This transcript was generated automatically and may contain small errors.
The first quarter of 2025 is done. Do you know where in Australia has outperformed everywhere else? This episode, we're going to unpack the three strongest performing markets from the first quarter of 2025, uncovering how much they have grown, why they have grown, and a sneak peek into where the data suggests these markets could be heading. I'm Junge Ma, lead research analyst at InvestorKit. Let's get into it.
So the first strong performer we're looking at here is Sterling, an SA3 in Greater Perth. It's just next to the Perth CBD region, and its town centre is around 10 kilometres to Perth CBD. The median house price there is around $805,000, and in the past three months, the house prices have grown by 8%. And if we annualise that, that could be 36% per year. And that is higher than its last year's growth of 27%.
Why it has grown so well in the past three months? There could be two reasons. One is its high market pressure, and the other is the buyer's movement inside of Greater Sydney. I'll explain them one by one. First, the high market pressure.
If we look at some of Sterling's market indicators, you see that days on market in Sterling is at the lowest level in more than 20 years. Currently, it is sitting at 10 days, just slightly above the lowest level of 8 days recorded last year. And then if we look at the inventory level, it is currently at 1. 1, that is much lower than the balance level of 3 to 4 months. It is true that there has been this upward trend since mid-2024.
However, the inventory level itself is still showing really high market pressure. On the other hand, housing demand is still there, as we can tell from the high rental market pressure. Vacancy rate is now at just 0. 2%. While many cities are seeing rises in vacancy rate, it's not happening in Sterling.
Vacancy rate here has been around 0. 2 to 0. 3% over the past 2 to 3 years. Now, all these indicators are showing the typical traits of a hotspot market. So the high market pressure is one of the reasons why Sterling has been performing so well in the first quarter.
And then the second reason is buyers' movement or demand movement inside of Greater Perth. In the past year or so, we have seen this very obvious trend that more people are selling up in the outer suburbs of Greater Perth, moving to either the middle ring or inner ring of Perth or moving to other states. Market pressure in the outer ring suburbs in Greater Perth has been decreasing continuously. In the meantime, in the middle ring of Greater Perth, while market pressure is also decreasing, the pace is much slower than the outer ring suburbs. And then if we move closer to the Perth CBD, in the inner ring areas, market pressure is holding quite steady, not showing too much significant signs of relief.
And that is where Sterling is. So will Sterling keep going at this fast pace and achieve the 36% annual growth as we have annualized? Well, I don't think so. Based on what we have observed in any market indicator trends, for example, the uptick in sale days on market and the increasing trend in inventory, if these trends are to continue, what's likely to happen is that in the coming year, Sterling will achieve very strong growth, most likely double-digit growth. However, it won't achieve the annualized 36% and it won't achieve even the same amount of growth as it had last year.
And the next strong performance region we're talking about is Albury in New South Wales. In the last three months, median house price there is $585,000 right now. And in the past three months, house prices have grown by 6. 7%. And if we annualize that, it will be 29.
7%, so close to 30% growth. Why the strong growth happen? Let's have a look at the market indicators. Market pressure in Albury has been recovering robustly over the past year. Sale days on market has been decreasing since mid-24.
And if we look at the three-month rolling days on market trend, we can see this even more dramatic drop from March 24th, 68 days to end of 24th, just 37 days. That is a very good sign for market pressure recovery. And then if we look at inventory trend, inventory level has been dropping since early 2024. At the time, it was 3. 6 months of stock.
And now after almost a year's drop, inventory is around 2. 7 months now, below the balance range of 3 to 4 months of stock. And then if we look at the rental market, rental pressure there is actually accumulating. Ever since late 2023, vacancy rate has been trending downward from 0. 8% to the current 0.
5%. So housing demand is quite strong in Albury. All these trends are indicating a strong recovery in Albury's market pressure. And that is why we categorize Albury as a second wind market. Moving forward, will Albury really achieve the 30% annual growth?
Well, I don't think so. But one thing is for sure, Albury's price growth will speed up and achieve a much stronger annual growth than it has achieved last year, which was 1. 7%. Why don't I think it will achieve the 30% annualized growth? Well, the market pressure in Albury is on its way of recovery.
It is not high enough yet. If we want to see the 30% growth, what we want to see would be consistent fast decline in days on market, a consistent decline in inventory to a really low level of around 1 to 1. 5 months of stock. And three, to achieve a phenomenal 30% growth, we would like to see below average last 5 to 10 year growth, like what happened in Townsville, Adelaide or Brisbane before their booms. But in the case of Albury, its last 10 year growth was 7.
5% and last 5 year growth was 11%. Both of them are already much higher than its long term average. So the room for further growth in the short to medium term is actually limited. And the third and final region we're talking about is Townsville. Median house price there is now around $538,000.
And in the last three months, total house price growth was 6. 1%. And if we annualize that, it will be 26. 9%. Very much in line with its last one year growth of 26.
5%. So for everyone here who's thinking for the last two years I've missed Townsville, it's actually still growing. So why Townsville is growing fast? It's because market pressure is still high. If we look at the days on market trend of Townsville, it's been staying at the lowest level in more than 20 years since late 2024.
In recent months, there has been an uptick in days on market, but we will need to see more data to be able to tell if that's a really relief of market pressure. And then when it comes to inventory, it has been trending downward ever since 2023. And currently it's sitting at 1. 15 months. And this downward trending seems to be continuing.
Rental market vacancy rate has been fluctuating over the past two years. Currently, the vacancy rate is 0. 8%. That is much lower than the usual balance level. And the rents have been growing steadily over the last two years.
So now moving forward, will Townsville continue this strong growth and achieve our annualized growth rate? Well, for this one, I would like to say it probably will. This is for two reasons. First, all our indicators are showing extremely high market pressure in the sales market, which will sustain really strong growth, similar to what happened last year. And two, Townsville hasn't entered the second phase of its growth cycle yet.
This can be seen in its lower than average last 10-year growth. Townsville's last 10-year annualized growth was just 4. 1%. That is still lower than our long-term annual growth of 5% to 7%. So moving forward, there's still plenty of room for Townsville to grow, given its high market pressure.
Well, Townsville looks like it's got the best chance of continuing growth this year. Sterling and Aubrey still have solid growth fundamentals, and they're just at different stages of their market growth cycle. If you have enjoyed this episode and want to know more about the Australian property market, make sure to hit subscribe or follow if you're on iTunes or Spotify. My name is Junge Ma, lead research analyst at InvestorKit. I'll see you next time.
