2013 was the year of sensational events that never happened.
We heard about a bubble, but there wasn’t one.
We read that the Australian property market was white hot, but with rare local exceptions it wasn’t so.
There was much discussion about an affordability crisis, when all the statistics showed the opposite.
We were told yet again about the mythical housing shortage crisis, but neither the vacancy figures nor the rental growth data supported the notion. According to the REIA, six of the eight capital cities have vacancy rates ranging from 2.7% to 4.5%.
Some reported that the market had peaked, despite the lack of supporting evidence.
So what really happened in 2013?
It was year in which nothing remarkable happened at all. It was a year “full of sound and fury, signifying nothing”.
Some of our biggest markets sparked to life for the first time in many years. Sydney produced its first year of meaningful growth in a decade, though well short of the runaway boom depicted by an irrational media.
Perth produced its first year of solid price growth since its previous peak in 2007. Melbourne showed some life as well, but annual growth in the median house price was moderate, around 6-7% according to three major research sources. (We ignore the inflated figures published by the REIV).
Elsewhere among the capital cities, there was little to shout about. Darwin started the year as the market leader but its numbers moderated throughout the year. Brisbane showed the first glimmers of a return to price growth, but only 3-4% in annual terms.
Adelaide, Canberra and Hobart were largely non-events. As usual, it depends on whose figures you believe. Using the ABS House Price Indexes as a guide, annual growth was around 1% for all three cities.
All in all, it was a year that at no stage warranted the hysterical headlines it generated. The average result across the state and territory capitals was annual growth around 6% or 7%, with most of that figure generated by just three of the eight cities.
The real star performers were places we never heard about because they were out in the regions. Some regional centres recorded median price growth above 15%, including Port Lincoln in South Australia, Narrabri in New South Wales and Miles in Queensland.
So what did we learn this year?
The greatest lesson is that there is no such entity as “the Australian property market”. There are thousands of local markets, moving in various directions and at different speeds.
We learnt that boom-style growth is more often a curse than a benefit, as developers have an extraordinary ability to destroy those markets with over-supply. Central Queensland was surplus central in 2013, with Gladstone, Mackay and Emerald all experiencing declining markets because of over-building. We have previously seen high-population growth locations like Wyndham City and the Gold Coast go into sharp reverse, weighed down by too many new dwellings.
We learnt that developers don’t really care if major city markets are over-supplied as long as they can flog off their apartments in China. Melbourne is a stark example and inner-city Sydney and the Gold Coast are poised to follow suit. Smart investors will avoid these places.
We also learnt that the worst place to go for balanced and accurate information on real estate is the metropolitan newspaper industry.
So what of 2014?
I expect a solid year, with the price growth more evenly spread than in 2013. Brisbane will rise through the pack to be a market leader in 2014. Sydney and Melbourne will moderate somewhat but still have positive years, while Adelaide will produce its best growth since 2010.
The big struggler will be Canberra. It has an over-supply of dwelling, particularly apartments, and the public service cuts by the new federal government will hurt.