Trilogy Funds Update – September 2023

Earlier this month, Tim Lawless, Research Director at CoreLogic, presented to Trilogy Funds on the current state of each major housing market in Australia. Some of the key themes of the presentation included:

The residential housing market

There is a continued growth in residential dwelling prices, albeit at a decelerating rate. As highlighted in previous Company Updates from Trilogy Funds, net overseas migration is at elevated levels in a post-Covid environment, and this places upward pressure on demand. Increasing demand has not been matched on the supply side, which means buyers are competing for a limited supply of listings. This also means that investors would be wise to monitor trends in new listings – because increases in listing volumes may take some of the heat out of the market.

It was observed that 25% of suburbs nationally are at least 10% below their peak, whilst 40% of Sydney suburbs are below their peak. Generally across Australia, more affluent hubs tend to have experienced price drops further below their previous peaks than other areas; however, the suburbs further below previous peaks have also enjoyed the most growth over the previous three months to the end of July in particular.

The movement of populations between regional areas and capital cities has also influenced price growth. Where migration out of capital cities previously supported regional property values, a normalisation of that trend has dampened regional price recovery. Some cities, such as Brisbane, have benefited from positive net interstate migration as well as positive net overseas migration.

Sales and purchasing activity

Nationally, purchase activity (as measured by CoreLogic) is approximately at 5-year averages, with activity in capital cities just above 5-year averages and activity in regions just below 5-year averages. Purchasing activity in both capital cities and regions is extremely close to the 10-year averages.

Rising prices have created positive conditions for sellers. These conditions are likely to encourage an increase in listing volumes, particularly among vendors who may have delayed selling decisions or who may be seeing their holding costs (e.g. mortgage repayments) continue to outstrip the rental growth they’ve been able to achieve. In Sydney, for example, the average cost of ownership has risen by around $1,250 per month, while the median rental price only increased by $350. Furthermore, the rate of rental price growth is slowing.

As Spring approaches, a typically busier time in the selling cycle, listing volumes are expected to increase.

Housing supply and construction

We have discussed in previous Company Updates the impact of rising building and construction costs, and the tapering of that price inflation.

Core Logic reports that we have moved through a peak in the construction cycle, and homes that took a longer time to complete than expected (due to pressures facing the industry) will start coming through to completion, adding to the stock of homes available for sale.

That said, building approvals have still not turned around and the 1.2 million new home target set by the Government appears ambitious. Medium to high-density developers will continue facing challenges in delivering large volumes of stock due to squeezed margins and the competition for skilled labour.


Unemployment is expected to remain below 5% which, in the absence of an influx of skilled labour via migration, will continue to impact the supply of new housing. The market consensus is that interest rates have peaked, and inflation has fallen faster than expected.

Migration is expected to fall to 315,000 this financial year, from 400,000 last year, and then fall further to the high 200,000s year on year in subsequent years. To put these numbers into perspective, 400,000 was the biggest inflow of migrants Australia has ever seen in a year, with the second largest being just before the GFC, at 315,000. So while migration is pulling back, it remains at very high levels. On the one hand, this will provide an important source of skilled labour, and potentially help drive growth in supply. On the other hand, it will also drive demand for housing.

This article is issued by Trilogy Funds Management Limited ABN 59 080 383 679 AFSL 261425 (Trilogy Funds) as responsible entity for the management investment schemes mentioned in this article. Application for investment can only be made on the application form accompanying the relevant Product Disclosure Statement (PDS) and by considering the Target Market Determination (TMD) available at The PDS contain full details of the terms and conditions of investment and should be read in full, particularly the risk section prior to lodging any application or making a further investment, together with the TMD. All investments, including those with Trilogy Funds, involve risk which can lead to no or lower than expected returns, or a loss of part or all of your capital. Trilogy Funds is licensed to provide only general financial product advice about its products and therefore recommends you seek personal advice on the suitability of this investment to your objectives, financial situation and needs from a licensed financial adviser. Investments with Trilogy are not bank deposits and are not government guaranteed. Past performance is not a reliable indicator of future performance.

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