Read Full Blog Here

Melbourne has tested investors' patience like nowhere else. Its median house price has grown just 1.8% a year since early 2017, below inflation, meaning that, in real terms, property is cheaper today than it was almost a decade ago. Naturally, investors want someone to blame. But in this episode, Stuart argues the usual suspects are largely wrong.

Victoria's land tax regime, tenancy reforms and ballooning state debt get cited endlessly, and Stuart doesn't dismiss them. Still, he shows why the links to prices are weaker than they appear (in one case, buying another Brisbane property triggered a higher land tax bill than going to Melbourne). 

The real driver, he contends, is what came before: an almost uninterrupted 20-year boom from 1997 to 2016, unmatched by any capital city in 45 years of data. The longer the boom, the longer the correction needed to work off the gap.

Using a declining long-run growth benchmark, Stuart's analysis puts Melbourne houses around 21% below trend and apartments 29%, the clear outlier while Brisbane, Adelaide and Perth run well ahead. With replacement costs now exceeding market values, he makes the case Melbourne may be intrinsically undervalued, and explains how to think about whether to hold or sell.

Our most popular free guides:

Over the years we've written hundreds of articles. These three bring our best thinking together on the topics that matter most right now: choosing a super fund, debt recycling, and navigating the new tax changes.

Download them here

My new book, Wealth by Design, is out now:

Buy online or in bookstores. The ebook is available now, audiobook coming soon.

Got a question for the podcast?

Email us at questions@investopoly.com.au

Interested in working with our team?

Discover how we can work together

Subscribe to my weekly blog:

Stay connected here

Important

This podcast provides general information about finance, tax and credit. It doesn't take into account your specific objectives, financial situation or needs, so you need to assess whether it's relevant to your circumstances before acting on it. If you're not sure, speak to a licensed, trustworthy professional.