Beware of National Property Value Data

  • Beware of National Property Value Data image

Lately, all we seem to hear is “national property values are going to crash 20%” or “worst month ever for national values”, but if you think about it, what the hell even are national values?

Yes we buy, sell and live in properties “in Australia”, but that’s the only thing each property has in common.

In reality, there is no such thing as one ‘Australian property market’. The country is actually full of thousands of micro markets, each presenting different opportunities and often at vastly different stages of their cycles. So here’s how to cut through the noise when investing.

Covid was the exception, not the norm

The property markets of Australia’s different capital cities and regional centres almost never move in unison.

Often, when Sydney is booming, Melbourne may be flat, or Perth may be experiencing value falls. These places are affected by different economic factors, which manifest in varying property conditions.

The exception to this was during two years of the Covid pandemic, where the RBA slashed rates all the way down to 0.1%, while the government propped up the economy with other stimulus packages. The record low interest rates sparked a nationwide growth boom for property values.

Everywhere saw a price growth cycle at the same time.

Likewise, when rates began getting hiked last year, markets everywhere softened and vacancy rates everywhere seemed to tighten.

Will it last?

Well, as the dust settles and rates are no longer the driving force behind markets, we are seeing different locations revert back to being affected by different economic factors.

Hayden Groves, the president of the Real Estate Institute of Australia, remarked to the media late last year that different markets have gone back to somewhere close to their conditions before Covid. Sydney and Melbourne are having a correction, southeast Qld is back to slow and steady growth after an initial rate rise shock and Adelaide is also back on track for single digit growth this year. Perth, he said, was emerging as one of the markets with some growing to do in the near future, having not enjoyed as much upside during Covid as the other capitals. 

Playing it smart

If you’re in Adelaide or Perth, you’re hardly in the same housing market as Sydney or Melbourne. And while “national values” might head backwards by 5-10%, your investment property might actually experience growth at that time. The equity you pick up in one market may give you an opportunity to capitalise on a bargain in a falling market.

The same applies for vacancy rates. People may hear the “national vacancy rate” is 1%, but inner city Melbourne might have a 2.8% rate, while Perth’s outskirts are looking at a 0.4% rate. If you assume it doesn’t matter where you invest because the market is tight everywhere, you can make a costly mistake. Another reason to get as granular and hyperlocal as you can when researching locations to invest.

Pockets of promise

Anyone who has spent much time following the philosophy of b Invested founder Nathan Birch will know that now is always a good time to invest, as long as you’re looking for the right opportunities. Whether the market is rising, falling, or flatlining, the key is to purchase a property for below market value, with strong rental income and upside for capital growth. That way, you make money on the way in, shore yourself up against risk and keep a healthy cashflow for further investment.

Buying for below market value gives you the added bonus of being able to refinance quickly for equity to use on your next deposit.

So forget the national market. It’s time to focus on the many opportunities of markets within markets, all around Australia.



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