Houses vs units – Capital growth performance in capital cities and regions over the last 20 years and which locations have units outperformed houses and why? (Ep.169)

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In this week’s episode, Dave, Cate and Pete take you through:

1. Regional areas vs capital cities
Generally speaking, houses have outperformed units and capital cities have outperformed regional loctions. However this is not the end of the story. Capital cities suffer from greater fluctuation in prices. Which is an important reminder not to get too caught up in the short term. Will regional houses catch up with capital city units? Watch this space
2. Houses vs unit growth in our capital cities from March 2002 to December 2021
Which cities have been the winners and which city bucks the trend of houses outperforming units? Why is unit growth extremely low in Brisbane and Canberra? The trio sink their teeth into the data.
3. How have the Property Professor’s top suburbs performed?
Peter revisits the suburbs that he tipped to be top performers. Which ones have outpaced the growth of their city and how have units fared compared with houses?

1 Regional areas vs capital cities

  • Generally speaking – houses have outperformed units and capital cities have outperformed regionals 
  • More volatility for capitals, much more stable for regionals.  
  • Although combined capitals houses, it’s only if you’ve held it over the 30 years. If you’ve needed to sell, there’s greater likelihood that you could suffer greater loss because of that fluctuation.  
  • Don’t get too caught up in the short term. 
  • Everything was even until 97 – then started to have a divergence. Units trackinga long with regions up until 2007. Then capital units started to go above, but now they are just touching. Will they cross over? 

2 Houses vs unit growth in our capital cities from March 2002 to December 2021

  • Hobart – houses and units have outperformed other capital cities.  
  • Darwin bucks the trend – what do we put that down to – when you go to the finer grain data, the reason why median price for units outperforms prices, urban renewal or construction of new high rise apartments.  
  • Brisbane and Canberra extremely low growth for units.  
  • Canberra – you would think because Canberra property prices are second only to Sydney, more people more interested in buying units than houses. Salaries are higher in Canberra than other capitals. People are going for houses in Canberra, because their salaries allow them to do that. Canberra have the highest percentage of people with university degrees.  
  • There tends to be a lot of younger people in Canberra, go there to progress their career – 20 and 30 year olds.  
  • Especially in government or working with government.  
  • Canberra being a smaller town, even if living on the edges, only a 30 min drive to get to the city. Remote location but commute is very small.  

3 How have the Property Professor’s top suburbs performed?

  • When looking at the ata, it’s important to remember two things which could skew the view:
  • Urban renewal
  • Data integrity due to low sales volumes or brand new units released
  • Geelong – houses 89.5%
  • Units are in negative
  • In Melbourne houses that have outstripped 100% -gentrification
  • The units that have performed well – over 70% – due to Melbourne renewal
  • QLD
  • Units have dropped in value in Herston – there wasn’t much urban renewal. Showing what second hand units do over a long period of time
  • Urban renewal $500,000
  • Significant influx of well speced up, median to high density, worth $700,000, that reflects a growth in unit value so it distorts the numbers to suggest that there has been capital growth. 
  • Albion, Annerley and Woody point – 
  • Darwin’s performance over the last 12 years has not been great, that’s been reflected in the property prices. Comparing with Darwin, they did well, but nationally they have not done well.
  • Sydney more demand for units than any of the other capital cities.  

 

Gold Nuggets

David Johnston – The Property Planner’s Golden nugget: houses outperform units from a capital growth perspective, which has been a trend in play for 15 years. 15 years ago, growth was strong and comparable compared to houses. But that has separated over the last 15 years and sped up due to covid. People want a bigger house. Yields are greater on units, ave yield, for all capitals is about 1% greater than houses. If your strategy is more driven by cash flow, units provide that opportunity. 

Peter Koulizos – The Property Professor’s Golden nugget: if you’re looking for capital growth, nationally, statewise and suburbwise, by andlarge houses outperform units. But you need to pick the right type of property, in the right street, in the right suburb, in the right city?

Market Updates

  1. US not slowing down with rate rises

In the US, the Fed Chairman spoke with some strong words about not making the same mistakes as in the 70’s, with taming inflation and will go as hard as they need to with rate increases. There was some talk bubbling that the US will slow down with rate rises, but that’s been sidelined and the share markets have responded. Other Western nations tend to follow the US fed, so there could be more pain ahead in terms of rate rises than markets had expected in the last month or two.  

  1. Auction volumes – Melbourne

As we come close to the grand final public holiday, auction volumes are tending to slow down as vendors don’t like to sell on the long-weekend. Activity is expected to ramp up and get hefty in October. But watch this space, we may be in for a super Saturday on the 17th of September.  

  1. All major capitals are heading in the same direction (down)

Looking at day on day change, all capitals are now on the downward swing. But this is normal for the property market. Looking back over the last 30 years, ups and downs are par for the course.  

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