What does inflation mean for the Australian housing market?
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  • Australia's property market was more affordable than expected
  • Great cities need diversity in all aspects
  • Maintaining a safe and hygienic city is also paramount

The Australian property market has shocked millions as prices soared during the early years of the Covid pandemic. While many believed the housing market would crash in mid to late 2020, house prices did the polar opposite.

As first-home buyers and those looking to live the Great Australian Dream had to wait a little longer, most Australians were shocked to find that moving to regional Australia was just as tough, with amenities not up to scratch in many places, and prices skyrocketing by just as much, if not more than in the cities.

That shift meant essential workers across Australia were being unfairly shafted, unable to live close to where they were needed most, with many simply leaving nursing and other vital roles within the community.

The rental market was also unkind to the millions who either couldn’t afford a house or preferred the rental life. Indeed it was also unfair for the Australians who were pushed into the rental market for one reason or another.

Come 2022, the year of recovery turned into a year of regret for those believing interest rates wouldn’t budge, let alone take off at a record pace.

Not only did the cash rate surge, but inflation also meant Aussies had to tighten their belts that little bit more.

Australian house prices 6th in the world

Last year, Knight Frank’s Global House Price Index for Q2 2021 ranked Australia’s house price rises seventh in the world. Turkey led the pack with an almost 30% year on year change.

For Q3 of 2021, Turkey stayed at the top of the table (in nominal terms, but not when adjusted for inflation, that title went to South Korea), with Australia rising to fifth in the world for highest house price rises.

This year, the Q3 index shows Australia ranks tenth in the world… for largest house price drops (in nominal terms). Australia ranked 47th out of 56, the bottom five included South Korea, Hong Kong, and New Zealand.

Knight Frank Global House Price Index Q3 2022

Ranked by annual percentage change in nominal terms

Ranking Country/Territory Nominal Price Growth Real price Growth (adjusted for inflation)
1 Turkey 189.2% 57.6%
2 Estonia 27.3% 4.5%
3 Hungary 23.7% 10.7%
4 Czech Republic 22.6% 4.7%
5 Iceland 22.6% 12.2%
6 Slovakia 21.9% 6.8%
7 North Macedonia 21.2% 5.8%
8 Israel 18.2% 13.2%
9 Latvia 16.5% -2.4%
10 Slovenia 15.6% 4.7%
Ranking Country/Territory Nominal Price Growth Real price Growth (adjusted for inflation)
47 Australia 1.5% -5.4%
48 Malaysia 0.7% -3.6%
49 Finland 0.0% -7.5%
50 Ukraine 0.0% -19.8%
51 Morocco -0.3% -6.9%
52 New Zealand -2.0% -8.6%
53 China (Mainland) -2.2% -4.2%
54 Peru -4.7% -12.4%
55 Hong Kong -7.1% -11.0%
56 South Korea -7.5% -12.4%

Source: Knight Frank.

As for sixth place? That’s according to the rankings when considering house price falls from their 2022 market peak from the Knight Frank data.

How do Australian cities compare?

The Property Tribune has already done a bit of that comparison earlier this week, with Knight Frank data showing the top ten price declines around the world included the Australian cities of Sydney and Darwin.

Top ten price increases also saw Adelaide on the list.

Comparing Australian state capitals with each other, also sees Sydney and Darwin bring up the rear:

Domain house price movements

Capital City Sep-22 Jun-22 Sep-21 QoQ YoY
Sydney $1,464,371 $1,544,145 $1,506,727
Melbourne $1,028,452 $1,075,008 $1,049,276
Brisbane $811,312 $847,374 $715,834
Adelaide $795,093 $790,100 $652,418
Canberra $1,096,114 $1,163,851 $1,056,067
Perth $645,946 $656,058 $598,912
Hobart $741,275 $760,783 $682,208
Darwin $623,819 $649,178 $652,561
Combined capitals $1,022,194 $1,065,186 $999,620

Source: Domain

The unit market saw slightly different results year on year, with Sydney seeing substantially lower prices.

Capital City Sep-22 Jun-22 Sep-21 QoQ YoY
Sydney $754,812 $778,884 $799,508
Melbourne $561,121 $580,333 $574,136
Brisbane $451,905 $451,905 $409,129
Adelaide $416,410 $406,254 $351,208
Canberra $572,824 $598,095 $547,539
Perth $356,755 $365,674 $366,874
Hobart $549,135 $533,667 $538,520
Darwin $364,192 $382,937 $360,493
Combined capitals $599,082 $615,054 $611,243

Source: Domain

Where is the best place for families, and first-home buyers?

Well Money ranked best suburbs for families in November this year, with Tasmania’s Otago taking top honours, and South Australia’s Seaford Heights second place.

Western Australia’s Carine also made the list at 16th place, the only Perth suburb to make the top 20 list.

In July, The Property Tribune also looked into best suburbs for families, with two West Australian suburbs making the list: Boya, and Warwick.

The remainder was a cornucopia of east coast locations:

Top 20 suburbs to start a family

Rank State Suburb Postcode Median house price Increase in inventory levels over past 3 months
1 QLD Barellan Point 4306 $807,000 +3.3 months
2 SA Willunga 5172 $607,500 +3.3 months
3 QLD Mons 4556 $1,100,000 +3.2 months
4 WA Boya 6056 $620,000 +3.0 months
5 QLD Nudgee 4014 $855,000 +2.8 months
6 VIC Gisborne 3437 $1,050,000 +2.7 months
7 VIC Junortoun 3551 $750,000 +2.6 months
8 VIC Silvan 3795 $1,395,000 +2.5 months
9 QLD Camp Mountain 4520 $1,300,000 +2.5 months
10 QLD Newport 4020 $1,350,000 +2.4 months
11 VIC Selby 3159 $1,000,000 +2.3 months
12 WA Warwick 6024 $630,000 +2.3 months
13 SA West Lakes Shore 5020 $842,000 +2.2 months
14 WA Edgewater 6027 $630,000 +1.9 months
15 NSW Bolwarra Heights 2320 $940,000 +1.9 months
16 VIC Torquay 3228 $1,330,000 +1.9 months
17 ACT Curtin 2605 $1,421,000 +1.8 months
18 QLD Black Mountain 4563 $950,000 +1.8 months
19 NSW Saratoga 2251 $1,300,000 +1.7 months
20 VIC Viewbank 3084 $1,270,000 +1.7 months

Source: Well Money.

Affordable locations, great for first home buyers was covered in August, with the top 20 surprisingly including Perth golden triangle suburb of City Beach.

Top 20 suburbs affordable and desirable locations

Rank State Suburb  Postcode Type Median Sale Price Years of Income to Buy
1 ACT Macquarie 2614 Unit $300,000 3
2 WA City Beach 6015 Unit $579,000 3
3 WA Aubin Grove 6164 Unit $415,000 3.2
4 QLD Wavell Heights 4012 Unit $440,000 3.2
5 QLD Camp Hill 4152 Unit $520,000 3.2
6 SA Mawson Lakes 5095 Unit $333,000 3.3
7 QLD Waverley 4154 Unit $517,500 3.4
8 QLD Ashgrove 4060 Unit $507,000 3.4
9 SA Plympton 5038 Unit $285,000 3.4
10 QLD Alderley 4051 Unit $415,000 3.4
11 WA Canning Vale 6155 Unit $410,000 3.5
12 QLD Bridgeman Downs 4035 Unit $530,000 3.5
13 QLD Norman Park 4170 Unit $535,000 3.6
14 SA Parkside 5063 Unit $380,000 3.6
15 NT Marrara 0812 Unit $370,000 3.6
16 QLD Paddington 4064 Unit $529,999 3.7
17 QLD Parkinson 4115 Unit $420,000 3.7
18 QLD Wayville 5034 Unit $393,000 3.7
19 SA Prospect 5082 Unit $388,000 3.7
20 SA Brooklyn Park 5082 Unit $287,000 3.8

Source: Well Money.

Affordable places can be found in inner city locations too, with first home buyers not having to despair about an arduous hours long commute to the CBD.

The Property Tribune found great deals in accessible areas across the major cities too, including Granville (Sydney), and Richmond (Melbourne).

See the full list here.

Creating more livable cities

As part of CBRE’s recent Flow & Glow event in Sydney, leading experts discussed how to foster better cities, with a panel including CEO of Destination NSW, Steve Cox; Director of External Affairs and Programs, Office of the 24-Hour Economy Commissioner, James Hulme; Jennifer Di Bartolomeo, Head of Asset Services, Place & Experience, Office at Charter Hall; and Mick Gibb, CEO of Night Time Industries Association.

In a global city like Sydney, ranking third in the 2019 Global Liveability Index doesn’t imply an absence of its underlying shortcomings.

Gibb believes two of those challenges are young people being left out of the conversation of post-Covid recovery planning, and the misconceptions about the city’s stale nightlife.

“The argument that Sydney is dead is a complete furphy. There’s plenty happening. It’s about getting people to feel confident about being able to go out, that there’ll be something on, and that they’ll be able to get home safely.

“There are options available; it’s rethinking how do we see Sydney and our night life.”

The latter point is a significant observation shared by Hulme who heads the 24-hour economy program for Investment NSW.

“Safety is a major priority for our office. Everything we do is about how to make the going out experience memorable for young or vulnerable people. Sydney is the fourth safest city in the world. It’s a good place to be but we’re not complacent,” he says.

“There’s some really interesting use of technology. There are Bluetooth apps to track where your friends are. Safety used to be about physical harm, but hygiene and cleanliness is now a priority as well.”

Building a world class future city takes tenacity, planning and patience. For Cox, who recently led  the return of Sydney’s iconic Vivid Sydney festival after a major pandemic hiatus, diversity is paramount in drawing out the masses.

“We’re always mindful of the diversity of our offer. We want to be the major events capital of Asia Pacific. It doesn’t mean having three major sporting events; it means having diversity across sports, culture and blockbuster pieces. And underneath that, having the best shows, concerts and exhibitions in our galleries and museums.

Diversity also covers the three tiers of local, domestic and international tourists.

“The NSW Visitor Economy Strategy 2030 is our north star. When you develop work to come out of that initiative, you think about advocacy at the local level. We need to build advocacy of the people who live in this city and get them to talk more positively, engage and experience it.

“The more we experience, the more we advocate to tell visitors to go to those places or see those things. It builds excitement into the city and that’s what brings people in to invest alongside businesses and students.”

So how livable is Australia?

Very… but more to come as we explore the impacts of climate change on Australian cities.

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