In this episode, Damien and Jeremy dissect a marketing email Damien received, claiming wage growth is one of the most important, overlooked pieces of property data for the next decade, and test its two example suburbs directly against historical capital growth data.
The Claim
The newsletter argues that areas where wage growth outpaces the state average tend to see stronger property price growth, encouraging readers to analyse wage growth data by location and "follow the money." Jeremy notes, to be fair, the newsletter is phrased as a suggestion rather than an absolute claim, a small positive compared to more definitive marketing language he's seen elsewhere.
The Newsletter's Two Example Postcodes
The newsletter presents two Victorian postcodes using weekly family income charts sourced from SQM Research: postcode 3337 (Melton area, including Harkness, Kurunjang, Melton, Melton West, and Toolern Vale), presented as an example to avoid, where the area's income has fallen behind the Victorian state average by 2021, despite being above it back in 1991; and postcode 3011 (Seddon and Footscray), presented as an ideal example, where income started below the state average in 1991 but had overtaken it by 2021.
Why the Original Charts Are Hard to Read
Jeremy notes the original dollar-value income charts make it difficult to see with the naked eye exactly when one area's growth overtakes another's, since the gap between two bars isn't an intuitive way to judge relative growth rates over time.
Jeremy's Reanalysis: Wage Growth Rate by Period
Jeremy rebuilds the same underlying ABS census data (collected every five years) as a percentage growth-rate chart instead, directly comparing each postcode's five-year wage growth rate against the Victorian state average for every census period from 1991 to 2021. The results: postcode 3337 (the "avoid" example) never once exceeded the state average wage growth rate across all six periods measured. Postcode 3011 (the "ideal" example) exceeded the state average in five of the six periods, most dramatically from 2006–2011 and 2011–2016, more than double the state's growth rate in both cases, with the only exception being the most recent period (2016–2021), where its wage growth actually fell behind the state average.
Testing the Theory Against Actual Capital Growth
Jeremy then checks what capital growth actually followed in each of the "ideal" wage growth periods identified for postcode 3011. If the newsletter's theory held, buying in 2011 or 2016 (the two periods showing the strongest, most obvious wage growth outperformance) should have produced the strongest subsequent capital growth. Instead, using capital growth data from each of those purchase years through to early 2025, postcode 3011 underperformed the Victorian state average in both cases, and also underperformed postcode 3337, the very postcode the newsletter had flagged as one to avoid. From 2016 to 2025 specifically, postcode 3337 (low wage growth) achieved more than double the capital growth of postcode 3011 (high wage growth), while also outperforming the state average.
Jeremy notes the only period where the theory would have actually worked was buying in 1996, following the first (1991–1996) measurement period, but every other opportunity to act on the theory, including its two most extreme, seemingly obvious signals, would have led to underperformance rather than outperformance.
Jeremy's Conclusion
Jeremy is careful to clarify he isn't proposing an inverse relationship (deliberately seeking out low wage growth suburbs) either, his point is that the newsletter never appears to have actually tested its own theory against historical outcomes before publishing it, and that if it had, its own two chosen example suburbs would have directly disproven the claim being made. He stresses that drawing a general rule from a sample size of two suburbs is statistically meaningless regardless of the outcome, and that this kind of claim needs to be tested across many suburbs and many time periods before being presented as reliable guidance.
Both hosts discuss possible reasons wage growth doesn't reliably predict capital growth: rising area income can reflect a change in resident demographics (wealthier people moving in) rather than existing residents receiving pay rises, and even where incomes genuinely rise, that additional income isn't necessarily redirected into local property demand at all, it could just as easily fund a holiday, a caravan, or other discretionary spending.
Why This Matters
Jeremy's broader concern is that this newsletter did include real data and charts, unlike vaguer, purely opinion-based marketing, which could make it appear more credible to someone newer to property investing, even though the underlying interpretation of that data was never actually validated. Damien adds that a newer investor encountering this kind of seemingly evidence-based content might reasonably lower their guard and trust the source more readily as a result, reinforcing the importance of independently checking any claimed relationship against real outcomes, not just checking whether a source includes charts and data at all.
Closing Thoughts
Jeremy speculates that firms who have promoted a theory like this for a long time may be reluctant to walk it back publicly, given the reputational cost of admitting a long-held claim doesn't hold up, and jokes about the theoretical possibility of a class action from past clients advised on this basis, though neither host offers a legal opinion on that point. Both close by encouraging listeners who've encountered similar wage-growth claims to share this episode, and to send in any similar articles or claims they're unsure about for the team to review in future episodes.