» Australian Employment

Research reveals new housing demand hotspots

Simon Pressley — Wed, 07 Mar 2018 01:02:54 +0000

Contrary to general belief, population growth is not the biggest influence on property prices – far from it, in fact. There are a range of factors that influence the demand side of the property price equation. Aside from affordability, the biggest influence is economic conditions. Jobs. Jobs. Jobs! Propertyology’s recent analysis of national job data for the 2017 calendar year concluded that numerous locations across regional Australia may soon see considerable strength build in their property markets. In alphabetical order, Albury, Armidale, Ballarat, Ballina, Bowral, Cairns, Coffs Harbour, Dubbo, Mackay, Muswellbrook, Port Macquarie, Townsville, Warragul and Warrnambool are likely to see increased market activity over the coming year or two. A marked improvement in local economic conditions was a key driver that transformed 2011-12 property price declines in Sydney and Melbourne into boom markets over the last four years. Similarly, it’s not that long ago that Tasmania was in recession but the remarkable turnaround in its economy now sees Hobart as Australia’s hottest property market by a country mile. Sustained job growth within a community puts more money in people’s pockets, attracts new people to a region and boosts local confidence. It increases the chances of renters becoming home owners, provides home owners with confidence to renovate, increases demand for local goods and services, and gets more people at open homes. Tracking trends of job volumes is a more reliable measurement of the direction a localised economy is heading in, rather than looking at isolated unemployment rate. At a capital city level, Melbourne (10 per cent), Hobart (there it is again ~ 9.8 per cent), Canberra (8.7 per cent) have produced the largest increases in jobs over the last two years. While the measurement of job volumes is far from the only metric that Propertyology look at, it’s no coincidence that these numbers correlate with property market performance. While Brisbane is (finally) producing some encouraging employment data, inner-city jobs continue to reflect the post-mining boom pinch. The miserable 1.9 per cent increase in CBD jobs over the last two years is not the only disappointing data. CBRE recently reported that commercial office vacancy rates were 16.2 per cent (in other words, one in six Brisbane offices is empty). The significant number of regional locations that have produced rates of job growth above the two-year national average of 6.6 per cent is reflecting strong regional tourism, a very exciting outlook for Australian agriculture, advanced manufacturing (especially food-related), some good infrastructure projects, and a rebound in (parts of) the mining sector. The strong growth in retail, accommodation and food, and arts and recreation jobs reflect the sustained strength of Australian tourism. From 5 million international visitors in 2008, Australia is on target for 10 million by 2020. But, it’s more than the traditional holiday hot-spots of Sydney, Melbourne, Brisbane and the Gold Coast that people are now visiting. With more affordable airfares and a significant increase in destinations that now offer direct flights within one or two hours, tourists are exploring alternative attractions throughout Tasmania and mainland regional Australia. The continuous extra demand from international and domestic tourists is creating new jobs in great cities like Cairns (tropical wonderland), Dubbo (Western Plains Zoo), Orange and Armidale (foodie experiences), Bendigo and Ballarat (our gold rush heritage), and regional Tasmania (because, well, it is God’s country!). If Queensland can ever get its act together with a serious tourism campaign, the state with more tourist attractions than any other has the potential to set economic records. And, when the cash registers start ringing again, Queensland’s affordable housing and desirable lifestyle will drag interstate migration well above 20,000 per year. That’s one of the most sustainable growth drivers that any property market could wish for. April’s Commonwealth Games is just a short sugar fix; the state still lacks a long-term tourism strategic plan. While growth in jobs for regional Australia is well overdue, the 2017 data just supports the trends that Propertyology flagged a few years ago and has influenced our decision on a few locations across that our buyer’s agents are helping people invest in. Aside from Australian tourism, the millions of extra people entering the middle class each month during the Asian Century have an enormous attraction to our produce. This nation that was first built off the sheep’s back is now Asia’s food bowl. Universities have recently experienced an unprecedented increase in agriculture-related degrees. And new manufacturing jobs are being created by food processing businesses such as abattoirs, cheese factories, and wine making. Renewable energy is a fast-emerging sector that benefits regional economies more than capital cities. Household budget pressures and environmental pressures are the trigger for billions of dollars already being invested in job-creating wind, solar and battery projects across this vast country. 2017 was one of the strongest years for job growth in Australian history, with a 5.7 per cent increase in volumes for the year. And it wasn’t a year in isolation – total jobs in Australia for the last two calendar years have increased by 6.6 per cent. Closer analysis of ABS data shows that the industry sectors which produced the largest rates of employment growth in 2017 were health (104,317), construction (100,664), retail (60,064), education (40,991), accommodation and food (36,485), and agriculture (28,901). A 2017 net job loss occurred in manufacturing (85,060), admin and support (28,698), public admin and safety (27,433), and mining (4,688). One would assume that a significant portion of manufacturing job losses in 2017 related to Toyota and Holden plant closures (Adelaide and Melbourne) late last year. The health sector is Australia’s biggest direct employer (13.3 per cent of all jobs). The recent growth in the health sector is indicative of our aging population combined with the rollout of new positions under the NDIS program. Propertyology believes that Australia’s construction industry (the backbone of our economy) is now at an interesting cross road. Completion of the mining construction boom in 2012-13 resulted in large volumes of workers in this sector being redeployed to new residential […]

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Demand for employment equates to demand for shelter

Simon Pressley — Mon, 26 Oct 2015 04:57:34 +0000

Employment trends can be a precursor to property market trends. Having spent much of the last week analysing the latest employment data for locations right across Australia, Propertyology found some interesting discoveries which might shape property market performance over the next year or two. At a base level knowledge of becoming an astute property investor is recognising that property is shelter. Wherever there is demand for a job there is demand for shelter. It is thereby logical to expect that wherever there is demand for more jobs in the future there will be demand for more shelter. Actual job numbers (as opposed to unemployment rates), drilling down to individual cities (as opposed to generic state data), and observing data trends over a time series provide us with interesting insight in to probable future performance of property markets. There can often be a lag of 12-18 months before what’s occurring on the jobs front produces a material impact in real property data. In addition to economic development (jobs), the factors which have the biggest influence on property prices are affordability, sentiment, and supply. At a national jobs level, the data paints a much rosier picture than what the doomsayers elect to report. After creating a meagre 12,849 extra jobs during 2013, a credible 389,518 jobs were created during the 2014 calendar year. This has been backed up this year with 239,765 new jobs for the eight months to August (annualised 359,647). There has been an increase in total Australian jobs over the two years to August 2015 of 3%. Against this national benchmark, it would surprise few to learn that New South Wales has outperformed with a 4.0% increase in jobs over the last two years. On the back of a raft of positive economic news over the last couple of years, Tasmania was easily the best performed state with a 5.5% increase in jobs growth. Northern Territory (4.1%) was the other state/territory to bat above the average. After a strong job recovery year in 2014, Brisbane had a sluggish start to 2015 however, figures from the last few months suggest that momentum might be back. Propertyology’s forward estimate for Brisbane is for a steady performance although there is nothing suggesting that a boom is on the immediate horizon.When we drill down to individual cities, with a respective 21.4% and 19.5% of the nation’s total workforce, Sydney (4.3%) and Melbourne (4.5%) have both produced strong job growth. It is absolutely no coincidence that property markets in Australia’s two largest cities have been strong over the last few years. With a 3.8% increase in jobs over the two years to August 2015, Hobart was the third best performed capital city. Darwin produced the biggest jobs growth of Australia’s eight capital cities with an 8.3% increase over the last two years. It is worth noting that much of this growth occurred during first half of this period and Propertyology’s research suggests that the trend could be reversed in the next year or so when construction on the Ichthys LNG project finishes. Perth (2.4% growth) and Adelaide (0.8%) were both below the national benchmark while Canberra has 2.2% less jobs now than two years ago. The truly astute property investors don’t have the blinkers on and they recognise that 8 million Australians elect to live and work in alternative locations to capital cities. There are some really interesting job numbers unfolding in regional cities. Oh, and for those who missed the memo, housing is much more affordable in these locations. In New South Wales, Coffs Harbour (13.8%), Central Coast (12%), Illawarra (8.7%), the Mid-North Coast (8.0%) and Richmond/Tweed (5.0%) have all been superior to the State’s capital. If you think these are impressive numbers, the biggest jobs growth in all of Australia over the last two years was in the Orana region with a 32.6% increase. With 5.6% more jobs now than two years ago, the Hume region has been Victoria’s biggest improver. Most of regional Victoria is struggling though, with a decline in total job numbers over the last two years in the North West (19.2%), Bendigo (12.6%), Geelong (10.9%) and Ballarat (2.9%). In Tasmania’s North West zone, which includes Burnie and Devonport, there was a 16.7% increase in jobs while the North East (Launceston) has increased by 4.6%. Go Tassie! Queensland has produced mixed results. As forecast by Propertyology at the start of this year, the Gold Coast economy is very strong – there’s been a 15% increase in jobs – boom! Ipswich (8.2%), Moreton Bay North and Wide Bay (both 7.7%) have also been solid improvers. A decline in total jobs has occurred in Mackay (9.7%), Logan (9.4%), and Townsville (7.1%). It won’t surprise anyone that job losses have occurred in Western Australia’s Pilbara and Kimberly regions; Perth (where thousands of mining administration jobs are based) has also felt the brunt. But, WA is a big state and it’s not entirely about iron ore and gas. In the state’s south, tourism and agriculture have been drivers behind 13% jobs growth in Bunbury.

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