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It Is Not About Size: Performance

It Is Not About Size: Performance
August 26, 2021 Propertyology Head of Research and REIA Hall of Famer, Simon Pressley

Property markets, on the track or in the sack, one of life’s biggest misconceptions is that size determines performance.

Real estate capital growth rates of various property markets across Australia along with so many uplifting performances in the recent Olympic Games is compelling proof that size does not matter.

The size of Australia’s population (the world’s 55th largest country) proved to be no barrier for its overall world ranking of sixth in the Olympic medal tally. 17 gold medals from 339 events was an outstanding achievement.

Propertyology’s analysis of the best performed property markets over the 5-years ending May 2021 revealed the NSW regional city of Orange as the Australian property market equivalent to the Land Down Under’s Olympic performance.

With a 78 percent increase in median house price over the last 5-years, Orange was Australia’s 8th best performed property market. Testament that mass does not determine output, Orange is Australia’s 56th largest city (population 42,500).

Number 1 ranking in Australian property markets over the last 5-years was Australia’s 73rd largest city, Byron Bay. Home to 36,000 people, Byron’s median house price increased by a whopping 105 percent.

Less than an hour up the road from Byron and with a population of just 9,000 people, Kingscliff took the real estate silver medal position on the podium.

The entire Northern Rivers region of NSW was real estate on Viagra over the last 5-years. Yamba (86 percent capital growth), Ballina (73 percent), Lismore (55 percent), Coffs Harbour (52 percent and ranked 36 overall) and Grafton (48 percent) all performed tremendously well.

The real estate bronze medal went to the Victorian regional township of Wonthaggi (population 5,000 and 95 percent capital growth).


Status Is Not A Statistic

Sydney is to real estate what India was to the Tokyo Olympic Games. Both are big on status but produced middle-of-the-road performances.

India’s 1.39 billion population represents a massive 18 percent of the human race but, it finished 48th on the Olympic medal tally with only 1 gold.

Australia’s biggest city produced a 35 percent increase in median house price over the last 5-years and a limp national property market ranking of 63rd. And Sydney apartments produced a very underwhelming 14 percent price growth.  This is despite Sydney adding 437,000 people to its population in just 5-years (a similar volume of people that Canberra amassed over 120 years).

Contrary to society’s grossly misguided perceptions, population growth has never been the dominant driver for property market performance.

Over the last 5-years, Melbourne (12.4 percent) and Brisbane (10.5 percent) had the highest population growth rates of the 8 capital cities, yet they ranked 61st and 71st on the national capital growth rankings.

Margaret River’s population growth rate was higher than all of them (15.8 percent) and Burnie’s barely moved (1.5 percent), but their respective capital growth rates were an impotent 14 percent (ranked 88th) and a juicy 56 percent (ranked 28th).

Despite having populations of less than 20,000, Leongatha, Seymour, Kyneton, Torquay, Cooma and Bega all produced orgasmic capital growth rates of more than 50 percent, outperforming 7 out of 8 capital cities.

Perth (Australia’s 4th largest city, but only 7 percent capital growth) and Brazil (a country with a population 8-times the size of Australia, but only 7 Olympic gold medals) also have great status but produced limp performances.

Age Shall Not Weary Them

The 14-year old Chinese girl, Quan Hongchan, who won gold in the 10-metre diving event ahead of 29-year old Australian, Melissa Wu (bronze) is proof that age does not determine performance either.

In real estate parlance, Gold Coast is Australia’s newest major city. With a population of 635,000 and growing at a pace twice that of the national average, Gold Coast’s 32 percent increase in median house price over the last 5-years was a mediocre 64th ranking.

Conversely, Adelaide and Launceston (population 69,000) are a couple of Australia’s oldest cities. Capital growth rates of 25 percent and 60 percent, respectively, highlights that age has no bearing at all on performance.


Water Is Not A Growth Driver

The regional locations of Geelong (population 265,000) and Devonport (population 26,000) are cities of vastly different scale and from different states. Coincidentally, the median house price in both of these coastal cities increased by 62 percent over the 5-years ending May 2021, superior to 7 out of 8 capital cities.

Before anyone jumps to the conclusion that seaside is a real estate aphrodisiac, keep in mind the performance of beautiful Busselton (7 percent), Airlie Beach (24 percent) and Victor Harbour (32 percent).

‘Sea change’ and ‘tree change’ is as subjective as steak and seafood.

Inland property market stars included Kempsey NSW (70 percent), Ballarat VIC (67 percent), Griffith NSW (61 percent), Launceston (60 percent), Wangaratta (53 percent) and Goulburn (51 percent).

These and umpteen other locations performed significantly better than Sydney, Melbourne and Brisbane.

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Sunshine, So What?

A big portion of the property markets in the bottom quartile of capital growth over the last 5-years are locations from Queensland, Western Australia and Norther Territory.

Let me be crystal clear, warm climates, cool climates and global warming have stuff-all impact on real estate performance.

The cooler climate in Hobart, Australia’s 12th largest city (population 245,000) had nothing at all to do with it being Australia’s best-performed capital city property market (69 percent capital growth over the last 5-years).

Ditto to the impact of warm weather on real estate in the Sunshine Coast (49 percent capital growth).

‘Big’ is not a fundamental component of ‘better’. Many of life’s most powerful performances are not mass-produced.

Here is a great example of a high-performing property portfolio.

Capital Growth

[Median House Price Change Over 5YE May 2021]

1 Byron NSW 105%
2 Kingscliff NSW 103%
3 Wonthaggi VIC 95%
4 Yamba NSW 86%
5 Noosa QLD 84%
6 Cooma NSW 83%
7 Leongatha VIC 80%
8 Orange NSW 78%
9 Ballina NSW 73%
10 Kiama NSW 70%
11 Kempsey NSW 70%
12 Torquay VIC 69%
13 Hobart TAS 69%
14 Ballarat VIC 67%
15 Bega NSW 63%
16 Geelong VIC 62%
17 Devonport TAS 62%
18 Griffith NSW 61%
19 Seymour VIC 61%
20 Cessnock NSW 60%
21 Launceston TAS 60%
22 Colac VIC 60%
23 Karratha WA 60%
24 Kyneton VIC 60%
25 Warragul VIC 59%
26 Nambucca Heads NSW 59%
27 Batemans Bay NSW 59%
28 Burnie TAS 56%
29 Tenterfield NSW 56%
30 Lismore NSW 55%
31 Mudgee NSW 55%
32 Casino NSW 54%
33 Newcastle NSW 54%
34 Wangaratta VIC 53%
35 Warrnambool VIC 52%
36 Coffs Harbour NSW 52%
37 Shellharbour NSW 51%
38 Goulburn NSW 51%
39 Sunshine Coast QLD 49%
40 Canberra ACT 48%
41 Grafton NSW 48%
42 Singleton NSW 48%
43 Gympie QLD 48%
44 Shepparton VIC 48%
45 Bathurst NSW 48%
46 Bendigo VIC 48%
47 Port Macquarie NSW 47%
48 Maitland NSW 46%
49 Lithgow NSW 46%
50 Wollongong NSW 46%
51 Mildura VIC 46%
52 Traralgon VIC 45%
53 Port Stephens NSW 44%
54 Gundagai NSW 44%
55 Albury-Wodonga NSW/VIC 42%
56 Taree NSW 42%
57 Leeton NSW 41%
58 Muswellbrook NSW 40%
59 Kyabram VIC 38%
60 Hervey Bay QLD 38%
61 Melbourne VIC 37%
62 Bairnsdale VIC 37%
63 Sydney NSW 35%
64 Gold Coast QLD 32%
65 Scenic Rim QLD 32%
66 Victor Harbour SA 32%
67 Moranbah QLD 31%
68 Wagga Wagga NSW 28%
69 Narrabri NSW 28%
70 Dubbo NSW 27%
71 Brisbane QLD 26%
72 Mount Gambier SA 26%
73 Adelaide SA 25%
74 Yeppoon QLD 25%
75 Tamworth NSW 24%
76 Airlie Beach QLD 24%
77 Mount Barker SA 20%
78 Toowoomba QLD 19%
79 Armidale NSW 19%
80 Kingaroy QLD 19%
81 Mackay QLD 18%
82 Bundaberg QLD 18%
83 Cairns QLD 17%
84 Port Hedland WA 16%
85 Warwick QLD 15%
86 Gladstone QLD 15%
87 Goondiwindi QLD 14%
88 Margaret River WA 14%
89 Alice Springs NT 12%
90 Albany WA 11%
91 Rockhampton QLD 10%
92 Port Pirie SA 10%
93 Geraldton WA 9%
94 Perth WA 7%
95 Busselton WA 7%
96 Kalgoorlie WA 6%
97 Townsville QLD 6%
98 Darwin NT 5%
99 Bunbury WA 0%
100 Katherine NT -5%

Propertyology are national buyer’s agents and Australia’s premier property market analyst. Every capital city and every non-capital city, Propertyology analyse fundamentals in every market, every day. We use this valuable research to help everyday Aussies to invest in strategically-chosen locations (literally) all over Australia.