Largest falls and greatest gains in property values around the country

A quick update on where the largest declines in residential property values have been experienced and where the largest capital gains have been recorded across the country.

The bar charts below show the top 30 statistical divisions nationally for the largest ‘peak to current’ decline in dwelling values (ie change in house and unit value from their respective market peak through to the end of May 2013) and the largest annual capital gains over the past five years (based on compounding growth rate).

The largest corrections have clearly been recorded across the coastal and lifestyle markets;  more particularly the largest declines are most concentrated across unit dwellings within these regions.  There are a variety of factors that have caused values to fall substantially in these areas:

  • Unit dwellings within the lifestyle regions generally show a larger proportion of investor owners and holiday home / second home owners.  In times of financial distress, the investment property or second home will often be the first to be divested.  A large number of properties were added to the market in these areas at a time when buyer demand was virtually non existent.
  • Additionally, unit dwellings within these markets are often more reliant on short term holiday rentals or long term rental demand from service workers associated with the tourism and retail sectors, both of which have shown weakness post GFC.
  • These markets were prime beneficiaries of the ‘sea change’ phenomenon where retirees or prospective retirees were driving migration and housing demand in these locations.  I would expect that this trend (and hence housing demand) has slowed substantially as many retirees and prospective retirees look to rebuild their wealth post GFC before embarking on their sea change.
  • There’s also the fact that most of these markets recorded a strong run up in values pre-2008 and were arguably overvalued.

Where's the pain

For those individuals who have aspired to own a holiday home or relocate to one of these lifestyle markets the buying opportunities are now looking much more affordable than they were back in 2007.

The largest gains have generally been recorded across regional markets around the country, particularly those associated with the mining sector.  The Pilbara region of Western Australia stands out as recording the highest rate of capital gain at 19.8% per annum over the past five years.  This is clearly a spectacular return, however many of these mining regions are now showing a substantial slowdown in buyer demand as the resources sector transitions out of a very strong phase of infrastructure investment and growth.
Where's the gain

About Tim Lawless

Tim heads up the RP Data research and analytics team, analysing real estate markets, demographics and economic trends across Australia

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13 Responses to Largest falls and greatest gains in property values around the country

  1. Richard Locke June 14, 2013 at 2:45 pm #

    Imagine this is from the peak of 2008 until now. I speak for the Sunshine Coast where I work and can assure you the drop has been much more than minus 5.7% for houses and -14.2% for units. The medians are a guide but don’t tell the whole story as we know and yet so much dependance is placed on this methodology.
    Be interesting to compare the land sales as this gives a better picture, property is often improved land is not.

    • Tim Lawless June 14, 2013 at 7:46 pm #

      Hi Richard, thanks for your observations. The data in the blog is based on our hedonic index movements for each statistical division across the country, not median prices, but I take your point; local conditions where you work have certainly shown a larger decline than the broader Sunshine Coast region. Your offices are situated in Noosa which has seen a larger downturn than most other areas on the Sunshine Coast. I have owned some properties there and have seen the downturn first hand. The Sunshine Coast region, which is based on the statistical division boundary, extends from Caloundra (Beerburrum is the southern most suburb) through to Noosa (Kin Kin, Como and the Noosa Northshore are the northern most suburbs) and west to include the Hinterland suburbs all the way out to Kenilworth. It’s a massive area with a range of performances.

      Looking at land prices on the Sunshine Coast, we have seen a 9.7% fall in prices from the market peak. Considering there has been a reduction in the average block size, the median rate/sqm for land sales on the Sunshine Coast has fallen a more substantial 17.5% from the market peak.

  2. Les Unferdorben June 14, 2013 at 5:02 pm #

    Thanks for the data Tim. Whilst I do agree in general and your comments are on the money, I think the data in growth corridors really needs to separate brand new properties from older properties as new properties are often more expensive than older comparable homes and some areas are experiencing substantial growth corridors of new properties. For example, a new home in Adelaide’s northern suburbs may sell for 300k to 350k and an older comparable home for 230k to 280k. And as there are a lot of new homes being built and sold, that would increase the medium price when bundled together. When in fact the older homes have been selling at discounted prices since the GFC. In fact, an over supply of new homes means property prices will not normally increase more than CPI, sometimes even decrease until demand catches up. And property valuers are valuing these new properties under the purchase price. It can be as simple as this, if demand is greater than supply, prices go up. If supply is greater than demand, prices go down. What affects supply and demand in any area is what needs to be researched and considered as all areas are different. Employment, infrastructure, population growth, demographics and rental yield. I am wondering if it’s possible to separate the data into broader areas such as new vs old, other than just houses vs units to give a wider picture of different markets within markets?

    • Tim Lawless June 14, 2013 at 7:53 pm #

      Hi Les, thanks for your comments. We have looked at the difference in performance between new homes and established homes in the past – an you are right, there is a substantial difference in price (note our methodology isn’t based on median prices though – the figures in the blog post are taken from our hedonic regression method developed in conjunction with Rismark). Considering new home sales arent flagged by the state government, we build some simple logic into our database to identify new sales: basically, if we haven’t observed a transaction on a particular property previously in our database, which generally extends back to 1980 and earlier for some regions, then we consider the transaction to be either new or a home that has been held for a long period. Stay tuned and we will publish some further research on the difference between new and established pricing when we have time.

  3. confused June 14, 2013 at 5:54 pm #

    First chart: “Yorke and Lower North, SA (houses)” -5.2%
    Second chart: “Yorke and Lower North, SA (houses)” +6.5%

    • Tim Lawless June 14, 2013 at 8:06 pm #

      Thanks Confused. The two graphs are measuring different time periods; it’s possible for a region to have a strong rate of growth over the five year period and also have a large decline from peak. Looking at the decline from peak (the market peak was in January 2012), values have fallen by 5.2% through to April 2013. The earlier growth phase has provided a strong annual return over a longer period. The York & Lower North index recorded an annual growth rate of 10.4% between April 2008 and January 2012 when the market peaked.

      • Pete June 27, 2013 at 10:42 am #

        Still confused. What is the time period of the first graph? Is the first graph time period “since market peak” based on the peak for each suburb, state or entire country. For example, is the Jan-2012 peak just for Yoke and Lower North?

        I am confused still don’t see the point of comparing graph 1 and graph 2 if they are not based on the same time period.

      • Tim Lawless June 27, 2013 at 10:54 am #

        The first graph shows the decline from the respective market peaks of each region. For example the broader capital city index peaked in October 2010, but the detached housing market in Yorke and Lower North peaked in January 2012. The two graphs aren’t provided for comparison, they are showing two different themes; the level of decline from the market peak in the first graph and the average level of value growth over the past five years in the second graph.

  4. Olivia June 17, 2013 at 2:56 pm #

    Hi, I’d be interested to see a similar analysis of Sydney SLAs, is that something you are likely to do?

  5. Darwin Pete June 25, 2013 at 8:26 pm #

    I am also confused. Darwin Units -7.3% then +4.7% so does that mean a net result of -2.6% over the period?

    • Tim Lawless June 27, 2013 at 11:01 am #

      The Darwin unit market recorded a substantial decline in values between mid 2010 and late 2011 – even though there has been recent growth, values remain below their 2010 peak. The medium term view (ie the past five years) has seen a reasonable level of growth though, despite the dip in values half way through this period.


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