Where property prices are rebounding around the country
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Where property prices are rebounding around the country

Interest rate rises and cost of living pressures resulted in mixed results on home values around Australia

By KANEBRIDGE NEWS
Tue, Jan 2, 2024 11:10amGrey Clock 3 min

Australian home prices rebounded strongly in 2023, new figures released today have shown.

The Home Value Index from property data provider CoreLogic revealed prices surged by 8.1 percent last year after falling -4.9 percent in 2022. However, recorded growth is nothing like the rises in 2021, which saw home prices swell by 24.5 percent.

CoreLogic research director Tim Lawless said while the greatest increases were seen at the start of 2023, consistent interest rate rises announced by the RBA put a dampener on growth as the year progressed, with just a 0.4 percent increase in December.

“This was the smallest gain in our national monthly HVI since values started rising in February,” Mr Lawless said. “After monthly growth in home values peaked in May at 1.3 percent, a rate hike in June and another in November, along with persistent cost of living pressures, worsening affordability challenges, rising advertised stock levels and low consumer sentiment, have progressively taken some heat out of the market through the second half of the year.”

While regional areas saw record price rises during COVID, it is now the Australian capitals leading increases in home values, Mr Lawless said.

“Stronger conditions across capital city markets is a reversal of the early COVID trend which saw regional markets experience higher demand amid strong internal migration,” he said.  “Regional migration trends have mostly normalised through 2023, and the significant capital gains recorded through 2020 to 2022 has meant many regional markets have become less affordable.”

However, growth across capital cities is uneven, with Perth recording the highest annual increases at 15.2 percent, followed by Brisbane on 13.1 percent and Sydney on 11.1 percent. The results were followed by Adelaide (8.8 percent), Melbourne (3.5 percent) and Canberra (0.5 percent). Darwin and Hobart values declined over the past 12 months, down -0.1 percent and -0.8 percent respectively.

In Perth, the top performing suburb was Armadale, up 25.2 percent, followed by Gosnells, 22.6 percent.

In Brisbane, home values in the suburb of Nathan are up 22 percent on last year, followed by Mt Gravatt, up 21.1 percent.

For the Sydney market, Blacktown lead the way, with a 15.8 percent increase in home values, followed by the inner west suburbs  of Marrickville – Sydenham – Petersham, which increased by 15.3 percent.

Rank

SA3 Name 

SA4 Name 

Median Value

Annual change 

Greater Sydney

1

Blacktown

Sydney -Blacktown

$969,287

15.8%

2

Marrickville -Sydenham -Petersham

Sydney -City and Inner South

$1,741,931

15.3%

3

Hornsby

Sydney -North Sydney and Hornsby

$1,485,422

15.3%

4

Strathfield -Burwood -Ashfield

Sydney -Inner West

$917,641

14.9%

5

Eastern Suburbs -North

Sydney -Eastern Suburbs

$1,988,175

14.6%

6

Warringah

Sydney -Northern Beaches

$2,068,585

14.5%

7

Canterbury

Sydney -Inner South West

$1,085,111

14.3%

8

Mount Druitt

Sydney -Blacktown

$812,868

14.1%

9

Merrylands -Guildford

Sydney -Parramatta

$1,060,399

14.1%

10

Leichhardt

Sydney -Inner West

$2,007,850

14.0%

Greater Melbourne

1

Darebin -North

Melbourne -North East

$762,619

7.9%

2

Banyule

Melbourne -North East

$935,214

7.7%

3

Monash

Melbourne -South East

$1,223,086

7.6%

4

Knox

Melbourne -Outer East

$910,533

7.5%

5

Manningham -West

Melbourne -Inner East

$1,388,013

7.1%

6

Manningham -East

Melbourne -Outer East

$1,539,018

6.9%

7

Whitehorse -West

Melbourne -Inner East

$1,213,085

6.7%

8

Whitehorse -East

Melbourne -Outer East

$1,185,513

6.1%

9

Casey -North

Melbourne -South East

$808,703

5.3%

10

Casey -South

Melbourne -South East

$758,745

5.1%

Greater Brisbane

1

Nathan

Brisbane -South

$1,079,497

22.0%

2

Mt Gravatt

Brisbane -South

$1,117,075

21.2%

3

Sunnybank

Brisbane -South

$1,026,758

19.4%

4

Carindale

Brisbane -South

$1,212,544

19.1%

5

Holland Park -Yeronga

Brisbane -South

$756,166

18.8%

6

Springwood -Kingston

Logan -Beaudesert

$638,552

17.1%

7

Chermside

Brisbane -North

$945,095

16.7%

8

Rocklea -Acacia Ridge

Brisbane -South

$935,200

16.2%

9

Nundah

Brisbane -North

$794,173

15.7%

10

Forest Lake -Oxley

Ipswich

$665,472

15.4%

Greater Adelaide 

1

Playford

Adelaide -North

$474,782

14.3%

2

Gawler -Two Wells

Adelaide -North

$590,250

13.7%

3

Salisbury

Adelaide -North

$582,159

13.2%

4

Tea Tree Gully

Adelaide -North

$700,396

11.5%

5

Port Adelaide -West

Adelaide -West

$691,116

11.0%

6

Onkaparinga

Adelaide -South

$663,042

9.9%

7

Port Adelaide -East

Adelaide -North

$737,926

8.5%

8

Marion

Adelaide -South

$797,606

8.3%

9

Campbelltown

Adelaide -Central and Hills

$859,213

8.2%

10

Burnside

Adelaide -Central and Hills

$1,416,110

8.2%

Top 10 capital cities SA3s with the highest 12-month value growth – Dwellings. Source: CoreLogic



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Few of the U.S.’s philanthropic foundations invest their endowment assets—totalling an estimated US$1.1 trillion—to create positive social and environmental change in addition to high returns, potentially limiting or even counteracting the good such organisations do.

Exactly how few isn’t precisely known. But Bridgespan Social Impact, a subsidiary of the New York-based Bridgespan Group along with the Capricorn Investment Group, a Palo Alto, Calif.-based investment firm founded by Jeff Skoll , the first president of eBay, and the Skoll Foundation, also in Palo Alto, attempted to “get the conservation started,” with a study of 65 foundations with a total of about US$89 billion in assets, according to Mandira Reddy, director at Capricorn Investment Group.

The top-line conclusion: 5% of the primarily U.S.-based foundations surveyed invest their assets for impact. Most surprising is that 92% of these organisations, which have assets ranging from US$11 million to US$16 billion, are active members of impact investing groups, such as the Global Impact Investing Network and Mission Investors Exchange.

“If there’s any pool of capital that is best suited for impact investing, it would be this pool of capital along with family office money,” Reddy says.

The study was also conducted “to draw attention to the opportunity,” she said.

“We want to redefine what philanthropy can achieve. There is massive potential here just given the scale of capital.”

Foundations are required by the U.S. Internal Revenue Service to grant 5% of their assets each year to charity; in practice they have granted slightly more in the last 10 years—an average of 7% of their assets, according to Delaware-based FoundationMark, which tracks the investment performance of about 97% of all foundation assets.

The remaining assets of these foundations are invested with the intention of earning the “highest-possible risk-adjusted financial returns,” the report said. Those investments allow these organizations to grant funds often in perpetuity.

Capricorn and Bridgespan argue that more foundations, however, need to “align their capital with their missions,” and that they can do so while still achieving high returns.

“Why wait to distribute resources far into the future when there are numerous urgent issues facing the planet and communities today,” argue the authors of a report on the research, which is titled, “Can Foundation Endowments Achieve Greater Impact.”

The fact most of the foundations surveyed are very familiar with impact investing and yet haven’t taken the leap “highlights the persistently untapped opportunity,” the report said. It details some of the barriers foundations can face in shifting to impact, and how and why to overcome them.

Hurdles to making a shift can include “beginner’s dilemma”—simply not knowing where to start—and a misperception on the part of large foundations that impact investing is “too niche,” offering opportunities that are too small for the amount of capital they need to allocate. Other foundations are too stretched and don’t have the resources to add capabilities for making impact investments, the report said.

One of the biggest concerns is financial performance. Some foundation leaders, for instance, worry impact investments lead to so-called concessionary returns, where a market rate of return is sacrificed to achieve a social or environmental benefit. Those investments exist, but there are also plenty of options that offer financial returns.

The authors make a case for foundations to “go big,” into impact to realize the best outcomes, and to take a portfolio approach, meaning integrating impact principles into how they approach all investments. To make this happen, foundations need to incorporate impact into their investment policy statements, which determine how they allocate assets.

It will be difficult for foundations that want to shift their assets to impact to pull out of investments such as private-equity or venture-capital funds that can have holdings periods of a decade. But with a policy statement in place, a foundation’s investment team can reinvest this long-term capital once it is returned into impact investing options, she says.

“The transition doesn’t happen overnight,” Reddy says. “Even if there is a commitment for an established foundation that is already fully invested, it takes several years to get there.”

The Skoll Foundation, established in 1999, revised its investment policy statement in 2006 to incorporate impact. According to the report, the foundation initially divested of investments that were not in sync with its values, and then gradually, working with Capricorn Investment, began exploring impact opportunities mostly in early-stage companies developing solutions to climate change.

“As the team gained more knowledge and experience in this work, and as more investment opportunities arose, the impact-aligned portfolio expanded across different asset classes, issue areas, and fund managers,” the report said.

As of 2022, 70% of the Skoll Foundation’s assets are in impact investments addressing climate change, inclusive capitalism, health and wellness, and sustainable markets.

Capricorn, which manages US$9 billion for foundations and institutional investors through impact investments, constructs portfolios across asset classes. In private markets, this can include venture, private equity, private credit, real estate, and infrastructure. There are also impact options in the public markets, in both stocks and bonds.

“Across the spectrum there are opportunities available now to do this in an authentic manner while preserving financial goals,” Reddy says.

Of the foundations surveyed, about 15, including Skoll, have 50% or more of their assets invested for impact. Others include the Lora & Martin Kelley Foundation, the Nathan Cummings Foundation, the Russell Family Foundation, and the Winthrop Rockefeller Foundation.

Though not part of the study, the California Endowment just announced it was going “all in” on impact. The organisation has US$4 billion in assets under management, which likely makes it the largest foundation to undergo the shift, according to Mission Investors Exchange.

Although the researchers looked at a fairly small sample set of foundations, Reddy says it provides data “that is indicative of what the foundation universe” might look like.

“We cannot tell foundations how to invest and that’s not the intent, but we do want to spread the message that it is quite possible to align their assets to impact,” she says. “The idea is that this becomes a boardroom conversation.”

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