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Looking at the latest capital city property figures from CoreLogic, Australian real estate has one obvious outlier. Right now, Perth, Brisbane and Adelaide remain at record high prices, while other cities like Hobart, Canberra and Melbourne are feeling the serious impact of rate hikes, still below their 2022 price peaks. However, astonishingly, Darwin remains 6.6% below its record property market, a level it hasn’t exceeded since May of 2014 – almost a decade ago!

Informational asymmetry, where one party in a transaction possesses more or superior information than the other, is a concept well-documented in economic theory. It can be a big problem, and its effect is felt uniquely within the real estate market – far more than in other asset classes like stocks, commodities or cryptocurrencies. Compared to many of these alternative investments, traded in vast quantities across highly regulated and transparent markets, with no informational lag, real estate is inherently unique.

Informational asymmetry, where one party in a transaction possesses more or superior information than the other, is a concept well-documented in economic theory. It can be a big problem, and its effect is felt uniquely within the real estate market – far more than in other asset classes like stocks, commodities or cryptocurrencies. Compared to many of these alternative investments, traded in vast quantities across highly regulated and transparent markets, with no informational lag, real estate is inherently unique.

Recently, real estate firm CBRE released the results of their residential valuer survey for Q1 of 2024. The results of this survey offer some valuable insights into the observations of ~190 CBRE valuers around the country. In today’s article, we’re taking a look at some of the key results, and offering some brief commentary of our own: According to CBRE’s report, 6x as many valuers are expecting ‘strong to very strong’ demand, Australia wide, as opposed to ‘soft or very limited’ demand. Valuers note also that demand has been the most significant in a few key markets, namely – Perth, Adelaide and Brisbane.

If you're among those seeking relief from the burden of high home loan rates, there might be a glimmer of hope on the horizon. By now, we’ve all heard that inflation has been coming down. As it stands, a return to target inflation isn’t far away, but perhaps a more pressing concern for the RBA is unemployment and productivity.

Nationwide, waterfront properties are generally worth over 60% more than inland properties, according to some estimates. And as you might expect, this premium tends to be the highest within our capital cities. For instance, waterfront properties in Sydney are, on average, worth almost double the value of inland properties – the highest waterfront premium in the world. But it isn’t just the inner cities that continue to produce a major waterfrontage premium. Tourist hubs like Byron Bay, the Mornington Peninsula, the Sunshine Coast, the Gold Coast or the Central Coast are all coastal hotspots for attractive lifestyle properties. In areas like these, even inland properties can feel the knock-on effects of high waterfront demand.

In our previous article, we explained how Hedonic Value Indices (HVIs) such as those published by CoreLogic, can measure changes in property market values, despite only a small number of houses having recent sale prices. From that article, you’ll remember that the accuracy of a HVI relies upon details about property quality – bedroom counts, bathroom counts, land size, construction date, are all things that HVIs use to better provide context for sales that have taken place. In other words, a house selling for double the local median, probably has much better features than other houses nearby. Knowing this, we don’t conclude that the value of the entire area has doubled. Since we’ve accounted for the higher quality of that property, we know it was an outlier, and we can produce a more accurate estimate of market change.

If you’ve ever read a news article about Australian real estate, there’s a decent chance you’ve come across CoreLogic’s hedonic indices. These indices, published monthly, have become something of a benchmark in the industry for understanding the comparative performance of Australian property markets over time. Besides our own monthly market smart reports, even the biggest Australian publications have come to rely on these figures published by CoreLogic.