The next property markets to boom
You don’t even need to be a newspaper subscriber to know that the headlines are screaming that the property boom is over, and that we (again) are looking down the barrel of a property collapse. Open Twitter, look at your Facebook page, browse Google or turn on the TV, and it’s all the talk.
I’m constantly incensed at how myopic the press can become when they’re talking about property, and, unfortunately for the rest of the country, the performance of the Sydney market dominates discussion and is presented as the be- all and end- all of property. This shortsighted-ness extends to include a short memory, as everyone has already forgotten the complaints made by any NSW property owner back in the early noughties. Between the years of 2003 and 2010, when all other capital cities almost doubled their property values, Sydney returned an abysmal 17%, and those who had purchased, and held for those seven years, felt that NSW was the worst place in the country in which to buy property.
And so here we now sit, with reports of the great property boom being emblazoned across every available public space, and the poor people of Brisbane, Adelaide, Perth and Darwin are glancing about with stunned expressions, thinking it all must be some kind of joke as they look for the property boom which never was – in their part of the world at least.
The property cycle in motion
The point is, for as long as property has existed, so has the property cycle, and Sydney (and only Sydney) has just been through the upswing of its cycle, after spending a protracted period of dismal years lolling about in the growth cemetery. If you had bought in 2012 and were ready to sell now – it’s been a great ride and you’ve likely made around 45% in five years. If you had bought in 2003 and were ready to sell now – you’ve made about 74%, but it’s taken 14 years, so it averages only around 5% per year. But had you bought in 2003 and sold just before prices started to move in 2012, you’d have made an average of just 1.88% a year, well below what you could have made in any other state. And during that time, when the headlines were screaming ‘Property Slump!’, the people of Perth were quietly enjoying a 100% increase to their net worth, as property doubled, and in some suburbs almost tripled, in a four-year period.
Yes, the property boom is over – in Sydney! I can’t see how this is a surprise to anyone – without wages growth, sooner or later growth in any market will become unsustainable, and a slow-down will occur. However, the property boom is far from over country-wide, and forever more, there will always be a market somewhere which is at the bottom and turning around. The figures above prove what savvy property investors know to be true – market timing is absolutely critical – and even more so than ‘time in market’, although staying in for a suitable time also helps.
So, where to now?
So many choices, and so many markets being presently driven by far more than investor sentiment.
Perth is most definitely nearing the bottom. In classic media driven misconception, Perth is a market which can hold its own without the need for a mining boom. Long before mining was even such a big thing in Perth, this affordable market chugged along nicely and managed its own wonderful mini boom just before the mining boom skewed the figures and drove industry-related demand into the market. Now that it’s all settled down and things are returning to normal, the sizable population and reducing rental vacancy and unemployment rates should result in a return to normal activity, which will include house price pressure. Look for the up and coming trendy markets just east of Perth CBD, on the road to the airport for well- priced property with early evidence of improving demand.
Up in sunny Brisbane, Moreton Bay Regional Council is creating a thriving new major precinct that will generate thousands of local higher education and employment opportunities for the region.
Sitting just 25 minutes or so north of the CBD by car or rail, this full-scale University of the Sunshine Coast (USC) campus will boost demand in the growing Northern Suburbs. On track for completion in 2020, it’s supported by additional work, study and community facilities, and will cater for up to 10,000 university students in its first 10 years.
There’s also a great link to the area by the onsite train station which will connect local residents from right along the Redcliffe Peninsula Rail Line, and the Caboolture Line, to the new Petrie campus. This kind of infrastructure, when you add it to the already climbing demand for affordable property within commutable distance of the city, is bound to push ahead prices and result in great rental yield too.
And for those who are really into steady yet compounding growth, let’s not forget Adelaide, where the present median price of $588,000 represents an impressive 138% growth over 14 years! It kind of creeps up, because it never really booms in the way we would recognise it, but
it does grow steadily, every year! The expanding Southern Suburbs down to Aldinga Beach, with the new freeway duplication and an explosion of families, is bound to keep delivering as the council supports this expansion through significant infrastructure development and service provision.
The boom isn’t over. The crash is not imminent. The big opportunity in Sydney has, for now, passed, although it will come back. But, somewhere in Australia, there’s a boom just waiting to happen, and if you stop looking for the instant gain and start thinking about what really drives growth, you can get in on the ground floor of that next boom and ride it all the way home!