nation – and building approvals are falling when we need them to be rising. Commonwealth Bank, the nation‘s biggest lender, has now announced it will allow investors to borrow up to 95% of property’s value. The bank’s previous maximum was 90%. That means investors can get a loan to buy a property with less of a deposit. At the same time, another big four bank, NAB, has upgraded its forecasts on the outlook for residential property this calendar year to 8% nationwide, after another upgrade earlier in the year had suggested 5% - and not forgetting that at the start of the year they forecast house prices would fall 15% or more in 2023. Across Australia, residential property prices have been rising, month by month, for all the 2023 calendar year. In addition, rental income has been showing double-digit growth - but investors have largely remained on the sidelines, having been massively discouraged by a range of policies at all three levels of government. NAB’s figures suggest the number of investors buying in the market has turned the corner with signs of early growth. It says the market share of “local investors for established houses” has nudged up to 18% but still remains well below average. Overall, it appears some of the big banks are seeing better prospects and higher activity ahead for property investors across Australia.

The remarkable steadiness for which the Adelaide market is renowned continues, with our latest survey of market activity showing that most suburbs in the South Australian capital have busy markets and rising prices. Consistency has become the key defining feature of the Adelaide market. Our Spring survey found that while there are relatively few suburbs classified as rising markets in Adelaide, there are large numbers of consistency suburbs – with steady sales levels over the past few years. Overall, seven out of 10 suburbs have positive rankings – which is one of the highest in the nation. There are three key factors which underpin ongoing demand in the Adelaide market. One is that South Australia is one of the nation’s strongest economies and continues to thrive on the state’s innovation in the areas of technology and alternative energy, as well as being a key location for education and the Defence industry. Another big factor is affordability. Despite recent good growth, Adelaide is considerably cheaper than Sydney, Melbourne, Brisbane or Canberra. Homes in Adelaide are around half the price of Sydney’s. Adelaide and Perth are the only capital cities in Australia where you can still find a good supply of houses in the $300,000s and $400,000s. The third factor about Adelaide is the resilience and consistency of its market. In 2022, when prices generally fell in the bigger cities, Adelaide continued to deliver price growth. And that steady performance has continued in 2023. In the first nine months of this year, the median house price for Adelaide rose 5.3%, according to CoreLogic, while the median unit price increased 6.1%, which was above the national average. And Adelaide continues to have one of the tightest rental markets anywhere in the nation. The national vacancy rate, according to SQM Research, is 1.1% - but Adelaide is less than half that national average, at 0.5%. As a result, residential rents in Adelaide have increased more than 10% in the past 12 months. Overall, Adelaide presents as one of Australia’s strongest markets, with consistency of performance its defining characteristic.

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Superannuation has the potential to become a powerful tax haven and wealth creator for Australians, if handled well.   Investment expert Andrew Courtney of Plenitude Wealth says many Australians, however, fall into the trap of being asset rich and cashflow poor with their investments. But he says it’s possible to transition from active income (salary) to portfolio income (earning from your portfolio of investments, including real estate). “Instead of trading your time for money, get your money to start working for you,” he says. Courtney says people who …  start early with a SMSF,  set targets and milestones,  exploit the available borrowing capacity,  properly apply the tax benefits, and  acquire good property … … can achieve results that out-perform most of the population. Hotspotting founder Terry Ryder and Andrew Courtney of Plenitude Wealth recently conducted a lunch and learn webinar on the 25th of October 2023 Catch the full replay today.

Somehow, according to the logic of the major economists, including those who work for the Reserve Bank, we may need to put up interest rates again to quell key inflationary pressures like residential rents and petrol prices. As most of you will know, the Reserve Bank is obsessed with bringing down the rate of inflation. And they’ve searched through their list of policies and possibilities – and come up with the brilliant concept that, if you increase the interest rates of one third of Australian households – the ones that have mortgages – somehow inflation will miraculously come down. So, Plan A is to put up interest rates.

You may be tired of hearing about it, but the latest data on residential vacancy rates shows that they are continuing to fall. And why wouldn’t they, given that the nation’s gaggle of politicians collectively haven’t got a clue about how to deal with this situation. The latest data from SQM Research shows that the national vacancy rate dropped from 1.2% in August to 1.1% in September. Comparing the situation with a year ago, Sydney’s vacancy rate has dropped from 1.5% to 1.3% and Melbourne is down from 1.8% to 1.2%. In the latest month, vacancies dropped to lower levels, or stayed the same, in six of the eight capital cities.

Some of the nation’s leading economists have just released their forecasts for Australian property prices in 2023.  Now, I imagine you think I’ve made a mistake and that I meant to says that they’ve made their predictions for property prices next year, in 2024.  But No, they’ve made their forecasts for house prices in Australia this year – in late October. A little over two months before the end of the year, they’re telling us what they expect to happen with property prices in 2023. This is according to a Bloomberg survey of 13 so-called leading economists published in the nation’s worst tabloid rag, the Australian Financial Review.  Now, you can’t blame economists for leaving it until the year is almost over to make their forecasts about property price outcomes for the year – because this is something they’re really bad at.

It’s a reality of modern life that most of the impending disasters forecast by news media never happen – and that is particularly so in the property industry. Recent years have been full of startling headlines of a collapse of property prices, including in 2020 when Covid struck Australia and at the beginning of 2023 when bank economists predicted prices would drop 15% to 20% because interest rates were rising. Journalists love these kinds of “impending doom” stories and are happy to publish scary headlines warning of us of dreadful things to come. It causes a lot of unnecessary anxiety in a community already struggling with high interest rates, rising prices for life essentials, climate disasters, the outbreak of wars, earthquakes causing devastation and a whole lot more. Media, of course, never apologises when the disaster they predicted does not occur. One of the notions very popular with journalists seeking to generate clickbait with a startling forecast is the concept of a cliff. A property market cliff, a property price cliff, a mortgage cliff – according to news media, there are always things about to fall off a cliff. Except it never happens.

Australia has just recorded its highest population growth in 20 years. And the data about which areas of the nation are growing the fastest shows that the trend we call the Exodus to Affordable Lifestyle is continuing strongly. Western Australia and Queensland continue to be national leaders on price growth, while the two biggest states on population, NSW and Victoria, continue to lose population through internal migration – which means people moving from one part of Australia to another. The biggest part of that trend is people leaving our two biggest cities, Sydney and Melbourne, and moving to smaller cities or to regional areas. That’s been happening in significant numbers for the past decade and was NOT caused by the Covid lockdowns, as some media reports have suggested.

Usually the term “a perfect storm” refers to a highly negative scenario. One definition says a perfect storm is “an especially bad situation caused by a combination of unfavourable circumstances”. I’d like to turn that around, because right now there’s a perfect storm of scenarios impacting real estate market and they’re overwhelmingly favourable for property investors and for real estate growth, while being extremely unfavourable for anyone looking for a place to rent. Right now, real estate markets are being impacted by a well-entrenched imbalance between supply and demand – and it’s becoming increasingly pronounced.

Property markets across Australia have grown stronger as 2023 has progressed. And this notable resurgence has been led by Sydney, which we regard as the leading market in the nation. It is the market with the strongest data on sales activity, slightly ahead of Perth, and it’s also a national leader of price growth in 2023, both for houses and for apartments. Sydney had shown signs of recovery early in 2023 but our most recent analysis shows that the city’s market has gone to another level more recently. Most of the suburbs across Greater Sydney have experienced significant improvement in their market activity – which puts Sydney at the forefront of a national revival in sales volumes.

Regional NSW is part of the emerging recovery theme which dominates the national real estate scene, although its revival is perhaps a little less emphatic than some of the other states. Earlier in the year, when Hotspotting conducted its Winter survey of sales activity, only a third of Regional NSW locations had positive outcomes. But more recently our Spring survey revealed that two-thirds of locations had positive rankings. This represents a meaningful turnaround in the Regional NSW market overall, although some high-profile locations like Byron Bay have yet to join the revival. The biggest cohort in Regional NSW now is the recovering markets.