When it comes to buying an investment property, you want to make sure you’re putting your money into an investment-grade property in a growth suburb.
Tip: Due diligence is key here, so it’s vital to do your research into location, demand levels, property types, and long-term price trends to make the best investment decision.
This is why it’s so important to look at the average house price growth over at least 10 years - it helps give a great indicator of what to expect from your investment property in the next 10 years or longer.
On the other hand, looking at the performance of a location or a particular property over a shorter period can be deceptive.
Many investors are keen to know how long it will take for the value of their property to double.
And it’s a question you should know the answer to - after all, capital growth is one of the main reasons people invest in real estate.
It has been often said that the average yearly increase for top-tier properties in major cities is generally around 7%, meaning that these properties would double in value within a span of 10 years.
Here, to give a clearer picture, let’s drill down into house prices over the last 10 years in each Australian state.
Sydney house price growth over the last 10 years
Looking at Sydney’s house price growth over the last 10 years, values in Australia’s harbour city have doubled.
SQM Research data show that the weekly asking property price for the average house in March 2014 was $962,965 or $881,473 for the average 3-bedroom house.
As of the week ending 4th June 2024 those figures have skyrocketed to an average of $1,924,710 for all houses or $1,659,853 for a 3-bedroom house.
As you can see in the chart below, Sydney’s house price growth has steadily increased over the entire 14-year period listed in SQM’s research, with the exception of a minor dip in values around 2019 and again when interest rates started rising in 2022
Overall, Sydney’s median house price has grown an impressive 97% over the past 10 years.
The majority of Sydney’s property price growth occurred during the initial 2021-2022 pandemic-induced property boom, with levels rising again through late 2023 and into this year.
Sydney's asking property prices graph
| Property type | Median price | 12-month change | 3 year (pa) change | 7 year (pa) change | 10 year (pa) change |
|---|---|---|---|---|---|
| All houses | $1,924,710 | 7.0% | 7.7% | 5.0% | 7.1% |
| 3-br houses | $1,659,853 | 6.1% | 5.4% | 4.1% | 6.4% |
| All units | $805,529 | 4.8% | 6.2% | 2.1% | 3.8% |
| 2-br units | $874,967 | 6.2% | 6.8% | 2.3% | 4.3% |
| Combined | $1,473,589 | 6.2% | 7.0% | 4.2% | 6.2% |
Source: SQM Research, June 2024
Melbourne house price growth over the last 10 years
Similarly, looking at Melbourne’s house price growth over the last 10 years, values in Australia’s southern city have also doubled.
SQM Research data show that the weekly asking property price for the average Melbourne house in March 2014 was $634,921 or $624,410 for the average 3-bedroom house.
As of the week ending 4 June 2024, those figures have jumped to an average of $1,261,070 for all houses or $1,124,483 for the average 3-bedroom house.
Unlike Sydney, the data shows that while the Melbourne property market has enjoyed a consistent rise in property values, it has not grown as strongly over the last couple of years in part related to the challenges with the local economy.
Having said that, over the 10-year period, Melbourne’s house prices have grown 96.15%.
However Melbourne apartments values have floundered over the last decade, meaning anyone buying an established apartment in Melbourne at present would be able to purchase it at below replacement cost, meaning there is considerable inbuilt intrinsic value.
Melbourne's asking property prices graph
| Property type | Median price | 12 month change | 3 year (pa) change | 7 year (pa) change | 10 year (pa) change |
|---|---|---|---|---|---|
| All Houses | $1,261,070 | 6.5% | 5.9% | 4.7% | 7.1% |
| 3-br Houses | $1,124,483 | 4.3% | 4.2% | 3.5% | 5.8% |
| All Units | $603,456 | 2.0% | 2.2% | 2.8% | 3.6% |
| 2-br Units | $593,973 | 0.4% | 2.3% | 2.1% | 3.1% |
| Combined | $1,055,615 | 5.4% | 4.9% | 4.1% | 6.3% |
Source: SQM Research, June 2024
Brisbane house price growth over the last 10 years
It’s much the same for Brisbane’s house price growth over the last 10 years, as values in Queensland’s largest city have also doubled.
SQM Research data show that the weekly asking property price for the average Brisbane house in March 2014 was $537,670 or $472,287 for the average 3-bedroom house.
As of the week ending 4 June 2024, those figures have surged to an average of $1,104,641 for all houses or $928,195 for the average 3-bedroom house.
That means that as of 2024, the average house price in Brisbane has risen by $520,669 over 10 years.
Or, in other words, Brisbane’s property values over 10 years have risen 96.8%.
As you can see in the chart below, the majority of Brisbane’s house price growth occurred during the 2021 pandemic property market boom, with prices surging again from late 2023 through to today.
Brisbane's asking property prices graph
| Property type | Median price | 12 month change | 3 year (pa) change | 7 year (pa) change | 10 year (pa) change |
|---|---|---|---|---|---|
| All Houses | $1,104,641 | 14.1% | 17.5% | 9.0% | 7.3% |
| 3-br Houses | $928,195 | 12.5% | 16.0% | 8.2% | 6.9% |
| All Units | $618,088 | 19.2% | 16.5% | 7.1% | 5.4% |
| 2-br Units | $607,296 | 18.4% | 16.9% | 7.5% | 5.4% |
| Combined | $983,475 | 14.8% | 17.2% | 8.6% | 7.0% |
Source: SQM Research, June 2024
Adelaide house price growth over the last 10 years
Values in the South Australian capital have grown strongly over the last 10 years.
SQM Research data show that the weekly asking property price for the average Adelaide house in March 2014 was $477,329 or $444,921 for the average 3-bedroom house.
As of June 2024, those figures have risen to an average of $909,476 for all houses or $821, 346 for the average 3-bedroom house.
That means that as of March 2024, the average house price in Adelaide has risen by $393,252 over 10 years.
Or, in other words, Adelaide’s property values over 10 years have risen 82.3%.
As you can see by the chart below, the majority of that increase has occurred since the pandemic boom when an otherwise very stable property market skyrocketed in line with a nationwide property surge.
Unlike values in Sydney, Melbourne, or Brisbane, Adelaide’s property prices then continued to rise sharply through 2023 and into 2024.
Adelaide's asking property prices graph
| Property type | Median price | 12 month change | 3 year (pa) change | 7 year (pa) change | 10 year (pa) change |
|---|---|---|---|---|---|
| All Houses | $909,476 | 15.4% | 17.9% | 8.6% | 6.6% |
| 3 br Houses | $821,346 | 13.1% | 16.8% | 7.9% | 6.2% |
| All Units | $468,067 | 11.4% | 13.1% | 6.9% | 4.5% |
| 2 br Units | $492,638 | 20.3% | 15.7% | 8.4% | 5.6% |
| Combined | $830,302 | 15.0% | 17.3% | 8.4% | 6.3% |
Source: SQM Research, June 2024
Perth house price growth over the last 10 years
Looking at Perth’s house price growth over the last 10 years, values in Western Australia's capital have generally experienced very low levels of growth.
Sure it's been the star performer over the last year or so, but SQM Research data show that the weekly asking property price for the average Perth house in the first week of March 2014 was $766,209 or $673,631 for the average 3-bedroom house.
As of June 2024, those figures have increased to an average of $994, 562 for all houses or $896, 798 for the average 3-bedroom house.
Perth’s house price growth over the past decade is much more modest compared to the other Australian states but the city’s property values have still risen a smaller $64,182 or 8.37% over the 10-year period.
As you can see on the chart below, Perth’s property prices saw a small but gradual decline between 2014 and the 2021 pandemic boom, before upticking in line with the rest of the country over the last 17 months.
The strongest uptick has occurred in the first two months of 2024.
Perth’s asking property prices graph
| Property type | Median price | 12 month change | 3 year (pa) change | 7 year (pa) change | 10 year (pa) change |
|---|---|---|---|---|---|
| All Houses | $994,562 | 18.5% | 13.5% | 5.9% | 2.8% |
| 3-br Houses | $896,798 | 20.9% | 13.9% | 6.2% | 3.0% |
| All Units | $522,942 | 18.6% | 10.2% | 3.6% | 1.3% |
| 2-br Units | $513,296 | 17.8% | 10.5% | 4.0% | 1.7% |
| Combined | $871,813 | 18.4% | 12.8% | 5.5% | 2.5% |
Source: SQM Research, June 2024
Which Australian city has the best result?
The data differs for each of Australia’s 5 major capitals, but there is a clear trend throughout… growth.
The data shows that in Sydney, Melbourne, Brisbane, and Adelaide, house prices have increased by an impressive 80-100%.
Perth has enjoyed a lower but relatively stable 8.37%.
House prices over the last 10 years in each major Australian city
| City | Median house price | Growth per annum | Total 10-year growth |
|---|---|---|---|
| Sydney | $1,924,710 | 7.0% | 7.1% |
| Melbourne | $1,61,070 | 4.3% | 5.8% |
| Brisbane | $1,104,641 | 14.1% | 7.3% |
| Adelaide | $909.476 | 15.4% | 6.6% |
| Perth | $994,562 | 18.5% | 2.8% |
Source: SQM Research, June 2024
While the figures for house price growth over the past 10 years are impressive, history shows that some areas and properties outperform others in terms of capital growth by an additional 50-100%.
In other words, strategic property investors can outperform the averages.
And there is no reason why those property investors who buy an investment-grade property today should not see their property’s value double within the next 7 to 10 years.
In the medium term, our property markets will be underpinned by 3 factors:
- A significantly growing population
- Strong jobs creation
- Increasing the wealth of our nation
Note: The problem is...in my mind only around 4% of the properties on the market currently are what I would call "investment-grade".
It’s also worthwhile noting that you can’t just look at a city or state-wide level.
Because not only does each city have its own property cycle - but there are also cycles within each cycle.
However, I see the current market offering a window of opportunity for property investors with a long-term focus.
You see…we are at the early stages of a new property cycle, something that doesn’t happen very often.
Not that I suggest you try and time the market- this is just too difficult, and in truth, you’ve missed the bottom which occurred in early 2023.
But if the market hands you an opportunity like this, why not take advantage of it?
Taking advantage of the upturn stage of a new property has created significant wealth for investors in the past.
Moving forward, demand is going to outstrip supply for some time to come as we experience record levels of immigration at a time when we’re not building anywhere as many properties as we require.
At the same time, the cost of construction of delivering new dwellings will keep increasing not only because of supply chain issues and the lack of sufficient skilled labour but also because builders and developers will only commence new projects if they are financially viable and currently new projects will need to come on line at considerably higher prices than the current market price.
In due course, consumer sentiment will rebound when it becomes clear that inflation continues to fall and interest rates have peaked.
At that time pent-up demand will be released as greed (FOMO) overtakes fear (FOBE - Fear of buying early), as it always does as the property cycle moves on.
We are also going to be experiencing a prolonged period of strong rental growth - the rental crisis will only worsen further, with no end in sight.
Now I'm not suggesting taking advantage of tenants, what I'm suggesting is to recognise there is currently a problem (lack of rental accommodation) and provide a solution.
So rather than trying to hunt down a bargain, focus on buying an investment-grade property in an A-grade location because these types of properties are in short supply but are still selling for reasonably good prices…
Plus they’ll hold their value far better in the long term.
READ MORE: Do property values really double every 7 to 10 years?
