West Side Story

Posted by Daniel Joseph

Australians love an underdog and our support for the battler was perhaps never louder than it was on the weekend. The Western Bulldogs overcame a 62 year Grand final drought to secure a 22 point win over the Sydney Swans. In the NRL, the Cronulla Sharks held on to claim their maiden premiership – 53 years in the making.

The recent Sydney property market growth phase signaled another victory for the battler; generally speaking, the city’s west outperformed the east by around 20%. Yes, some of this performance was driven by affordability constraints in the relatively more expensive east. The more significant contributor, however, was the underperformance of the west in the harbor city’s previous growth phase (1999 – 2005). This led to an unprecedented disparity in median prices between east and west, some of which has been corrected for (at least in percentage terms) by the most recent property upswing.

With art imitating life, Melbourne’s Western Bulldogs overcame better-on-paper local teams and the minor premiers to claim their first premiership in six decades. After a growth phase characterised by an outperformance of Melbourne’s south and east, the north and west, inspired by the Bulldogs of course, are projected to be the primary beneficiaries of the city’s population growth. Our research indicates that population growth has a tendency to lead increases in property prices. Bernard Salt, KPMG partner and professor at Curtin University, agrees. He notes:

‘This is a once-in-a-generation property transformation and it’s taking place right now in Melbourne… Why? Well that’d be because the city’s demographic weighting is shifting from the east to the west. The city’s far-more-accessible western edge started to look mighty attractive and especially with new suburbs like Caroline Springs, west of Deer Park, and Point Cook… all located barely 35km from the CBD. In the year to June 2015 the City of Melton and the adjacent City of Wyndham added 15,300 residents, making this “western front” the fastest growing region in Australia. Why should business have faith in the future of Melbourne’s west? Because Melbourne’s west is this nation’s last untamed urban frontier.’

If there’s anything we can learn from the underdogs I describe it’s that we shouldn’t judge a book by its cover. If we invest solely on the reputation of a location, we’d miss out on opportunities where the ‘cover’, as it often is, was a poor barometer of the potential within.

Posted by Daniel Joseph, on 4th Oct 2016