Real es­tate sta­tis­tics tell an in­ter­est­ing story, writes An­thony Keane

Daily Mercury 15 Apr 2019

ONE of the prop­erty mar­ket’s most pop­u­lar say­ings, that house prices dou­ble ev­ery 10 years, is more ac­cu­rate than you might think.

De­spite real es­tate val­ues fall­ing this year in most cities, a MoneysaverHQ anal­y­sis of 40 years of Real Es­tate In­sti­tute of Aus­tralia data has found that a ma­jor­ity of state cap­i­tals have in­deed dou­bled ev­ery decade.

But it hasn’t been a smooth ride, with many years of lit­tle growth and then short boom pe­ri­ods. Since the REIA data se­ries be­gan in 1980, the num­bers have been im­pres­sive. • Syd­ney prices have dou­bled four times, up from $64,800 to $1.06 mil­lion – a 1536 per cent gain.

• Mel­bourne me­dian house prices have also dou­bled four times, up from $40,800 to $796,500.

• Bris­bane dou­bled four times, from $34,500 to $530,000.

• Ade­laide didn’t quite get there, dou­bling at least three times from $36,300 to $475,000, and it was a sim­i­lar story for Perth – up from $41,500 to $500,000.

• Can­berra has per­formed the best of all cap­i­tals, dou­bling al­most five times from $39,700 to $665,000.

• Smaller cities Ho­bart and Dar­win don’t have REIA records dat­ing back to 1980, but have both dou­bled at least twice since the late 1980s. Ho­bart’s me­dian house price has climbed from $88,000 to $502,800 since 1991, and Dar­win is up from $87,500 to $493,800 since 1987.

REIA pres­i­dent Adrian Kelly said real es­tate had al­ways been a long-term propo­si­tion.
“There’s not too many peo­ple who have made money out of buy­ing and sell­ing prop­er­ties quickly,” he said.

Prop­erty was a form of forced sav­ing for in­vestors, Mr Kelly said. “Then you have an as­set – or more than one – to sell down when you re­tire.”

He said there was an un­prece­dented amount of un­cer­tainty around real es­tate prices right now, caused by the bank­ing royal com­mis­sion, Bud­get, fed­eral elec­tion and loom­ing tax changes. Turner Real Es­tate man­ag­ing di­rec­tor Lach­lan Turner said prop­erty should be seen as a long-term in­vest­ment to re­coup the costs of buy­ing and sell­ing, in­clud­ing stamp duty. “Get­ting in takes about 5 per cent when you in­clude all the costs,” he said. “You have to grow 5 per cent just to break even. “Growth nat­u­rally takes time – it doesn’t hap­pen im­me­di­ately. It’s a slow burn.” Metropole Prop­erty Strate­gists CEO Michael Yard­ney said the cur­rent na­tional prop­erty down­turn of 17 months was al­ready the sec­ond-long­est on record, be­hind only 2010-12.

“This means this is likely to be the long­est and deep­est prop­erty down­turn in mod­ern his­tory,” he said.

Mr Yard­ney said try­ing to time prop­erty in­vest­ment at the bot­tom of the mar­ket was a flawed strat­egy, and made min­i­mal dif­fer­ence to longterm per­for­mance.

“Imag­ine you man­aged to save $50,000 buy­ing your $700,000 in­vest­ment prop­erty by tim­ing the mar­ket or snar­ing a bar­gain,” he said. “Fast for­ward 20 years and, if your prop­erty is well lo­cated in a high-growth, in­vest­ment-grade sub­urb, it is likely to be worth over $2 mil­lion.

“That $50,000 sav­ing you may, or may not, make to­day will be in­signif­i­cant in the scheme of things.”