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A new index has revealed that just one-sixth of Australian homes are responsible for more than 51 per cent of the nation's capital growth, with unique characteristics linking the properties together.
The findings from integrated residential property firm, LongView, show that older dwellings on well-located land have continued to outperform the broader market.
While median house prices in Sydney, Melbourne and Brisbane grew by 3.3 per cent, 1.6 per cent and 6.9 per cent respectively over the past year, properties classified as RODWELLs delivered annual growth of 7.04 per cent in Sydney, 5.95 per cent in Melbourne and 8.23 per cent in Brisbane.
“While overall house price growth has been subdued over the last 12 months, RODWELLs have consistently surged ahead,” said Evan Thornley, co-founder and CEO of LongView.
“RODWELLs are typically quality family homes where land accounts for 75–80 per cent of the property’s value.
“We’ve always known that land appreciates while buildings depreciate so if investors and home owners want real capital growth, this is where they should be looking.”
The RODWELL index tracks the price performance of this subset of older, established homes situated in tightly held locations. Despite representing just one in six properties nationwide, they account for 51 per cent of all capital growth – a dynamic LongView said is central to the structural forces shaping the Australian housing market.
The company uses the RODWELL classification to underpin its Home Equity Fund, which co-invests in residential property. The fund posted a return of 4.55 per cent for the most recent quarter.
The fund has co-invested in more than $130 million worth of residential property across the three cities.
It is open to wholesale investors, starting at $100,000, and has a 12-month return of 9.10 per cent.
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