40 most affordable areas – Simon Pressley

One of the things that we love to look at is affordability. Today we look for affordable markets around Australia with Propertyology who are one of our trusted advisors and one of Australia’s leading property analysts.   They did an exercise recently to look at the most affordable markets around Australia and came up with a list of 40, but there are some interesting indicators here. Simon Pressley joins me from Propertyology.
Transcript:
Kevin:  One of the things that we love to look at is affordability. Most people are looking for housing affordability, and when we do that, it’s interesting; we look for affordable markets around Australia, and in doing this, we work very closely with companies like Propertyology who are one of our trusted advisors, one of Australia’s leading property analysts.
They did an exercise recently to look at the most affordable markets around Australia and came up with a list of 40, but there are some interesting indicators here. Simon Pressley joins me from Propertyology.
Good day, Simon.
Simon:  Hi, Kevin.
Kevin:  Some interesting indicators came out of this. We want to look at affordability, but then that then says “Well, hang on. Which of these affordable markets now could we actually make a profit out of in the years to come?” What were some of the things you found out?
Simon:  We cast our eye across Australia’s 550 city councils, Kevin, and the two main metrics that we followed here is where there has been a significant shortening of the time that’s it’s taking for the typical property to sell, combined with the volume of properties increasing. Those two metrics are the pressure points, if you like, for property markets.
40 locations throughout Australia in total where there’s significant pressure building. That’s not to say that all these 40 locations are experiencing price growth. Now, some are, but what we’re saying is they are all heading in the direction of a growth cycle. There are 40 locations, and they’re in every state in Australia.
Kevin:  Looking at days on market, is there a point in time when you say “Well, if it’s selling in 30 days, that’s a reasonably good market, if it’s selling in 60 days, that’s an average market, and 90 days is pretty slow”?
Simon:  I would agree with those numbers. Generally speaking, when we’re getting around somewhere between, say, 30 and 45 days, generally speaking, that market is experiencing some price growth. The rate of growth, obviously, can vary. But not always.
Big parts of Brisbane, for example, Kevin, a typical property has been selling in that 30 to 45 days for five or six years now. But as we know, Brisbane has experienced some price growth but not enormous price growth.
Kevin:  There are lots of things influence days on market, like the amount stock on the market, obviously, the number of buyers who want to buy into that market. But, it’s also interesting to look at the amount of stock in a marketplace. I’ve seen markets – particularly the Sunshine Coast as an example – where there has been enough stock on the market, that if nothing else was listed and the days on market didn’t change, it would take about two years to settle that stock. It’s a pretty depressed market.
Simon:  That’s right. Stock on market is one factor that leads to pressures. If there’s not much there and there’s heaps of interest, obviously, again, you’re going to have a lot of pressure. But at the start of a growth cycle there can be markets that do have lots for sale but still an increasing number of buyers, and then over of the period of time, what you’ll see is not only more property selling but also taking a shorter period of time to bill.
But, you can also have locations – Hobart is a classic example at the moment, and other parts of Tasmania, for that matter – where the sales volumes are actually reducing but the market is roaring. And the reason the sales volumes are reducing is because there’s very little left.
We saw that happen in Sydney and Melbourne a couple of years back as well, where sales volumes were reducing, but that was certainly not to imply that the market was cooling.
Kevin:  You mentioned Hobart there, Tasmania. I noticed that you in your release talk about the fastest selling area was Clarence in Tasmania. Tell me about why you chose that and what were the dynamics?
Simon:  These were all chosen just purely from official statistics. So, Clarence is on the eastern shore of Hobart. It includes suburbs such as Howrah and Lindisfarne. Here and now today, the average time it takes to sell a property is ten days. So that’s literally you blink and miss it.
Now, that’s what the official data says. Our buyer’s agents will tell me “Simon, once it hits RealEstate.com, it’s probably already sold.” That’s indicative of what’s happening in that particular market at the moment.
But the actual sales volume is actually reducing, as I said, but that’s part of why there’s such strong price growth over there. There are lots and lots of people who want to buy but very few properties for sale.
Kevin:  In the analysis, how many of the states actually were really tightening up on their sales times?
Simon:  The only territory that didn’t mention was the ACT and of course, the ACT has only one city; that’s Canberra. That’s not a bad reflection of Canberra, though. It’s market pressure is fairly solid.
What we’re picking here are locations where the pressure is tightening further. Northern Territory had one, Alice Springs. Western Australia had four locations where pressure is tightening, and they were all in parts of regional WA, not so much Perth itself. South Australia had six. Queensland had five. New South Wales had the most, ten locations, and they were all outside the really big metropolitan areas. Tasmania seven, and Victoria seven. So, it’s literally spread right around the country.
Our motivation for sharing this data with the public, Kevin, is on the back of what we’re going to hear probably a lot more of for some time yet is Melbourne and Sydney consistently falling month after month. Not big falls, but it is dominating the media tabloids.
And the public need to be aware that’s two cities. This is a massive country, and large parts of Australia are actually showing signs of improvement, not regressing like Sydney and Melbourne have.
Kevin:  It’s great to have this chat with you. Simon Pressley from Propertyology. Is there a report that we can get on this, Simon?
Simon:  Yes, absolutely. Go to Propertyology.com.au, click on the “Insights” tab in the menu bar, and you’ll see all sorts of goodies and research reports there, including this one.
Kevin:  Well, I have the list of 40 tightening markets. Too many to go through. But Simon great talking to you. Thank you so much.
Go to Propertyology.com.au, the “Insights” tab, and you’ll get that, along with a lot of other reports as well.
Simon, thanks for your time.
Simon:  My pleasure. Talk next time.

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