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:-
- The data shows that growth rates are accelerating already.
- 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.
- In coming months, supply volumes will reduce by a further 10% or so, because we’re coming into the Christmas/New Year period.
- Buyers have more confidence heading into the start of 2024 and many will buy early in the New Year.
- Interest rates are expected are begin falling early in 2024.
- Then there is the ongoing influx of overseas migrants in record numbers
- 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.