Building Approvals - Fewer Bananas Bigger The Opportunity!

In March 2015 APRA commenced its illogical attack on property supply. In the charts below show the impact. This, in turn, shows opportunity. In the Club, you know when there is a shortage of bananas, but a rising population the price must go up. It's a good thing no one told APRA!

New South Wales

Sydney is clearly a unit city with the volumes way greater than houses. You can see that from January 2012 the supply rose quite rapidly in response to rising prices from a previous supply shortage. This should have continued creating an oversupply which would have stagnated the prices as happened in Sydney in 2005. However, now you can see despite the rising population, supply has fallen from July 2016 to January 2018. Opportunity.

Victoria

Melbourne is still more a house city rather than units compared to Sydney. We again see the rising supply between 2012 - 2015 which was cut off by APRA with only a recent uptick over the last 12 months. This re-negated it. This is the huge supply of inner-city units.

Avoiding these, you can still see good opportunities across Melbourne with its huge 3.5% population increase against the national average of 1.6%. Again stock selection is critical and why our Researchers work so hard.

Queensland

In 2012 you can see Qld was predominantly a house state and supply since then has not increased greatly. There has been a dramatic increase in supply through to 2016 which caused prices to stagnate particularly in Brisbane. From this high point of supply, unit, and townhouses has dropped off quite sharply. Opportunity.

Again, micro research is required. We've isolated 2 areas that have population growing and double the national average gobbling up all the bananas. Already this has had a huge impact on the rental market and prices.

South Australia

Supply of houses has been pretty static for houses. The unit and townhouse market though has seen a fair bit of supply come in versus 2012. This has flatlined to falling over the last 2 years. Again a market that needs micro research with a concentration on where rents are rising.

Western Australia

Housing still dominates dwelling demand here. From 2012 good supply came into the market from units, townhouses and houses peaking in January 2015. This oversupply we picked and led to dropping in rents and prices. The good news for investors was twofold. Firstly, we are in it for the long haul and we expect these peaks and troughs as the market rises and falls. We know long-term properties double. With normal inflation, it was 7 - 10 years and now with low inflation, it is now 10 - 12 years.

The supply of unit has now fallen closer to the supply of houses. This is an exciting market and has almost reached its bottom and I think within 12 - 18 months we'll see rising rents and rising prices.

All markets require intensive research to avoid the traps that 90% of the investors fall into. The wrong suburb, wrong funding, wrong construction, wrong type of dwelling and the wrong letting agent. That's why we started the Property Club the only organisation that helps buyers, not sellers.

Regards

KY