PROPERTY REPORT – March 2017

 

 

Quarterly Market Report No. #42 – March 2017
By Terry Ryder, creator of hotspotting.com.au

Introduction: You Just Can’t Believe What You Read About Real Estate

fear for Australian real estate consumers. Seeking information to underpin investment decisions is like walking blindfold through a minefield – in this case a minefield of misinformation.

The standard of reporting of property issues has deteriorated to the lowest levels I have seen in my 35 years as a real estate researcher and writer. Much of the real estate content of media outlets is nothing more than recycled press releases from developers, agents and other industry spruikers.

Recently I wrote an editorial with this headline: “It’s dangerous to be a newspaper reader in Australia in 2017.”

It’s apparent from my communications with many thousands of consumers over time that most people think reading newspapers and magazines constitutes research. In my view, it’s the opposite – it’s anti-research.

The wrong information is worse than no information at all and much of what is published in mainstream media about residential real estate is misinformation.

That sounds like a sweeping statement but it’s one that’s substantiated by the analysis I present in this report.

In this edition of the Quarterly Market Report, I analyse the major markets around Australia by presenting the conflicting data that’s published by research sources via the media and seeking to make sense of it. This is something that should happen in major media, but sadly no longer occurs in modern Australia.

Brisbane and Queensland

REIQ Vacancy Data Tops Brisbane’s Pile of Misinformation

If you can believe media reports, vacancies in central Brisbane have dropped and are now close to acceptable levels, not much higher than 3%. This is because media, sadly, recycles industry propaganda are credible news.

The reality, as portrayed by independent research, is that Brisbane inner-city vacancies remain uncomfortably high and are likely to get bigger before they improve.

The Real Estate Institute of Queensland, which lately has specialised in political game-playing, published research indicating vacancies down close to 3% in inner Brisbane, no doubt trying to counter constant negative publicity about oversupply in the apartment market.

But independent vacancy data from SQM Research shows that vacancies continue to be extremely high. The Brisbane CBD and all the near-city suburbs, including South Brisbane, Fortitude Valley, Kangaroo Point and Woolloongabba, have vacancies in the 5-6% range.

They will inevitably worsen, with more high-rise projects coming out of the ground.

The big question is why journalists would publish the REIQ figures, which clearly conflicted with the prevailing view of things, without asking a few questions and seeking alternative information. The answer to this rhetorical question is that journalists no longer do journalism – they are conduits for industry press releases.

Not only does central Brisbane have high vacancies but the disease has spread to some of the middle ring suburbs, with small and medium-sized developers building too many units and townhouses in locations such as Albion, Kevin Grove and Chermside. Investors are advised to check vacancy rates on the SQM website and also to check building approvals data, which can provide a clue to future oversupply.

This is not to say that people should stay out of the Brisbane market. Most precincts have moderate vacancies and Brisbane overall has good prospects for solid growth.

The key elements are economic growth and infrastructure spending, factors which have been strong in Sydney and weak in Brisbane in recent years, hence the relative differences in market performance.

The Queensland economy is showing signs of improvement, especially in the growing confidence in the resources sector, while there are a number of big-ticket projects in the pipeline for Brisbane, including infrastructure projects and major tourism-related developments.

The more affordable areas in the outer ring suburbs are the ones with the greatest momentum, including the Moreton Region in the far south, Logan City in the far south, and Ipswich City in the south-west. There are also busy markets in the Redlands LGA in the east.

There is also a rising tide in some of the regional Queensland economies. The resources sector has renewed confidence and previously-mothballed projects have been revived. There is a growing number of alternative energy projects is the pipeline, including wind farms and solar power plants.

Regional centres that have struggled in recent years are on the way back, headed by Townsville and including also Rockhampton and Mackay. Boom-bust city Gladstone has some prospects of recovery, after 3-4 tough years.

Meanwhile, the Gold Coast and the Sunshine Coast continue to thrive, boosted by vibrant economies and major spending on infrastructure and other construction projects.

In conclusion

Be Willing To Do Your Own Research Or Pay For Data From Credible Sources

In the previous edition of this quarterly report, I presented this simple three-step formula for success as property investors in 2017:-

  • Step One: stop reading newspapers.
  • Step Two: conduct genuine research.
  • Step Three: be willing to pay for good information and quality advice.

It’s worth repeating.

Above all else, those seeking to invest in real estate must treat the process like a business. In any business venture, you must be willing to spend money to make money. Real estate investment is no different.

The most successful investors I know – those with large portfolios of growth properties – behave in this way. They approach property investment as a business venture and understand the importance of seeking services and advice from qualified professionals, including research information.

Most mum-and-dad investors don’t do that – and end up with ordinary results.

All the information a consumer will ever need to make informed choices exists and most of it is readily available through Internet research. The problem is that often data from one source conflicts with figures from another.

How to make sense of it? Seek advice from qualified businesses. And be willing to pay for it.