Chapter 1: What is the main topic discussed in this episode?
It's the Real Estate Podcast, brought to you by Ray White, the largest real estate and property group in Australasia.
And welcome to another episode of the Real Estate Podcast. And we're talking with Nerida Conisbee, Chief Economist at Ray White. G'day there, Nerida. Welcome to the Real Estate Podcast. Thanks for having me. Yeah, nice to have you on. And how's 2022 been for you? I guess like everybody else, it's sort of started with a bit of a thump.
Yeah.
It certainly has. It's been a pretty fast start. I think it's looking quite a different year compared to last year. I was talking to a few people about it last week that start of 2021, it was pretty much full steam ahead. We could see that prices were really on the increase and it was going to be a very big year. I think this year there's a lot more uncertainty.
On one hand, COVID is starting to become a little bit more less of an impact in terms of the way we live. But there's a lot of other influences on the property market, such as the threat of interest rate rises, opening borders, all of those things are going to have a different impact on what happens in 2022.
Yes, you're absolutely right, particularly about the international borders reopening. Of course, we weren't talking about that last year, but let's talk about that because international borders reopening and rental levels, especially because when people start to really come into Australia in their numbers, they don't begin with buying a property. Traditionally, they'll go into the rental market.
And as a result, would we be expecting some really big growth in that rental area?
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Chapter 2: What market trends does Nerida Conisbee observe for 2022?
Yeah, absolutely. I mean, as you said, people, when they come to Australia, they rent before they buy. And last year, we did see very solid rental growth in many locations. It was partly to do with the fact that people were getting wealthier through the pandemic. We've seen it through ABS data that
Australians are the wealthiest they've ever been, but also because we had a lot of movement in Australia. So a lot of movement, particularly up to Southeast Queensland, which really pushed up rental levels. Rental levels for houses in Brisbane actually increased by about 20%. So we did see some really big pickups.
The areas though that struggled were those areas that did house a lot of overseas students. So if you have a look at somewhere like Melbourne CBD, we did see a fall in rents of in excess of 20%. Places like North Ryde in Sydney, Parramatta saw pretty big drops.
So what we are expecting this year that rents will continue to increase for houses, but we will also see a recovery in those unit rents, which have been particularly problematic for a lot of people that invest in apartments.
And Nerida, these first home buyers, they're going through a pretty emotional draining and taxing time, particularly with their energy levels. As house prices rise, the aspirational goal of owning your own backyard, a slice of section somewhere, gets further and further away. And I think a lot of first home buyers want that house with a bit of room to move outside.
But there is no doubt in this market, it requires very quick pivoting to secure a roof over your head. Have you got some numbers on different areas and the gap between the house pricing and the apartment market?
Yeah, look, we did have a look at that in our most recent property market update. So that's available on raywhite.com. But what we did, we had a look at what's been happening to house prices and unit prices. And in some areas now, very desirable areas, getting into the apartment market is actually quite affordable. So some really good examples include places like Hawthorne,
In Melbourne, you know, trying to buy a house in Hawthorne is pretty much well and truly out of reach for most first home buyers. But head into an apartment and you can get an apartment for around $600,000. So, you know, that's certainly in first home buyer territory. Even places like New Farm in Brisbane, you know, again, buying a house is pretty much out of reach.
An apartment is well under $700,000. And across in Sydney, Mossman in Sydney, buying a house is sitting at about $4.5 million median. Yeah. You know, you can certainly buy a unit for under a million dollars. So, you know, I think it is an important shift. I think first-home buyers do need to make if they want the amenity of some of our most expensive suburbs.
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Chapter 3: How will the reopening of international borders affect rental markets?
You get on the property ladder and once you hit retirement and once you're sitting at a much more aged position, you are in a vastly different financial position to someone that remains a renter.
And this whole exodus of people buying and shifting from larger cities to some of the outer areas, it really is now starting to show up in these regional areas. And if you take a Geelong, for instance, they're starting to go toe to toe in pricing with, say, Melbourne, which, gosh, a few years ago, you would never have thought that that would have ever happened.
Yeah, it's been fascinating. I mean, if you have a look at somewhere like the Illawarra now, Illawarra is getting very Sydney-like in its pricing. Geelong, as you said before, Gold Coast, Sunshine Coast are actually more expensive than Brisbane. The regional shift was one of the more fascinating parts or the fascinating things that happened during the pandemic.
We did see more people move to regional Australia than had ever been recorded. And it was interesting because over decades, we've seen government policy try to move people to regional areas, but it did take the pandemic to do it. So lots of people moved to the regions. A lot of areas that had never seen much price growth did start to move.
So it was partly people moving there because they were working differently. But we also saw very good conditions in mining, in the mining sector that pushed up prices in A lot of mining towns and also agriculture did really well. So there were a lot of towns in the Western Australian wheat belt, for example, that pretty much hadn't moved for a very long time.
But then we had these amazing wheat growing conditions and prices started to take off. So, you know, it is an interesting trend. I guess the thing that people do tend to ask now is, you know, are people going to move back? You know, we don't know. I mean, the people are getting called back into the office and living in regional areas. If you can't commute very easily...
back into that capital city, it does make it a little bit more tricky. But what I think we do need to keep in mind that even prior to the pandemic, places like Geelong were really starting to take off in terms of price growth. Getting to Geelong from Melbourne is, you know, it's about an hour's drive.
There has been an investment into a business study into getting a fast train, which would reduce the commute to half an hour.
head down to the Illawarra and you know again there's a train which you know for some people it would be quicker going from from Wollongong up to to Sydney than it would be from transfer you know traveling from from some of Sydney's western suburbs so so I think you know the regional trend was pretty extreme during the pandemic but you know I think we really have to remember that there was already a regional push prior to the pandemic that you know was taking place regardless.
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