Our cities and regions move differently through cycles
Headline values and trends are a helpful indicator of how the market is broadly moving over time. However, when you’re buying or selling, it’s important to remember that the national market doesn’t necessarily move in exactly the same way through cycles.
In general terms, there are several drivers of housing prices, including interest rates, income, supply and demand. The cash rate is the same across Australia, and one of the factors that influences home loan interest rates. However, regional supply and demand, as well as income growth, are not the same across Australia – contributing to differences in medium-term housing growth.
It follows that Australian capital cities move at different paces to each other, and there are often differences in how metropolitan and regional areas are behaving through a cycle.
This is where doing your research, and thoroughly understanding the market you’re operating in, is essential. It may also mean that when other larger or different markets are dropping, that your property isn’t as significantly impacted, creating cause for calm.
This lesson rings true for the current cycle also. For example, data from the first quarter of 2023 shows cities like Perth and Adelaide have been relatively insulated from pricing falls, such as those experienced in Sydney, due in part to their comparative affordability. At the time, values in Perth had fallen 1% from their peak in 2022, compared to Sydney which had fallen 13.9%.4