Jame’s weekly Snapshot -19Jan21

19-Jan-2021


Some big news stories and data have come out in recent weeks, five in particular caught my eye.

  1. House price data for 2020 calendar year

December house price data came out early in the new year, with all capital cities up by +1% for the month:

CityMonthYear
Sydney1.1%4.0%
Melbourne1.2%-2.0%
Brisbane1.2%4.6%
Adelaide1.2%5.9%
Perth1.1%2.0%
Aus capitals1.1%2.6%

It was a solid year for house prices with Melbourne the only capital city to finish the year below where it started. That’s understandable given they were locked down for half of it! Sydney, Brisbane and Adelaide finished the year up 4%, 4.6% and 5.9% respectively, showing the resilience of housing in times of crisis.

That’s why we’re seeing the likes of CoreLogic head of research Tim Lawless forecasting 7% to 10% growth in capital city house prices during 2021.

2. RBA even forecasting house prices to increase in 2021

The Australian broke a story in January to say that “confidential analysis by the Reserve Bank of Australia suggests house values could jump 30 per cent over three years if borrowers believe the cut in interest rates is permanent.”

It went on to say “an internal RBA document released on Friday in response to a Freedom of Information request says the biggest risk to the economy was high unemployment, and that stronger household balance sheets from low rates could help counteract the danger.”

In other words, the RBA is predicting that house prices will increase over the next 3 years, and they’re ok with that.

Why?

Because it’s better than the alternative which is high unemployment. The majority of all Australians’ wealth is tied up in their home and 69% of all Australians own their home. The RBA figures that house prices are going up so therefore that means the wealth of most Australians isn’t all that bad, particularly since we’ve just gone through our first recession in 30 years.

3. Holiday markets on fire

The clear beneficiary from COVID-19 has been some of the seachange and holiday markets.

Realestate.com.au reports that Noosa has had a “surge in apartment prices” as a result of buyers grabbing lifestyle properties since the COVID-19 pandemic began restricting international travel.

There were 45 apartments which sold for more than $2m during 2020 within the Noosa local government area compared with 43 in 2019, 29 in 2018 and 21 in 2017.

Holiday markets can be tricky from an investment perspective they can be volatile with big increases  often followed by big drops in values. It’s not for the faint hearted. But when it’s hot, it’s hot, and it’s certainly experiencing a good run at the minute.

4. Building approvals at 20 year high

Monthly approvals to build new houses are running at two-decade highs, spurred by the cheapest money on record and generous government incentives.

The ABS reported during December that the number of new dwellings approved for construction, including detached homes and apartments, increased by 2.6 per cent in November to 17,205.


That’s the fifth consecutive monthly increase and the fastest monthly increase since December 1999.

The Housing Industry Association’s (HIA) New House Sales report was released during the month also, with new home sales up 15.2% between November 2019 and November 2020.

In the three months to November 2020, all regions reported an increase with Western Australia leading the pack with growth of 108.8%, followed by South Australia (57.6%), Queensland (34%), Victoria (22.2%) and New South Wales (20.7%).

The figures show that both federal and state government financial stimulus measures are having the desired impact.

5. Deal of 2020

The biggest and most interesting land deal for 2020 was saved for the last month of the year. Stockland bought the 700 Ha Providence estate in Ripley from the Okeland Group (formerly Amex) for $193million.

The deal was for the 6,000 lots remaining in the estate which works out to about $32,167 per lot.

According to the Courier Mail, the $193m will be paid over a six-year period with final payment of $160m to be made in December 2026.

Interested in knowing more? Check out the weekly podcast we do at Strong Coffee and Smart Real Estate | Custodian.

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About James Fitzgerald

James Fitzgerald

Property & People 11 years with JLF Group of companies James holds a Bachelor’s Degree in Law and Commerce – Majoring in Accounting James is the nephew of CEO, John Fitzgerald and has at times worked in and run the Research, Acquisitions, Construction, Investloan and Sales divisions of the business.

At just 30 years of age, he has bought, sold and developed more than 2,000 properties and spent more than 20,000 hours of his time helping to build and implement strategies for Custodian clients.

James is the chairman of Toogoolawa Schools Ltd, a not for profit school for youth at risk that was started in 1991.

James starts the day with an hour of exercise; he loves Netflix TV series and has a sweet tooth. James is based at our Head Office on the Gold Coast and can be contacted via phone and email.

Posts written by James Fitzgerald

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