We take a look at the price of property in Australia from 40 years ago to today and the factors that have contributed to this upward surge.
Fifty years ago, you could nab a house for tens of thousands of dollars. Today, headlines tell us that house prices are soaring through the roof, especially in Sydney.
Interestingly, CEO of the Real Estate Institute of Australia (REIA) Amanda Lynch says that housing-affordability issues have actually been brewing in Australia for quite some time. Factors at play
‘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. Spot the difference
To break it down, in 1973, median house prices across Australia’s capital cities looked something like this:
- Sydney – $27,400
- 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
Now, before your eyes start rolling into the back of your head, let’s put it all into some 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 house 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 times, they are a-changin’
‘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,’ explains Lynch.
There’s also been growing concern about the low levels of first-home buyers entering the market in recent years. Having said that, Lynch points out that the ABS is currently looking at the methods used to collect information on first-home buyers, due to the fact that they may be buying as investors rather than as owner-occupiers.
All in all, immense changes in the social structure of Australian society, the rise and fall of ‘boom’ industries such as mining, new ways of entering the property market and other financial factors over the years have all had an impact on Australian property prices.