What makes a housing boom?

Not all cheap areas are good buys, and a housing boom isn’t just about affordability – it’s about a mix of key factors.

Here are seven indicators that signal potential growth:

1. Population Growth – A booming market must attract more residents. If an area’s growth rate exceeds its 10-year average, it’s a positive sign.

2. Employment Growth – Local job creation (not just employed residents) is crucial. Strong job growth fuels demand.

3. Real Wages – Higher real local incomes support rising housing prices. Sectors like specialist trades, tech, and research drive sustainable growth.

4. Tight Supply – Housing shortages (less than three months of sales stock or <2% rental vacancy) push prices up.

5. Undervalued Housing – Local investors snapping up properties and increased renovation activity suggest housing is priced below potential.

6. Demographic Mix – A balance of young buyers, upgraders, and downsizers sustains long-term growth.

7. Education – Proximity to top-performing schools can drive price premiums.

The X Factor: Unexpected catalysts – overseas investment, infrastructure projects, or economic shifts – can push a market into overdrive.

While some areas may still ‘boom,’ the post-Covid surge is unlikely to repeat.

For me, investors should focus on these seven fundamentals for sustainable gains.

About Michael Matusik
Michael is director of independent property advisory Matusik Property Insights. He is independent, perceptive and to the point; has helped over 550 new residential developments come to fruition and writes his insightful Matusik Missive