Covid-19 vs Property: How Australians are achieving record wealth despite the global pandemic

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R P C O R EVEA RO D LED PE G R : RT O YO W WN T H ER S FO

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Covid-19 vs

Property How Australians are achieving record wealth despite the global pandemic.

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Disclaimer: Information contained herein is gathered from sources we deem to be reliable however warrant no guarantee as to the accuracy of third party data. It is not intended as legal, financial or investment advice and should not be construed or relied on as such. Before making any commitment of a legal or financial nature you should seek advice from a qualified and registered legal practitioner or financial or investment adviser. All rights reserved.

August 2021

Welcome Thank you for reading this report.

Freedom Property Investors is not a property company. We are a community of investors accessing the hidden market of positive cash-flow properties located in high growth locations across Australia.

Led by Scott Kuru and Lianna Pan, two of Australia’s most successful property investors, we aim to provide our members with investment properties that outperform market averages for both capital growth and rental yield.

Lianna Pan is one of only 3,000 qualified Actuaries in the country, and together we have perfected a detailed methodology

covering all fundamental aspects affecting the residential property market. Spending tens of thousands of dollars on our research, we also employ a full-time research team with access to property specific data not easily accessible to the everyday investor.

Utilising a wide team of hundreds of experts around Australia, we work toward a common goal of helping create financial freedom for our members through property.

We hope you enjoy this report and we look forward to helping you leverage our data insights to achieve your financial freedom.

Lianna Pan

Scott Kuru

Founder & Director of Research

Founder & CEO

While many states once again embrace life in lockdown, the Australian property market continues to prove its steadfast resilience, revealing a new window of opportunity for homeowners and property investors alike with Freedom.

June yet again saw the housing market continue its astonishing growth, with national dwelling values increasing 1.9% (approximately $11,100), and finishing the financial year with a growth rate of 13.5% – the highest annual rate of growth since 2004.

Despite these gains, we are starting to see signs that some markets may be beginning to cool. Investors in this instance could be afforded yet another valuable opportunity to take advantage of economic uncertainty to create and grow a profitable property portfolio.

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Covid-19 vs Property

Change in Dwelling Values as at June 30, 2021 Month

Quarter

Annual

Total Return

Median Value

Sydney

2.6%

8.2%

15.0%

17.8%

$994,298

Melbourne

1.5%

4.6%

7.7%

10.7%

$753,100

Brisbane

1.9%

5.7%

13.2%

17.9%

$586,142

Adelaide

1.6%

5.6%

13.9%

18.5%

$508,712

Perth

0.2%

2.1%

9.8%

14.7%

$526,166

Hobart

3.0%

7.4%

19.6%

25.3%

$607,960

Darwin

0.8%

6.3%

21.0%

27.6%

$475,083

Canberra

2.3%

6.1%

18.1%

22.5%

$770,873

Combined capitals

1.9%

6.2%

12.4%

15.9%

$727,427

Combined regional

2.0%

6.0%

17.7%

23.1%

$478,212

National

1.9%

6.1%

13.5%

17.3%

$645,454

Source: CoreLogic

Covid-19 vs Property

05

Month change

May-2021

Jun-2021

MoM change (pp)

Sydney

3.0%

2.6%

-0.4

Melbourne

1.8%

1.5%

-0.3

Brisbane

2.0%

1.9%

-0.1

Adelaide

1.9%

1.6%

-0.3

Perth

1.1%

0.2%

-0.9

Hobart

3.2%

3.0%

-0.2

Darwin

2.7%

0.8%

-1.9

Canberra

1.7%

2.3%

0.6

Combined capitals

2.3%

1.9%

-0.4

Combined regional

2.0%

2.0%

0.0

National

2.2%

1.9%

-0.3

Source: CoreLogic

Regional markets continue to be a standout performer throughout 2021, with many buyers now considering these areas as more and more businesses transition staff to remote operations. The combined regional markets over June recorded the same rate of growth from the previous month at 2.0%, while the combined capital city market slowed from the previous month to 1.9%.

Looking broadly, there are signs now of a divergence in growth patterns between individual capital cities.

For example, Darwin, which recorded an annual growth rate of 21%, is now showing some indication of a slow down. After having achieved one of the most impressive market turnarounds this year, Darwin had a monthly growth rate of only 0.8% in June which was down 1.9 percentage points from the previous month.

06

Covid-19 vs Property

Canberra, on the other hand, was the only capital city recording a monthly growth rate in June, sitting at 2.3% and up 0.6 percentage points compared to May. Canberra is one of the Freedom Property Investors locations to watch and you can read more about our top five regions that should be on every investor’s radar here.

While the national growth rate in June at 1.9% is down from the recording-breaking peaks of early 2021, the latest growth rate figures are still relatively high, and translates into significant wealth creation for property owners.

Monthly Change in Dwelling Values – Capital Cities vs Regional Monthly Change in Dwelling Values – Capital Cities vs Regional Combined Regional Combined Capitals Combined Regional

Combined Capitals

3.0% 2.6% 2.2% 1.8% 1.4% 1.0% 0.6% 0.2% -0.2% -0.6%

20 n-

Ju

-2 ay

21

1 02

1 M

-2

02

1 Ap r

ar

-2

02

1 M

Fe b

-2

02

21 20 n-

Ja

02 -2 ec

D

N

ov

-2

02

0

0

0 02

O ct -2

Se p

-2

02

0

0 02 -2

0

Au g

02 l-2

Ju

Ju

n-

20

20

-1.0%

Source: CoreLogic

Monthly Growth Rate of National Dwelling Values Monthly Growth Rate of National Dwelling Values

3.00%

2.00%

1.00%

0.00%

-2.00%

Jun-2018 Jul-2018 Aug-2018 Sep-2018 Oct-2018 Nov-2018 Dec-2018 Jan-2019 Feb-2019 Mar-2019 Apr-2019 May-2019 Jun-2019 Jul-2019 Aug-2019 Sep-2019 Oct-2019 Nov-2019 Dec-2019 Jan-2020 Feb-2020 Mar-2020 Apr-2020 May-2020 Jun-2020 Jul-2020 Aug-2020 Sep-2020 Oct-2020 Nov-2020 Dec-2020 Jan-2021 Feb-2021 Mar-2021 Apr-2021 May-2021 Jun-2021

-1.00%

Source: CoreLogic

Covid-19 vs Property

07

In order to gain a clear future perspective while assessing areas for their investment potential, we look at market indicators such as how much stock is on the market, as well as asking prices and vacancy rates.

With national stock levels continuing to fall, the total number of listings in June was recorded as 30% below the 3-year average. This is equal to around 70,000 fewer property listings on the market across the country.

When areas experience a lower supply of stock, it will often put upwards pressure on asking prices, and we are seeing this nationally with the average asking price (recorded weekly) up 13.2% year-on-year, or around $82,000.

In the investor space, the national vacancy rate fell 0.1 percentage points to 1.8%, a level not seen since 2012. Vacancy rates of around 1.8% is equivalent to approximately 11,500 fewer rental properties available when compared to the 3-year average.

National Stock on Market National Stock on Market

Total Stock on Market

3-year Avg

Total Stock on Market

3-year Avg.

Total property listings

400,000

300,000

200,000

Source: SQM Research

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Covid-19 vs Property

Jun-2021

Dec-2020

Jun-2020

Dec-2019

Jun-2019

Dec-2018

Jun-2018

100,000

Monthly Growth ofAsking National Values National Rate Average Price –Dwelling Houses $700,000

Average Asking Price

$650,000

$600,000

$550,000

4/29/2021

2/1/2021

11/8/2020

8/15/2020

5/29/2020

3/1/2020

12/8/2019

9/15/2019

6/22/2019

4/1/2019

1/8/2019

10/15/2018

$500,000

: e S c or u Q M S R e s c a r h

National Vacancy Vacancy Rate National Rate l a n o c y i ta N V e t a R

National Vacancy Rate

3-year 3-raey gv A Avg.

3.0 2.9 2.8 2.7 2.6 2.4 2.3 2.2 2.1 2.0 1.9 1.8 1.7

May-2021

Feb-2021

Nov-2020

Aug-2020

May-2020

Feb-2020

Nov-2019

Aug-2019

May-2019

Feb-2019

Nov-2018

1.5

Aug-2018

1.6 May-2018

Vacancy Rate (%)

2.5

: e S c or u Q M S R e s c a r h

Covid-19 vs Property

09

National Average Weekly Rent for Houses National Average Weekly Rent for Houses

550

Weekly Rent ($)

500

450

400

350

8

01

5/2

7/1

8

01

5/2

/1 10

9

01

5/2

1/1

9

01

5/2

4/1

9

01

5/2

7/1

9

01

2/2

/2 10

0

02

2/2

1/2

0

02

2/2

4/2

0

02

2/2

7/2

0

02

2/2

/2 10

1

02

2/2

1/2

1

02

2/2

4/2

Source: QMS Research

New New Loan Commitments, Housing (excl.

Refinance) Loan Commitments, Housing (excl.

Refinance) oT talTotal

w O Owner ner c OOccupiers cupiers

InvestorsInvestors

40

$ billions

30

20

10

3-May 3-Nov 4-May 4-Nov 5-May 5-Nov 6-May 6-Nov 7-May 7-Nov 8-May 8-Nov 9-May 9-Nov 10-May 10-Nov 11-May 11-Nov 12-May 12-Nov 13-May 13-Nov 14-May 14-Nov 15-May 15-Nov 16-May 16-Nov 17-May 17-Nov 18-May 18-Nov 19-May 19-Nov 20-May 20-Nov 21-May

0

Source: ABS, Finance, e L nding Indications, May 2021

10

Covid-19 vs Property

Similarly, a decrease in the supply of rental housing puts upwards pressure on rents, and the national average weekly rent for houses is up 15% year-onyear, or approx. $67 per week.

Buyer demand can best be gauged through how many are seeking finance to purchase a property. In the latest data from the ABS, new loan commitments (excl. refinance) posted another record of $32.56 billion in the month of May 2021. This shows that buyer confidence has been rapidly increasing since the last half of 2020, in line with those taking advantage of various government incentives and attractively low interest rates.

Lending to owner occupiers remains high with $23.44 billion in new lending for May, which is a month-onmonth increase of 1.9%, highlighting that the current growth in the real estate market is primarily driven

Australian households rose $518 billion in the March quarter of 2021, reaching a record $12.664 trillion.

Interestingly, 84% of that wealth ($434.6 billion) came from real estate, which serves to highlight the importance of property in wealth creation. You can read more about this here.

At Freedom Property Investors, we have perfected a detailed methodology that enables us to accurately predict which markets are poised for exponential growth.

Over the last decade we have helped thousands of everyday Australians achieve wealth and freedom through property. Being one of the largest communities of investors in Australia enables our members to benefit from our safe, strategic and data-driven approach to property investing.

by owner occupiers. Investor lending is also on the rise, with a significant month-on-month increase of 13.3% for a total of $9.13 billion in new loans to property investors.

To review your current position and future goals and discuss with you what your options look like, get in touch with our team today.

This incredible run of the property market, along with the likely continuation of growth in the near future, is creating significant wealth for property owners. In the latest ABS data for household net worth, the wealth of

Contact our friendly team today:

$518 Billion Total wealth created in the March quarter 2021

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84%

Land & Dwellings

5%

Shares & Equity

15%

Superannuation

3%

Currency & Deposits

Source: ABS, National Accounts, Finance and Wealth, a M rch 2021

Covid-19 vs Property

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1300 766 791 contactus@freedompropertyinvestors.com.au

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