Core Logic

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.

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.

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.

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.