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Property Price History Over The Last 40 Years

Property prices keep rising and housing is becoming ore unaffordable scream the headlines – especially in Sydney.

According to an article in Domain CEO of the Real Estate Institute of Australia (REIA) Amanda Lynch says thathousing-affordability issues have actually been brewing in Australia for quite some time.

Factors at playsave-money-house

“Although the level of affordability can vary cyclically, house-price and household-income data suggest that there has been an underlying structural affordability problem in Australia over the past half-century.

From 1960 to 2006, real house prices increased at an average of 2.7 per cent per annum, ahead of a 1.9 per cent per annum growth per household real income,” Lynch says.

According to Lynch, myriad factors have affected the housing system and property prices in the last 50 years.

These include an undersupply of housing, land-development processes and policies, the cost of construction and property-related taxes, as well as outside factors such as comprehensive taxation reform.

Back then:

To break it down, in 1973, median house prices across Australia’s capital cities looked something like this:

  • Sydney – $27,400Australia
  • Melbourne – $19,800
  • Brisbane – $17,500
  • Adelaide – $16,250
  • Perth – $18,850
  • Canberra – $26,850
  • Hobart – $15,200
  • Darwin – $87,500 (information unavailable until 1986; this value reflects 1986 housing costs)

Nowadays, we’re looking at much higher digits and another set of zeroes added to the price, according to September 2014 numbers from Domain Group’s House Price Report:

  • Sydney – $843,994
  • Melbourne – $615,068
  • Brisbane – $473,924
  • Adelaide – $459,258
  • Perth – $604,822
  • Canberra – $573,326
  • Hobart – $322,274
  • Darwin – $667,115

Let’s put this into perspective:

Back in 1973, the average weekly wage was $111.80 (including full- and part-time workers), according to the Australian Bureau of Statistics (ABS).

Today, a full-time worker makes on average $1453.90 weekly (before tax).

However, in the property price report, Dr Andrew Wilson, senior economist for the Domain Group, predicts that housing-market activity will continue to decline as affordable housing falls, joblessness increases and consumer confidence wavers.

The changing property landscape

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Lynch further explains:

“There have been many changes within the property landscape over the last 50 years.

We’ve seen a welcome increase in the level of foreign investment in commercial real estate, which has allowed for many inner-city apartment projects and new housing developments in the outer suburbs.

We’ve also seen an increase in the level of single-person households, both with retirees living longer and often alone in their family homes as well as with younger professionals who are increasingly living alone in inner-city areas. This, in turn, places extra demand on housing supply,” 

My thoughts:

While there is a growing level of concern about the low levels of first-home buyers entering the market in recent years, I remember buying my first property 40 years ago.

I paid $18,000 for a house and received $12 a week rent (and was excited!) I got $12 a week rent and took out a 30 year loan and had no idea how I’d ever pay that $18,000 off.

It was hard for first home buyers as well as property investors then. Having said that today many first home buyers are having to decide is it better to rent or to buy , and many are choosing to rent in areas they want to live, but can’t afford to buy and instead they become renting investors and buy an investment property where they can afford to helping them get a foot up the property ladder as explained by John McGrath here



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Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and his opinions are regularly featured in the media. Visit Metropole.com.au


'Property Price History Over The Last 40 Years' have 8 comments

  1. Avatar for Property Update

    November 4, 2014 @ 11:19 pm Derek

    Ever since I even thought about investing I have heard “how hard it is” for investors and First home buyers.
    While I’m not suggesting that it has ever been easy, it certainly is no harder now than when we bought our first home and then our investments.
    Michael, it would be enlightening if you, along with the historical values of homes, you also quoted the newspaper headlines about how “unaffordable” housing is from each era.
    With all the talk of prices dropping, it seems like the press just keep re-cycling the same old headlines – or am I mistaken?

    Reply

    • Avatar for Property Update

      November 5, 2014 @ 2:53 pm Michael Yardney

      Well said Derek

      it has always been hard for first homebuyers to get started and it always will. But it’s worth the savings and sacrifice

      Reply

      • Avatar for Property Update

        March 10, 2017 @ 3:32 am zoltan

        It”s rediculous. In 1973 the income to house Price Ratio was 3.5, now it”s 11-12. Hence, I have to work 3 times longer to buy a house now than I used to then. This is not hard, this is impossible.

        Reply

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          March 10, 2017 @ 6:53 am Michael Yardney

          That’s not exactly right Zoltan -what you haven’t taken into account is the cost of finance – falling interest rates mean that it costs half as much to borrow the same amount today than it did 10 years ago

          Reply

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            May 23, 2017 @ 12:23 pm Vitas

            Well, I personally believe that healthy interest rates in the healthy economy are at least 10%, where those retiring can live of their savings and those saving for the first property can save fast with a power of compounded returns. Unfortunately in the economy flooded with cheap cash where cash supply is further boosted by loose fractional lending practices cash resources are not allocated efficiently to the productive parts of economy that makes everyone directly and indirectly wealthier. Instead we have insanely expensive property market, the real economy is completely distorted and destroyed and all we rely on is further house price increases and consumer spending to buy us another few years of unearned prosperity. Sadly we all know how bubbles end. Japan serves as a good example, however they have been positioned much better than Australia and Japan had a very strong real economy that actually saved them from what could have been mother of all recessions. They saw property prices falling by over 80%, and we are talking about Tokyo, where space is really scarce unlike Sydney and Melbourne. I can not wait to make millions on crashing Australian economy and buy those multimillion dollar homes for the price of a deposit. We can already see how government is struggling to plug the holes in the sinking ship, and those who have common sense and basic education can conclude that we had seen the housing peak in March 2017. We will not see house prices that high in generations to come.

          • Avatar for Property Update

            May 23, 2017 @ 2:51 pm Michael Yardney

            Vitas I find your comments intersting – you hope prices will crash so you can buy in – but then what do you want to happen? Would you like prices to keep falling? Would you like them to stay static? Or are you really hoping for another boom so you can become rich?

  2. Avatar for Property Update

    July 7, 2017 @ 5:57 pm birchley

    I am running on the assumption that wages versus Sydney house prices will hit a brick wall and people will start relocating to Brisbane in droves. 20 years ago 1 person worked and paid a mortgage now both parents work. Whats next send the kids into coal mines. Most likely scenario over the next 20-30 years is a population explosion in Brisbane. Possibly Melbourne as well however if you have to move interstate why not to warm weather and lower priced housing (assuming it remains less than Melbourne). In turn more companies move to Brisbane.

    Reply

    • Avatar for Property Update

      July 7, 2017 @ 6:09 pm Michael Yardney

      Birchley – people don’t go interstate becuase proeprties are cheaper – nor dot hey move because it is sunnier. The majority of interstate and overseas migration is becuase of job creation

      Reply


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