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Property Markets Are Strengthening

There is a growing body of evidence that property market conditions are strengthening.

Against a backdrop of an ever-tightening rental market and increasing rents, there are signs of rising buyer activity and stronger prices.

Auction clearance rates are showing steady improvement in recent weeks and a number of research entities are recording price growth, in defiance of high inflation, rising interest rates and relentlessly negative media.

The more positive data began with the release of Domain’s price report for the December Quarter.

This recorded house price growth in five of the eight capital cities.

Then came figures from SQM Research which showed most capital cities recorded price growth in January for houses – and all but one of them recorded growth in median prices for apartments.

In recent weeks, the CoreLogic value index has shown small increases and their latest price report published on 1 March showed growth in Sydney house prices for the first time in almost a year.

And overall it indicated that, nationally, dwellings prices fell just 0.1% in February.

But there was even more positive data from other credible sources, including PropTrack and SQM Research – both of which have prices rising nationally in February.

The SQM Research price data for February showed that house prices rose in four of the eight capital cities, including a 1% rise in Perth and a 1.2% monthly increase in Hobart, with Brisbane and Darwin also recorded increases.

With apartments, SQM reported price increases in February in five of the eight capital cities.

The latest data from PropTrack is also full of positive data on property prices – with the national averages showing both house prices and unit prices rising during the latest month.

PropTrack says house prices rose during February in Sydney, Melbourne, Brisbane, Adelaide, Perth and Darwin – in fact, in every capital city except Hobart.

There was also house price growth, according to PropTrack, in the regional markets of Victoria, South Australia, Western Australia, the Northern Territory and Tasmania.

Now, we’re not speaking of large increases – less than 1% in most cases – but ANY level of increase at the moment is notable, particularly when media keeps stating that prices are nosediving everywhere.

For the unit markets, PropTrack recorded growth in February in Sydney, Melbourne, Brisbane, Adelaide, Canberra and Perth – as well as in the regional markets of Queensland, Western Australia and Tasmania.

Auction clearance rates have improved recently, with consecutive weeks in which the national clearance rate has topped 70%.

And consumer sentiment towards real estate is improving, with an API Magazine survey indicating that 50% expect prices to rise this year and a further 20% expect them to stay the same.

Commentators like Stephen Koukoulas are noting the improvement in the market – declaring that house prices appear to have stopped falling and that “the worst is over for house prices”.

High profile agency figure John McGrath this week published a blog under the headline: “Buyers are more decisive as the market stabilises”.

McGrath said: “I think we are either at, or approaching, the bottom of this property cycle – and it looks like many buyers agree.”

Perhaps the most remarkable report came from the Unconventional Economist Leith van Onselen, who rages daily against residential property and generally takes any opportunity to talk down the market and to forecast a price crash.

On 24 February he said, through gritted teeth: “Sydney house prices continue to bounce back, according to the CoreLogic dwelling values index. Sydney dwelling values have actually rebounded 0.26% over February.”

When this source says something positive about real estate prices, you know something significant is happening.

The general tone in news media is gradually improving, with an increasing number of articles with headlines like “Top locations defying the downturn with double digit price growth”.

Some of the articles based on the latest Home Price Index from PropTrack declared that Hobart is the only capital city where house prices fell in February, that the decline in Melbourne house prices has stalled and that Brisbane house prices have risen for the second month in a row.

A headline in The Australian newspaper on 1 March declared: “Key evidence that the housing crash is bottoming out.”

While I would dispute their claim that we’ve had a housing CRASH, I appreciate the acknowledgement that things appear to be improving.

But, of course, some of the usual suspects couldn’t help themselves – they felt compelled to ignore any hint of positivity and worked hard to find a negative to put in their headlines.

The Australian Financial Review, the worst tabloid rag in the nation when it comes to coverage of the housing market, managed to find someone to declare that the improvement in the price data was a false dawn.

But who did they turn to, in their desperation to turn a positive into a negative?

The worst real estate forecaster in the nation, AMP Capital chief economist Shane Oliver, who has devoted years to forecasting price collapse in Australia – and hasn’t been right yet, not once, not ever.

So, putting aside the inevitable negativity of the Financial Review, the overall picture for property prices across Australia is one of solid improvement.

And we at Hotspotting continue to forecast price growth in many markets across the nation in 2023.


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