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The latest house price and rental yield results suggest that value focused investors should avoid Sydney and Melbourne in favour of the smaller capitals.
To illustrate the point, below are charts plotting median house prices in the five main capitals against the weighted average of the other capital cities. This gives a high level view of relative value across each market.
Sydney’s ‘relative value’ is by far the worst based on this metric with its median house price tracking at 183% of the other capital cities as at September 2021 – close to the highest level in nearly 50 years of data:
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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.