Do the prices being achieved in the current market support the theory that Australia’s house prices double in value every 10 years?
According to Cameron Kusher, PropTrack’s director of economic research, the answer is somewhat complicated. But ultimately, while some markets have hit that market over the past 10 years, many others have not, so from a national standpoint, the rule proves to be untrue — even though it was generally accurate for a number of decades prior.
As Mr. Kusher explained, going off of figures from May 2023, the median house price nationally sits at $730,000 and the median unit price is $560,000. Median house prices, therefore, have taken substantially longer than 10 years to double in value — 15.4 years or 185 months, in fact. Unit prices, meanwhile, doubled over the course of 17.8 years, or 213 months.
That being said, zooming in, some markets and sub-sectors did achieve a much more rapid climb in prices. The difference between houses and units, for example, varies based on location.
“Median house prices across the capital cities doubled quicker (14.3 years) than they did across regional markets (16 years). For units, it was a different story with regional prices doubling quicker (17.5 years) than those in capital cities (18.1 years),” Mr Kusher explained.
Regional Tasmania was the market where house prices doubled in the shortest amount of time — values saw a 100 per cent increase in just 5.8 years. The state’s capital, Hobart, followed closely behind at 6.8 years. Regional NSW (9.4 years), Regional Victoria (9.6 years) and Sydney (9.6 years) were the only other Australian markets to double in median value in less than a decade.
Meanwhile, median house prices have taken the longest to double in Perth (17.8 years), regional Queensland (17.8 years), and regional Western Australia (17.5 years).
On average, unit prices take longer to double than houses, according to PropTrack’s analysis.
Hobart was the only unit market to follow the 10-year rule, while values rose relatively quickly in regional NSW, climbing 100 percent in 13.1 years, and regional Victoria, which took 13.8 years to double unit prices.
The adage was farthest from the truth in Perth, where units doubled in value over 19.2 years. Brisbane was close behind (18.9 years), followed by Canberra (18.9 years).
By and large, median house prices in the more expensive cities of Sydney, Melbourne, and Canberra doubled more quickly than those in cities with cheaper median prices such as Brisbane, Adelaide, Perth, and Darwin.
What will the next 10 years hold?
While some of the irregularity in price increases over the past 10 years can be attributed to the substantial trickle-down effects of the COVID-19 pandemic, Mr. Kusher said those expecting properties to fall back to the 10-year rule will be disappointed.
“The key drivers of strong price growth over recent decades were primarily falling interest rates, which increase borrowing capacity; increasing household incomes as more women joined the workforce; easier and greater access to finance; and migration creating strong demand for housing,” he explained.
Many of those factors will not have as substantial an impact in the coming years as they have in recent memory.
“While there is little sign of strong migration of the past decade abating, interest rates are unlikely to fall as they have over recent decades, employment participation is unlikely to increase as much, and accessing a mortgage is more difficult than it has been in the past,” he said.
Ultimately, the economist opined, “It looks like the days of property prices doubling every seven to 10 years may be well and truly in the past”.
Source: REB