This transcript was generated automatically and may contain small errors.
This is going to be one of the worst places you can invest right now in 2025. Not because it's a bad place, but because almost every single indicator is clearly pointing towards growth is pretty much over. In this episode, I'm going to unpack where I'm talking about and help you understand how the data is telling us, don't buy here, this location is done. I'm Joma, lead research analyst at InvestorKit, and let's get into it. So where is this location?
I don't want to hide it. It is the SA3 of Queen Anna in Greater Perth. In this location, we are seeing significantly slowing growth, declining sales market pressure, declining rental yields, and surging incoming supply. Now let me explain them one by one. So first, growth slowing down.
In the past five years, Queen Anna really performed well. Its annualized growth was actually 15% per year. It's actually incredible for a market to sustain this high growth for so long. In recent months, there has been a significant slowdown. To better illustrate it, I want to show you this chart.
So if you're listening on Spotify or iTunes and are interested in this chart, please go to our YouTube channel and watch the video. So this chart shows the 12-month rolling median price trend line overlapped with the three-month rolling median trend line. I may want to expand a bit on the difference between these two. So 12-month rolling median means the median price of all the transactions happened over the past 12 months. And the three-month rolling median, as you can get it, is the median sales price of all the transactions happened just in the past three months.
So naturally, the 12-month rolling median trend line is smoother because it always has a much bigger sample size. And it's more consistent, so it's good to analyze long-term trends. However, while it's the three-month rolling median, it can be bumpier, especially when the region is smaller. For example, if we're looking at a suburb, but it is more time-sensitive, it reflects recent trends better than the 12-month rolling. That is why it is important to look at both of them when we analyze market trends.
If a market is moving steadily, very likely these two trend lines would be moving pretty much in line with each other. When a market is slowing down, very likely the three-month rolling trend line would be originally much higher than the 12-month rolling trend line. And it's coming down, getting closer and closer to the 12-month rolling trend. While if a market is recovering, what's likely to happen or what we're likely to see is the three-month trend line was initially below the 12-month trend line and it would go up exceeding the 12-month trend line at a faster pace. So with that in mind, as you can see in this chart, obviously the three-month trend line has slowed down a year ago while we couldn't see much change in the three-month rolling trend.
And now let me give you some numbers. If just looking at the 12-month rolling trend, we would see a 22% year-on-year growth. But if we look at the three-month rolling trend line, the past one-year growth would be just 8%, much lower than the previous one. And then moving forward, if we just look at the growth happened over the past six months in terms of three-month rolling, that actually is a minus 1. 4%.
So for many properties, prices are actually declining over the past half a year. So that was growth slowing. Now, why is it slowing? The first indicator where we can see it is number of listings and inventory level. Number of new listings each month we are seeing is 300% higher than a year ago.
It was already increasing over 2024, but the real surge happened since the beginning of 2025. That could be due to many reasons. Number one, it could be because of the large amount of new houses being completed and coming to the market. New house building approval rate in Queen Anna has always been high. Over the past decade, the lowest building approval rate was 3.
5, above the 2% to 3% balance level. And last year, as property value was growing so well, I guess more and more developers got into this area, boosting the building approval rate to above 7%. And the second reason could be that some investors, they came to Queen Anna three or five years ago, got really high value growth here, and now they are selling up their properties here and relocating their funds to other markets. Another reason could be that some homeowners who have purchased or have been living here have enjoyed their high property value growth, and now they have enough funds to move to somewhere else, perhaps closer to the CBD or somewhere with better lifestyle. There could be many factors resulting in this surge in number of listings, and those were just three of them.
So as a result of the listing surge, inventory now is 57% higher than a year ago. Last year, it was under two months of stock, and now it has exceeded three months, and we're not seeing any slowing momentum in this increase. And another indicator where we're seeing this market pressure relief is days on market. Again, in this chart, I'm listing both the 12-month rolling number and the three-month rolling number. So days on market in Queen Anna started increasing in mid-2024.
Now, the 12-month rolling median is showing 13 days on market, but in reality, if we look at the three-month rolling, it has actually reached 20 days. And as supply keeps going up while demand cannot catch up, days on market will very likely keep going up. And now on the rental market, rental pressure is actually still high. Vacancy rate is still at 0. 6%, and we're seeing this declining trend in recent months since the end of 2024.
But the rental yield is now not as attractive as before. Last year, the rental yield in Queen Anna was 6%, quite high and attractive, but now it has dropped to 5%. It's still healthy, but the advantage is much less pronounced if we compare it to other cities across the country. I'm going to give you some examples. Mudra in regional Victoria now has a yield of 5.
5%. Aubrey Odonga, the twin city on the New South Wales and Victoria border, now has a rental yield of 4. 9%. Two or three years ago, their rental yield was much, much lower than Perth's or Queen Anna's. Double the regional New South Wales city, 5%.
And the Tasmanian cities, Burnie, Devonport, their rental yields are now also around 4. 9%. Not too much different from Queen Anna. So in summary, we're saying Queen Anna is the worst location to buy in because the massive slowdown in price growth, the relief in sales market pressure, the loss of rental yield advantage, and then the high incoming supply level. In fact, a lot of affordable hotspots, especially in Perth's outer skirt, are slowing down.
But it's important to note that while these hotspot markets are slowing down or cooling, other markets are recovering and becoming the new hotspots. For example, we're seeing a lot of cities in regional New South Wales, Victoria, and Tasmania actively recovering. So if you have missed out on Queen Anna or similar hotspots in the past few years, don't worry, there are more hotspots coming your way. I'm interested in hearing where you think is the worst location to buy in now in 2025. Comment below.
My name is Joma, lead research analyst here at InvestorKit. I'll see you next time.
