Global property prices are steadily increasing while Australia’s property price decline has picked up the pace, with Brisbane and Adelaide emerging as our strongest markets.
Knight Frank’s latest Global Residential Cities Index has revealed that despite Australian property prices falling from their peak in recent months, the two Aussie cities stand out among the rest.
House prices in Adelaide grew 25.6% in the past 12 months to June 2022, while Brisbane also saw strong growth, with house prices increasing 20.4%, according to the research.
By comparison, the average house price across the combined cities worldwide increased by 11.7% in the year to June 2022.
Of the 150 cities tracked in the index, 138 cities saw prices increase in the 12 months to Q2 2022, down only marginally from 142 cities last quarter.
Perhaps most surprisingly, there are still 66 cities recording annual price growth in excess of 10%, up from 64 last quarter.
And whilst many are forecasting a notable slowdown due to recessionary fears, energy prices, rate rises and geopolitical concerns, there are still only 12 cities where prices are falling on an annual basis.
It comes as no surprise that Australia is one of those countries, with our nation recording the third-largest decline in prices over the past quarter at -0.8%.
But a lot has changed in the past 3 months…
While there were only 12 cities that recorded price falls on an annual basis to June 2022, in the 3 months since then, that number has jumped to 20 cities.
Sweden, the Chinese mainland, Finland, New Zealand and Australia are well represented on the list.
Sydney’s property prices have fallen over 2% in the past 3 months alone, and in Melbourne, prices have slumped nearly 1%.
New Zealand recorded the biggest decline with prices down -3% overall over the past year.
Two New Zealand cities also ranked highly on the data for the past 3-month period - Wellington and Auckland with price declines as steep as 9% and 5% respectively.
Here’s how each of our cities ranked on the index
According to the Knight Frank index, Adelaide came in as the 10th strongest housing market in the world, and the strongest in Australia, over the past 12 months, followed by Brisbane in the 20th position.
Hobart came in 21st place on the index with a 20.2% property price increase over the period, and Canberra in 67th place with 9.9% growth.
Darwin also made the list in 87th place and 7.4% growth, followed closely by Perth which finished up in 89th place thanks to its 6.6% property price growth.
All of Australia’s smaller cities outranked our two most major markets, Sydney and Melbourne, which came in 104th place (5.1% increase) and 109th place (4.3% increase) on the list respectively.
Here’s the full list:
A note to investors…
While this data makes for interesting reading, it’s important that investors remember that there is more to property investing than picking the ‘right’ or ‘cheapest’ market where property prices are trending up or down.
It’s important to look for a suburb that will have long-term capital growth because of the demographics of those buying homes in the area, particularly in gentrifying areas.
Then find an investment grade property in that ‘right area’ rather than chasing ‘top hotspot’, popular or growth areas.
Picking growth or trending markets isn't enough.
After all, when it comes to property investing, it’s worth remembering that location does 80% of the heavy lifting of a property’s capital gain.
But even before looking for the right location, make sure you have a Strategic Property Plan to steer you through the upcoming challenging times our property markets will encounter.
You see…property investing is a process, not an event.
Things have to be done in the right order – and selecting the location and the right property in that location comes right at the end of the process.
The fact is, the property you will eventually buy will be the result of a sequence of questions you will need to ask and answer and a series of decisions you’ll need to make before you even start looking at locations.
Long before we talk about a property or the right location with our clients at Metropole, we look at factors including their age, their timeframes, and the desired end results in other words, what do they really want the properties to do – are they looking for cash flow, capital growth, or a combination of both.
And that’s because what makes a great investment property for me, is not likely to be the same as what would suit your investment needs.
So at Metropole, it all starts with helping our clients formulate a Strategic Property Plan which takes into account their surplus cash flow position, their risk profile (for example would they consider undertaking renovations or small development), and whether they currently own a home or are wanting to buy a new home or upgrade their existing home in the future, if they are going to earn more income in the future, or if they’re going to decrease their family income because they’re having a baby, how many other investment properties they own, where they are located and how they are performing plus 35 other considerations.
So whether you’re looking to buy a new home or an investment property and you want more certainty and direction in these interesting times, my recommendation is to sit with an independent property strategist to formulate a plan.
It’s just too difficult to do on your own and I’ve found most investors tend to be too emotionally involved to see their situation objectively.
If you’re a beginner looking for a time-tested property investment strategy or an established investor who’s stuck or maybe you just want an objective second opinion about your situation, please leave us your details here and we’ll be in contact and give you more details about how to book a Strategic Property Plan Consultation.
