The year is barely a month old and already some of the wackiest things have been written about Australian real estate.
I've previously commented on the Demographia propaganda manifesto and the strange way in which a shallow survey of six nations generated "we have the world's most unaffordable houses" headlines all over the country, the facts notwithstanding.
Then we had BRW perpetuating the myth that the "prime" suburbs close to the CBD provide the best growth. BRW writer Andrew Heathcote came up with five locations that would lead price growth in 2013 – the five chosen elite all had proximity to the CBD in common and this, apparently, is what is going to drive places like New Farm in Brisbane and Potts Point in Sydney to excel.
New Farm has one of the lowest capital growth rates in the Brisbane metropolitan area, roughly half that of outperformers in Ipswich City in Brisbane's south-west.
What was not explained was why New Farm, with its "tree-lined streets containing period cottages", would suddenly burst to the front in the capital growth stakes. New Farm has always had those qualities and it's always been two kilometres from the Brisbane CBD. Why suddenly is it going to outperform, when it hasn't in the past?
I have the same questions about Potts Point in Sydney, which has the dismal capital growth average of 4.3% per year. This is shabby even by the low standards of Sydney, which has been the under-achiever among the capital cities over the past 10 years.
Potts Point is suddenly going to outstrip the huddled masses, apparently, because it’s three kilometres from the Sydney CBD (hasn’t it always been?) and it has lots of heritage buildings (by definition, they’ve been there a long time). What new event has supercharged one of the nation’s worst capital growth performers to a ranking of fourth best for 2013? The gentrification of nearby Kings Cross (did that just happen?) or the fact that white-collar workers like the area?
In similar vein, the swanky suburbs of Melbourne’s inner south-east feature (Hawthorn is the anointed superstar) despite their volatility and lack of consistent performance.
Continuing the theme of strange musings about real estate, writer Pete Wargent burst into print to say “I told you so” about Sydney’s middle market being “the most resilient market in Australia”. He claims this sector is “the only sector of Australia’s property markets to be at all-time high prices”.
Apparently Australia’s property markets do not include Gladstone, Mackay, Moranbah, Port Hedland, Karratha, the towns of the Hunter Valley, Dubbo, Mudgee, Whyalla, Bendigo, Ballarat and many other regional cities and towns that have been growing strongly while the capital city markets have been falling or stagnating.
As for Sydney’s middle market being the most resilient market in Australia, it’s almost the polar opposite. Sydney generally has delivered the lowest growth among the capital cities in the past decade. Typical Sydney suburbs have averaged less than 5% per year, and the best has managed just 7% – half the best in Brisbane.
Middle-market suburbs have been among the worst Sydney performers. Gordon’s median price has dropped 8% in the past 12 months, according to Australian Property Monitors, and is still lower than it was five years ago. Its 10-year growth average is 3% per year, among the worst in Australia.
Canterbury, another middle-market suburb, also dropped 8% in the past year and has a 10-year average of 4% per year. There are a hundred other suburbs with similar histories.
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