The Rest of 2024 Forecasted! Supercharged Growth - With Arjun Paliwal

2024 still has a lot of growth left in the tank if you're serious about portfolio growth. Where you invest will actually make a huge difference. Using the data my team and I have put together, we've crunched the numbers and come up with a forecast of the top growing capital cities in Australia for the rest of 2024. My name's Arjun Paliwal, let's go. Now before I jump into today's episode, I've got a special announcement to make.

Today is episode 100. So I want to firstly say thank you to everyone that's tuned in to the InvestorKit podcast, the emails, the subscribers here on YouTube, helping us get over 5,000 subscribers as well. It's a pretty cool moment. But most importantly has been the connections we've been able to build with people who've reached out to say, hey look, I really enjoyed the podcast, really enjoyed learning more about what you do and how you actually help others with investing as well. And from there, they've connected with us to help them grow their own portfolio.

So if during all of this, you've heard us and you've liked what I've said or what my team have said, and you want to do the same, don't hesitate to reach out to us at investikit. com. au. But nonetheless, I wanted to say a big thank you for helping us reach 100 episodes and also getting past 5,000 subscribers here on YouTube. Now let's get into the rest of this episode.

So what I'm going to start off with is actually the ranking of capital cities. And I'm going to give you what I think are the top three that will finish this year off with the highest level of growth. Even though we're at the tail end, it's important to note there's still a couple of months left in it with positions that can change. Now when we're using this data, whilst we're talking about the rest of 2024, it's not as if the property market just thinks that the year finishes and all forecasts change for 2025. The property market doesn't work in those calendar years just like that.

When we come into the new parts of 2025, it's likely that the ordering of these locations still remains the same and we see some high performance going into the new year. Now remember, there's a lot of growth locations, not just these capital cities, and we've covered them off in other podcast episodes here on the show. So go into the podcast show on YouTube, Spotify, or Apple just to be able to check more about those episodes. We've talked about booms and suburbs growing in 2024. Now for this particular one, let's start off with position number one.

Who's going to finish off the top in this market for the rest of 2024 is the city of Perth. Now we have an internal scoring system of five points and Perth scored a 4. 7 out of five, which is pretty much the highest capital city, if not even the highest amongst any regional city in the country for growth rates. Now there are pros and cons to investing in Perth and it's important you have a diversified portfolio. We'll not talk about that in this episode.

That's for you to dig deeper on with the economy and things like that. But from a growth rate, it's definitely the highest amongst the capital cities to finish off this year. So what stats did we look at? Well, some of the most important ones are housing inventory levels. Well, housing inventory levels came in at 1.

42 months of stock. So it's very slim pickings in Perth when it comes to having enough properties to buy. And that also impacts the growth rates because there's less choice, meaning buyers are fighting over more properties. But the big thing that's been here has been the reduction of days on market. We've seen a one year change of days on market reducing 35.

8%. So in summary, sellers are selling by 36% faster today than they were this time a year ago. And if that trend continues, which is looking likely, the rest of this year will be very strong growth rates for Perth, which is why it scored so high in our systems. Another thing is that alongside the growth rates, it's also a high yielding location. So that helps in times of high interest rates, even though the forecast for interest rates that they're likely to get lower over the next year to finish off this year, high yields help you insulate some of the costs.

And with Perth's yields, it's common to get about 5. 2% in many parts of Perth, even higher. And what you can also see is that this yield has been increasing, which means rents have kept up with the rapid price growth, which is unreal. Vacancy rates remain really tight here in Perth with 0. 6%.

And that's still remaining tight for the rest of the year and even to the new year is what we expect. What's the big interesting part here is that just when you think you've missed out a lot of years of intense growth in Perth, the last 10 year growth rate of Perth still sits at about 30% on a 10 year basis, which is actually very weak, which means there's more left in the tank for the city to surpass growth rates of 10 years ago. Now, I understand that was at a peak rate of some of the economic boom and the mining conditions. However, it's likely that even without a mining boom in place, the growth rates can still continue to rise and we can actually see growth rates continue because they haven't been stretched from what they were 10 years ago. This is something that's been quite rare and unique to Perth amongst the capital cities, which is something common in many regional cities.

But in terms of the capitals, this is definitely one standout. We've obviously got Melbourne that's showing similar signs when it comes to the growth rates being weak over 10 years, but they'll need a year or two to be able to really show that whole 10 year picture being that weak. So now that's Perth, what is ranked number two? Well, ranked number two is the city of Adelaide. Adelaide's been actually one of the best performing markets over the last four plus years, call it about four and a half years in Australia.

So from late 2019 till about 2024, Adelaide's been a supercharged market. Now, what we can see is Adelaide's price growth was up 12. 5% as per our data over the last 12 months. Different sources have it up from 11 to all the way up to 15% plus. And we can see days on market continue to remain low, down 5.

7% from last year. Not as much down as Perth because Adelaide's growth cycle started tightening years prior Perth. However, it's still moving really strong and remains a high growth market in Australia. Vacancy rates remain tight in Adelaide at 0. 5% and rental yields healthy too at over 4%.

But the yields have come off a fair bit in comparison to markets like Perth. So I'd expect the rest of 2024 to still be strong with Adelaide. And if the undersupply continues, early parts of next year should also remain strong. But you can't keep it expecting to grow year after year after year, especially if yields have continued to suppress. Adelaide's 10-year price growth is starting to strengthen up a lot, up 85.

6% over the last 10 years, which is above its long-term average. It does mean it still has a little bit left, but it can't keep growing at this rate, which is what I mentioned earlier, because then it just outpaces its 10-year average for a long time. This is apparent in places like Sydney, which did over 120% rates of growth over a 10-year basis between 2012 and 2022. However, the growth rates started coming off then, which is a sign that may eventually happen in Adelaide too. Now, before I go into number three, I want to talk about a few areas in some of the regions of Perth and Adelaide that have been standing out.

So we use data points called SA3 regions, and in Perth, Kalamunda and Cockburn, ouch, are two SA3 regions that have actually produced some strong growth rates in Perth and are likely to produce some strong growth rates ahead as well when it comes to the cycle and what we're seeing and suburbs within them that are standing out. Forestfield, Auburn Grove, Success, what a cool suburb name, Success. These are three that data points are looking quite strong in as well. Now, if we go over to Adelaide, the council or SA3 regions of Tea Tree Gully, Prospect, Walkerville and Marion seem to stand out as well. There's obviously Onkaparinga too, but then we're just naming everywhere because so many parts are strong, but these three are good.

Suburbs like Plimpton Park, Broadview and St. Agnes. I usually don't share suburbs in chats like this, but I wanted to do that just to give you an idea of some suburbs that are strengthening or strong in that forecasted regions of Perth and Adelaide for the rest of 2024. It's very likely that growth rates will continue into 2025. Perhaps the ferocity of them will start to calm down, but it's expected that markets like Adelaide and Perth with supply conditions this tight will continue to perform.

Perth's 10-year growth rates have more left in the tank than Adelaide's do, so that's just an interesting point to note in terms of their cycle positions. Now, when it comes to that scoring system I mentioned earlier with out of five at InvestorKit, Perth scored 4. 7, and even though they've both grown similarly being Perth and Adelaide, Adelaide's score was 3. 7. I think that's clear from a cycle position difference, but they're both expected to be high performers as mentioned prior.

Now, this was a tough third pick because Brisbane and Sydney are the next two cities in line, and Brisbane had a score of 3.