Property UpdateWhy housing markets perform differently from each other


Even when we compare price performance in capital cities with similar housing prices and population sizes such as Perth and Adelaide, we quickly discover that their performance can be very different.

As the CoreLogic data shows, Perth’s housing market growth run appears to be over, while Adelaide’s is gaining strength.

Perth Movts

Adelaide Movts

If population or market size and affordability are not the causes of these price movements, what is behind them?

The problem is that we are looking at the wrong causes.

DemandWhile the market size and property prices obviously have an effect on demand, the real cause of price changes is the relationship of supply to demand.

As long as the supply of properties on the market is less than the demand for them, prices will rise.

We can see this taking place in Adelaide and Brisbane.

But, when the supply of properties for sale starts to exceed buyer demand, the rate of growth declines, as we see in Sydney and Perth.

So, performance is not about size or price, because property markets in cities of the same size and sale prices can behave very differently from each other.

It’s all about the supply of properties compared to the demand for them.

ALSO READ: Here’s what property investors will be doing in 2022


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