Have you ever been to a typical Aussie barbecue and not indulged in a conversation around either the weather or the property market ? Nope, I haven’t either.
The great Australian dream of owning a house goes far back and beyond the millennials, which explains our love for the property market.
In this blog, we dive into some of the most commonly shared property stats.
Looking back, 1993-2019
Strong housing market conditions have boosted household wealth over the last twenty five years. While these long-term historic numbers provide important insights into the strength of Australian property market, it is equally important to analyse the timing of the high-growth sub-periods.
Chart below shows the national median house and unit price movement in Australia for a 25 year period between 1993 and 2018. House prices in Australia have quadrupled in value during this time, which equates to an annual increase of 6.8%.
Now let’s look at this chart again, but this time with further segregations. Over a long term, Australia has seen house prices double every decade. However, more than half of this increase comes from just 2 years off the 10 years. So, if investors miss these critical high growth periods (eg 2000-03, 2006-08, 2017-18), they’ll have to wait another 5-6 years to get a boost in their returns.
Over a long term, Australia has seen house prices double every decade. However, more than half of this increase in that decade comes from just 2-3 years.
Looking ahead..
As Warren Buffet famously said “In the business world, the rear view mirror is always clearer than the windshield”. The same is true for the property investment. Historic numbers do not guarantee future returns and a property investor always accept some degree of risk in their portfolio. There are some principles can lower the risk profile of your investment.
Traditionally, demand for housing is Australia has been driven by population growth. Increasing number of unit sales and average lot sizes of new developments indicate heavy interest in high-density capital cities and suburbs with 30-40 km radius.
In the business world, the rear view mirror is always clearer than the windshield
Warren Buffet
It’s hard to imagine what the housing market will look like twenty five years from now. With technology progressing at a rapid pace, more households are likely to work from home, making ‘commute to work’ less of an influential criteria in the buying decision. This may see some housing demand deflected to the markets outside of the capital city boundaries where housing tends to be more affordable.
Check out our next blog for insights into the future of Australian property market.
