Episode Overview:

In this insightful episode of the Hotspotting podcast, Tim Graham sits down with Ben Kingsley, the Chair of the Property Investors Council of Australia (PICA), to discuss the vital role that property investors play in shaping the future of Australia's real estate market. Ben provides an in-depth look at the importance of the PIPA Annual Investor Sentiment Survey and how it captures the pulse of the property investment community.

Key Discussion Points:

Importance of the PIPA Survey: Ben highlights why the PIPA Annual Investor Sentiment Survey is a critical tool for understanding the mood, confidence, and key trends in the Australian property market. He explains how the survey data influences media and policymakers and why it’s crucial for all property investors to participate.

Advocacy through PICA:

Tim and Ben delve into the advocacy work that PICA does on behalf of property investors. Ben shares how PICA ensures that investors' voices are heard in important policy discussions and how membership in PICA can help protect and advance investors' interests in the face of changing regulations.

Membership Benefits: Ben outlines the many benefits of joining PICA, from staying informed about the latest changes in property law to networking with other like-minded investors. He also discusses how PICA members can access exclusive resources and support to enhance their investment journey.

Current Market Challenges:

The conversation also touches on the current challenges facing property investors, including new rental regulations and tax laws. Ben offers practical advice on how PICA membership can help navigate these complexities and safeguard investments.

Why You Should Listen:

Whether you're a seasoned property investor or just starting out, this episode is packed with valuable insights that will help you better understand the landscape of property investment in Australia. Learn how your participation in the PIPA survey can make a difference, and discover how PICA can support your investment goals.

Don’t miss out on the opportunity to have your say in the PIPA Annual Investor Sentiment Survey and consider joining PICA to ensure your voice is heard in the property investment community.

Visit Hotspotting.com.au for more resources and insights.

Complete the survey here: https://www.surveymonkey.com/survey-taken?sm=PXT61WAC1xL5N1S9IJePE1hAn4c6_2BrMhKsShimHkkmEzip1e9oEIwz8mVtE4BUS48EmEeTvIueOcJ2V9C91IGMteQ6VUOkZjAoyRp6M3rtZL2jIJEdiWCxXHtoDzsPg3MiLuyrYFEEQtWCQHMn_2F1xw_3D_3D

Join Pica here: https://pica.asn.au/membership/why-join/

There are two opposing story lines circulating in news media about Australian real estate ownership.

One story line, repeated regularly by media, is that the Great Australian Dream is dead and that young Australian adults can no longer afford to buy homes.

The other one, revealed whenever the Australian Bureau of Statistics releases official data on real estate finance, tends to suggest that the dream is very much alive – and indeed thriving.

In fact, the latest lending figures show major increases in buying activity by all types of real estate consumers, including first-home buyers.

Media loves negative sensation about housing affordability and very often the truth is optional.

Some organisations who crave publicity to lift the profile of their businesses regularly feed this weakness in news media by creating bogus reports about Australian housing affordability.

They do this, usually, by applying a set of parameters that are irrelevant and unrealistic.

Here’s a typical example: a so-called research organisation will create a report which examines how long it takes a young couple to save a 20% deposit to buy a house at the median price in Sydney or Melbourne.

Or how much a person needs to earn to achieve a loan for this.

Now, there are multiple reasons why this is a nonsense designed to create a headline rather than inform the public. These reports are full of furphies.

Furphy No.1 – you don’t need a 20% deposit. You can get into real estate ownership with a 10% deposit or even a 5% deposit.

Furphy No.2 – first-home buyers don’t buy at the median price in Sydney or Melbourne or anywhere else. They buy in the lower price ranges. The city median is irrelevant to the circumstances of young buyers and the issue of affordability.

Furphy No.3 – these reports always overlook attached dwellings as an option for buyers seeking affordability. In many capital city suburbs, the median price for units is half the median price for houses. But these bogus reports never speak about this viable, popular and more affordable option.

Why are these so-called research reports full of irrelevant and misleading information? Because the goal is NOT to inform people, or help people, or improve the situation for the community. The goal is always self-serving and dishonest – to create free publicity by generating alarm in the community.

And journalists are happy to recycle this nonsense as factual news.

In Sydney, the median house price is close to $1.5 million (according to CoreLogic) but that is irrelevant to people seeking affordability in our most expensive capital city.

What is considerably MORE relevant is how much it costs to buy a unit in the Canterbury-Bankstown area of Sydney, where there are plenty of viable options in multiple suburbs in the price range from $400,000 to $600,000.

Or what it costs to buy a house in more affordable parts of Greater Sydney, like the local government areas of Liverpool, Parramatta and Blacktown.

And of course there is the reality that over 20 million Australians live in places other than Sydney and the median house price in our most expensive city is utterly irrelevant to them.

How about some focus on what it costs to buy a house in the affordable northern suburbs of Adelaide, or an apartment in the inner-city Brisbane suburb of Bowen Hills, or in the inner-city Perth suburb of Belmont or a house in outer-ring areas of Greater Melbourne.

And what about regional Australia, which is attracting growing numbers of new residents relocating from the biggest cities in search of a different lifestyle, empowered by technology that allows more and more people to work remotely.

So, let me tell you, the home ownership dream is very much alive right across Australia.

How can I be so sure? Because the official lending data confirms it.

The latest stats from the ABS – which is for the month of June - shows we are currently seeing growing numbers of people buying homes as first-home buyers, other types of owner-occupier buyers and investors.

Lending for the purchase of homes rose 19% in June, compared to a year earlier.

In June lending to owner-occupier buyers was up 13% compared to a year earlier, with an even larger increase in loans to investors. There was also a rise in lending to first-home buyers, though not as large an increase.

It should be fairly self-evident that lending levels would not be rising, including for first-home buyers, if it was true that no one can afford to buy any more.

We have highly active property markets in most parts of Australia and buyers of all kinds are active.

So, next time you see one of those shallow media headlines declaring that the dream is dead and that young Australians are priced out of the market, don’t believe it.

The markets currently attracting our focus at Hotspotting are the ones we call “the second wind markets”.

These are locations which experienced strong capital from 2020 to 2022, have been in the post-boom pause/correction phase for the past 18 months or so, and are now poised for another period of price growth.

There are few better places to find second-wind markets than Regional Victoria, as many of the key centres have exhibited that pattern over the past 3-4 years and are now showing the early signs of revival.

Many of the suburbs of Ballarat are classic examples. The median house price for Sebastopol rose from $330,000 in 2020 to $475,000 by the end of 2022. There has been a price correction in the past 18 months but market activity is rising again and another period of price growth is expected.

Eaglehawk in Ballarat rose from $325,000 in mid-2020 to $520,000 in early 2023, before the price graph evened out over the following 12-18 months.

Bendigo displays similar patterns. The suburb of California Gully had a median house price of $300,000 in 2020, rising to $465,000 late in 2022. The price graph has flatlined since then, before showing the first signs of new growth in mid-2024.

Similarly, Flora Hill lifted its median house price from $255,000 in 2020 to $450,000 in early 2023 – but the price graph has been flat over the past 12 months. Now sales activity is rising again, which is a forward indicator of impending price growth.

Other markets in Regional Victoria have this pattern, which is a common one in real estate cycles with a period of strong growth followed by a period of correction or no growth, before the market embarks on the next growth cycle.

Shepparton, Traralgon, Mildura, Wodonga, Warrnambool and many other Victoria regional centres have this pattern.

They’re all places with solid local economies and credentials for future growth.

Most of them commonly have houses in the $400,000s and $500,000s, with low vacancy rates, so they present attractive features for property investors.