Mean Reversion: +3.0% Extra Growth Per Year
Suburbs that grew less than 44% over the past decade outperform by 3.0% per year over the next four years. This pattern held at every single sample date. 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 Mean Reversion?
Property markets revert to the mean. Suburbs that have grown quickly tend to slow down. Suburbs that have lagged tend to catch up.
This is one of the most consistent patterns in Australian property data. We tested it at 163 different time points across 14 years. The pattern held every single time. No other threshold in our research has a 100% consistency rate.
The threshold is straightforward. Measure how much a suburb's median house price grew over the past 10 years. If it grew less than 44%, it is in the top tier for future growth. If it grew more than 91.9%, it is in the bottom tier.
Low past growth is not a sign of a bad suburb. It is a sign of an undervalued suburb waiting to catch up. High past growth is not a sign of continued momentum. It is a sign that the easy gains have already been made.
Three Performance Zones
The model splits suburbs into three tiers based on their past 10-year median house price growth. Each tier shows a distinct forward growth pattern.
367,662 sales tested
252,173 sales tested
205,557 sales tested
This is one of the strongest and most consistent signals in our research. It held at 100% of sample dates from 2008 to 2021.
Consistency Across 28 Sample Dates
We tested the signal at 28 different points in time between 2008 and 2021. The top tier outperformed at every single date. No exceptions.
| Date | Extra Growth (4yr) |
|---|---|
| 2008-03 | +2.63% |
| 2008-09 | +2.53% |
| 2009-03 | +2.43% |
| 2009-09 | +2.02% |
| 2010-03 | +2.32% |
| 2010-09 | +2.41% |
| 2011-03 | +2.77% |
| 2011-09 | +3.63% |
| 2012-03 | +4.07% |
| 2012-09 | +4.63% |
| 2013-03 | +5.49% |
| 2013-09 | +6.61% |
| 2014-03 | +6.38% |
| 2014-09 | +5.67% |
| 2015-03 | +4.84% |
| 2015-09 | +3.35% |
| 2016-03 | +1.62% |
| 2016-09 | +0.56% |
| 2017-03 | +1.25% |
| 2017-09 | +1.29% |
| 2018-03 | +1.95% |
| 2018-09 | +2.61% |
| 2019-03 | +2.34% |
| 2019-09 | +1.57% |
| 2020-03 | +2.26% |
| 2020-09 | +2.93% |
| 2021-03 | +4.34% |
| 2021-09 | +6.32% |
Geographic Breakdown
The signal works across most Australian regions. Positive spread means the signal works as expected.
| Region | Spread | Sales Tested |
|---|---|---|
| Greater Sydney | +6.40% | 63,808 |
| Greater Hobart | +6.32% | 251 |
| Rest of Tas. | +3.49% | 364 |
| Rest of Qld | +3.30% | 119,654 |
| Rest of SA | +2.78% | 26,495 |
| Rest of WA | +2.77% | 41,480 |
| Greater Brisbane | +2.63% | 48,015 |
| Rest of NSW | +2.34% | 86,646 |
| Greater Melbourne | +2.15% | 33,702 |
| Greater Adelaide | +1.83% | 36,174 |
| Rest of Vic. | +1.51% | 56,582 |
| ACT | -0.09% | 5,948 |
| Greater Perth | -0.27% | 48,743 |
| Greater Darwin | -0.97% | 3,999 |
| Rest of NT | -1.80% | 1,358 |
Is This Pattern Real?
We tested this rigorously. The pattern of +3.02% spread was confirmed by testing across 825,392 total sales over 14 years.
This is a real signal, not a crystal ball. Many factors drive property prices, from interest rates to local infrastructure to supply constraints. Across 14 years of data, this pattern holds with perfect consistency.
The signal worked at all 28 different time periods. It held in 12 of 15 geographic regions. The top tier outperformed the bottom tier in 100% of quarters. The t-statistic is 251.87 and the p-value is essentially zero. These results point to a genuine, repeatable pattern.
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.
Find Undervalued Suburbs Near You
Get mean reversion scores for every suburb in Australia. Identify suburbs where low past growth signals strong future performance.