Our good friends at CoreLogic released a brief report yesterday on the best and worst performing local government areas in Australia over the past two decades. Of the 25 best performing, 17 were in Victoria. At an average of 10% per annum, price growth in these regions was close to twice the combined capital city figure. Click here for a link to the report.
Although history isn’t necessarily an indicator of future performance (I completely understand I sound like an ad for superannuation), I thought I’d do a bit of digging to see what these regions had in common. Here’s what I found:
- Population Growth
In a sample* of the Melbourne regions on the list, population growth was on average 20% higher per annum than the Greater Melbourne figure. Population growth places demand side pressure on housing which, all else equal, has a positive effect on prices.
- Affordability is King
There is a notable absence of affluent regions (median prices above $2 million) on the list. Strained affordability has a tendency to constrain growth. That’s largely the reason why the upper quartile of house prices has historically underperformed compared to quartiles two and three. Of course, affordability is not the singular driver for capital growth, but rather must coincide with a strong jobs market and population growth.
- Gentrification
Demographic and economic evolution is a notable trait of the over-achieving property markets on the list. Our sample of regions have had higher rates of income, regional product and employment growth than the capital city average.
Hindsight is indeed 20/20, but you’d be surprised by the clarity research and education provide.
*Whitehorse, Glen Eira, Maribyrnong, Yarra, Bayside and Darebin
