A message from the CEO

Price relativity between property types and locations can be an interesting indicator when discussing national property market performance. Comparing one datapoint to another is something that analysts do constantly of course, but this year it’s the broader concept of relativity that’s being tested across Australia and, as a measure,  it has some potency as a predictive tool.

For example, relative price movements between our major capital cities tell the story of rebalancing markets in post-covid Australia. One recent report, for instance, reveals that Brisbane and Melbourne are running at parity on house price for the first time in around 15 years. 

While there are many drivers of property price, it’s likely Victoria’s economic challenges along with Queensland’s high net interstate migration are manifesting in this distortion of long-term relative property prices. 

Of course, price differential can be a lead indicator of opportunity too. For example, a quick look at this month’s national property clocks for houses and units show Melbourne positioned in the Rising Market sector.

But relativity measures aren’t restricted to geography. They can be applied to other delineations too, such as property types within localities. 

For instance, there have been recent reports about the surge in apartment price growth, with some jurisdictions even seeing units gain value faster than detached houses. 

This is a reversal of a long-held belief among some commentators that houses will always outperform units for capital gain in each market. I suspect that the desire to enjoy more space during COVID-19 lockdowns resulted in the house vs unit differential widening. 

However, we now see this growth gap narrow as limited unit supply, rising rents, affordability challenges and the return to city living from the regions increase the demand for units. I believe we could be in the throes of the apartment rebound with prices recovering back to long term norms rather than being actively driven higher by economic levers and buyer sentiment about the market.

The relativity discussion extends to the commercial sector as well. In this month’s submissions on the office markets, generous incentives for Prime and A-Grade space are attracting tenants back to the nation’s CBDs. 

As such, B-Grade office stock on the fringe and in the suburbs is languishing. I can’t help but wonder if in the middle of this housing crisis we might see more of this secondary office space repurposed to the relatively lucrative residential market?

Finally, in our rural section this month, we have a study on Australian cotton production and the drivers compelling property values in this foundational sector. As you’ll see, consolidation of broadacre holdings across the nation is having a marked impact on market outcomes.

Please enjoy our May edition of Month In Review.

Gary Brinkworth

CEO