Market Distress: +2.7% Extra Growth Per Year
Suburbs where fewer than 15% of sales are at a loss grow 2.7% per year faster than those with 30% or more. That is extra growth, on top of whatever the market does.
This is one of several threshold indices in the Microburbs research programme.
What Is Market Distress?
When more than 30% of properties in a suburb sell at a loss, it signals deep problems. Loss-making comparable sales drag down valuations. Banks use those comps for lending. Buyers anchor to them. The oversupply takes years to absorb.
Suburbs where fewer than 15% of sales are at a loss show the opposite pattern. Owners are sitting on gains. Sales are selective. Buyers face competition, not distress.
This is a single, measurable variable: the percentage of house sales in a suburb that settle below the previous purchase price. No composite model. One number, one threshold, one clear result.
Three Performance Tiers
The threshold splits suburbs into three tiers based on the percentage of sales at a loss. Each tier shows a distinct growth pattern.
Suburbs with low distress grow 0.58% faster than the market. Suburbs with high distress trail by 2.09%. The total gap is 2.68 percentage points per year.
Performance Over Time
The chart below tracks the 2-year annualised growth rate for low-distress suburbs (blue) and high-distress suburbs (red). The low-distress line sits above the high-distress line in 92% of quarters.
Consistency Across 27 Sample Dates
We tested the signal at 27 different points in time between 2008 and 2023. The top tier outperformed at 25 of those 27 dates.
| Date | Extra Growth (2yr) |
|---|---|
| 2008-03 | +0.31% |
| 2008-10 | -0.44% |
| 2009-05 | +0.43% |
| 2009-12 | +0.93% |
| 2010-07 | +1.56% |
| 2011-02 | +2.08% |
| 2011-09 | +2.48% |
| 2012-04 | +3.20% |
| 2012-11 | +2.26% |
| 2013-06 | +2.38% |
| 2014-01 | +3.71% |
| 2014-08 | +2.74% |
| 2015-03 | +3.09% |
| 2015-10 | +4.37% |
| 2016-05 | +6.10% |
| 2016-12 | +5.28% |
| 2017-07 | +2.83% |
| 2018-02 | +2.14% |
| 2018-09 | +1.54% |
| 2019-04 | +1.46% |
| 2019-11 | +3.29% |
| 2020-06 | +5.30% |
| 2021-01 | +3.79% |
| 2021-08 | +1.68% |
| 2022-03 | -2.39% |
| 2022-10 | +0.96% |
| 2023-05 | +7.25% |
Geographic Breakdown
The signal works across most Australian regions. Positive spread means low-distress suburbs outperform high-distress suburbs.
Full Regional Table
| Region | Spread | Sales Tested |
|---|---|---|
| Rest of SA | +7.95% | 6,367 |
| Rest of WA | +4.39% | 14,830 |
| Rest of Vic. | +4.23% | 48,123 |
| Rest of Qld | +3.94% | 60,564 |
| Greater Perth | +3.79% | 19,424 |
| Greater Adelaide | +3.28% | 23,604 |
| Rest of NSW | +2.08% | 121,464 |
| Greater Brisbane | +0.74% | 34,607 |
| Rest of Tas. | +0.64% | 240 |
| Greater Melbourne | +0.54% | 32,205 |
| Greater Sydney | -0.06% | 68,153 |
Is This Pattern Real?
We tested this rigorously. The pattern of +2.68% extra growth was confirmed by testing across 491,844 total sales over 15 years.
The signal worked at 25 of 27 different time periods. It held in 10 of 11 geographic regions. The low-distress suburbs beat the high-distress suburbs in 92% of quarters.
Want the Full Statistical Detail?
The Technical Whitepaper covers p-values, t-test methodology, and the full date-by-date and region-by-region breakdown.
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