Market Update July 2023 – Rental growth slows, will rent freezes fan the flames, exploring the office exodus & capitals thrive as regionals dive (Ep.218)

Formerly the “Property Planner, Buyer and Professor” podcast

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1. Capital vs. Regional: The Performance Battle

Cate sparks a discussion on the thriving capital cities versus the diving regional counterparts as the ‘Urban Exodus’ Myth is debunked following a reversal of fortunes for capitals vs regions post the end of lock downs. 

Dave casts the spotlight on Brisbane, Adelaide, Perth, and Sydney’s stunning value growth, while also revealing that despite the upturn, most major capitals still haven’t reached their recent Covid peak. 

Source: CoreLogic

2. Perth: A Watchful Eye

Mike steers the conversation toward Perth’s intriguing outperformance. Dave and Cate weigh in cautiously, hinting at a potential Perth revolution.

The growth and yield combo earns Perth a spot in the ‘watch this space’ category.

3. Listing Insights: Appraisals & Inventory

Discover how Cate’s insights from the field hint at a rise in listings is just around the corner, with agents getting quite busy with their appraisal activity. A precursor to higher listing volumes.  

Mike digs deeper into the correlation between appraisals and listing volume.  

The Trio ponder the Spring market, and whether Sydney’s recent spike in listings might be a forebearer of what’s to come for the nation. An important consideration for those who have been holding off selling or buying.  

Improved buying conditions with interest rates possibly having peaked highlights the likelihood that October, November and December are the prime buying months. 

Source: CoreLogic

4. Rental Realities: Stock & Increases

Cate unravels the mystery of rental stock levels, noting that divorce rates and part-time city dwellers are playing a part in the reduced number of properties. 

Dave dissects rental increases as the pace of growth continues to ease in most cities, urging caution to state governments against rent freezes. 

They delve into market-specific drivers of the rental increases and threats, painting a diverse rental landscape. 

The trio share the fact that growth in national rents reached 35 consecutive months in July – the longest stretch since 2013. 

Source: CoreLogic

Source: CoreLogic

5. Vacancy Rates: Still Historically Low

The trio demystifies ‘optimal’ vacancy rates, and all agree that 2-3% signifies a healthy rental market. 

A revelation emerges as Cate presents an Office Vacancy chart showing office vacancies sitting at approx. 13%, shedding light on residential vs. office vacancy dynamics.

6. Sentiment Snapshot: A Curious Mix

The Trio unpack the latest consumer sentiment data that’s got us all scratching our heads. 

The hosts ponder slightly rising sentiment on the ‘Time to Buy a Dwelling’ Index in Sydney and Melbourne coinciding with property growth slowing, while there is strong anticipation of higher house prices on the horizon. 

Mike humorously attributes it to the “I wish I could, but I can’t” phenomenon. 

Cate’s ‘toys’ index, otherwise known as the ‘time to buy a major household item’, continues to nose dive. Maybe we are spending the money on Euro-trips instead as the flavour of the day? 

Source: Westpac Melbourne Insitutue

8. Buyer Buzz: First Time Buyers and Investors Spike

The Trio serves up a captivating roundup: a surge in first-time buyer activity, declining dwelling approvals, receding distressed listings, and a concerning spike in personal (unsecured) lending. 

Does this mean upgraders are falling away, given they have the largest loans? 

This could be reflected in the upper quartile exhibiting the weakest growth in Sydney and Melbourne now. 

Gold Nuggets

Dave Johnston’s gold nugget: Dave talks about some of our two-speed markets, citing the Gold Coast, South-East Tasmania and Newcastle/Lake Macquarie as high performers, and he delves into some slow performers in Victoria. There really are markets within markets!

Cate Bakos’s gold nugget: Cate anticipates higher listing figures in Spring and feels that the 2023 opportunity for buyers could match late 2022’s.


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