Matt’s (OpenCorp CEO) Review of 82.4% Surge in Mapping the Market Report.
According to the interactive Mapping the Market Report, a staggering 82.4% of the 4,506 homes and unit suburbs analysed nationally witnessed a surge in values over the last three months. This robust growth, despite the backdrop of high interest rates and economic uncertainties, paints a compelling picture of the nation’s housing landscape.
But a good headline can be just as misleading as a negative headline, and it’s equally important to understand what is going on “behind the numbers” and make informed decisions, or otherwise risk falling into a trap. So here is our take on CoreLogic’s latest insights.
Diverse City Dynamics
While the article focuses on the fact that nearly all suburbs across Australia have seen positive growth, giving the impression that you can’t lose right now, CoreLogic’s broader findings highlight the diversity in Australia’s capital city markets, each moving at its own pace. Perth emerges as the strongest market, defying broader economic trends, while Hobart and Darwin show signs of plateauing or decline. Eliza Owen, CoreLogic’s Head of Research, acknowledged this diversity, noting, “Australia is not ‘one housing market,’ and we’re currently seeing increased diversity in capital city market performance.”
In Brisbane, a city that has been in the spotlight since winning the 2032 Olympic Games, the report indicates a remarkable performance. Each of the 162 unit markets analysed experienced value growth in the past three months. Among the 305 house markets, only four saw a quarterly decline, emphasizing the city’s overall strength. These fluctuations, particularly in higher-end suburbs and more affordable locations, underscore the importance of precise market analysis.
Perth has been a standout market, with only one suburb experiencing a mild decline of -0.2% in house values over the past three months. Remarkably, 98.1% of the house and unit markets across Perth rose in value, with 96.3% of suburb dwelling markets hitting record-high values by the end of October.
Sydney and Melbourne at Mid-Speed
Sydney and Melbourne exhibit city-wide capital growth rates of 2.5% and 1.2%, respectively, over the last three months. Owen notes the slowing pace of growth from the middle of the year and highlights specific markets driving growth in these cities.
Our expectation is that Sydney and Melbourne will “track sideways” in 2024, meaning that growth will dry up in many premium suburbs. The better-performing suburbs are likely to be the more affordable markets as the rental vacancy rates shrink further as a result of the high migration rates into these cities.
Future Outlook and OpenCorp’s Commitment
Looking ahead, CoreLogic’s data aligns with OpenCorp’s belief in the strong prospects for house price growth in the coming years. The critical undersupply of housing, coupled with high population growth and rising wages, indicates a promising trajectory for the property market. But picking winning suburbs and properties in 2024 will be a lot harder than it was in 2023 when markets recovered from a lacklustre performance in 2022.
We anticipate that the number of suburbs exhibiting capital growth will reduce in the last quarter of 2023 and into 2024, but there will be a number of suburbs that show accelerating growth rates. These suburbs will be found in cities with better affordability and low rental vacancy rates. Perth, Brisbane and Adelaide are likely to outperform once again.
It’s important to understand that not every suburb within these cities will see the same growth in the coming 12-24 months, and the ability to choose suburbs that will grow and perform well into the future requires an extensive amount of data analysis and research.
Investors who weren’t in the market this last year can’t turn back the clock to benefit from the growth reported by CoreLogic in 2023. Positioning for the future means understanding the fundamentals that will drive growth in the years ahead and buying in the right suburb, in the right market, at the right time.