Australian Housing Prices Up 500% Over 25 Years

Proving itself as a reliable investment, research from the Real Estate Institute of Australia (REIA) shows the price of Australian housing is up 500% over 25-years.

According to data from REIA, the median price for Australian housing inflated from $160,000 in 1996 to $825,000 in 2020.

Other dwellings, such as units and apartments have seen capital values increase by just over 400% in comparison however these assets produce higher yields.

The data shows that over the past five years, housing grew by 25%, from a median of $683,000 to $825,000 while other dwellings rose by 10% to $600,000.

Mr Kelly said that over the 25-year period, Australian housing yields tightened from 5.1% to 2.9% while other dwellings have recorded a drop in yields but not as dramatic, falling from 5.2.% to 3.7%.

“Houses in Darwin have the highest return averaging 4.2%. In 1996, housing investments in Darwin were yielding 6.4%.

“Melbourne and Sydney have always had the lowest yields both falling from around 4% in 1996 to just 1.8% in 2020.

“The pandemic saw Melbourne and Sydney experience rising vacancies with Melbourne now the highest in Australia at 5% while Sydney is currently at 3.7%,” said Mr Kelly.

Further, Mr Kelly said that there has been a decline in investors in the market in recent times particularly as concerns have emerged with moratoriums on evictions and rising vacancies.

“Despite rising vacancies and the low yields, we are starting to see investors reemerge as they respond to a rising market with further growth expectations and low borrowing costs,” Mr Kelly added.

REIA’s latest report, Real Estate Market Facts found that in the December quarter 2020, the weighted average capital city median price for both houses and other dwellings increased in the Australian residential property market.

“The weighted average capital city median price increased by 6.0% for houses and by 0.9% for other dwellings. The weighted average median house price for the eight capital cities increased to $825,205. Over the quarter, the median house price increased in all capital cities.

“At $1,211,488, Sydney’s median house price continues to be the highest amongst the capital cities, 46.8% higher than the national average. At $490,000 Perth has the lowest median house price across Australian capital cities, 40.6% lower than the national average.”

The Australian housing market is rapidly evolving, with new research revealing changing activity in regional and city areas.

The latest Regional Movers Index from the Commonwealth Bank showed the exodus from Australian cities to the regions is significantly exceeding pre-COVID movements, sitting at 19.8 percent higher. Even more revealing is data which showed relocations are 1.8 percent up on the average recorded during the height of the lockdowns. At the same time, people in regional areas are staying put.

The report is a partnership between the Commonwealth Bank and the Regional Australian Institute. RAI CEO Liz Ritchie said the regions have become the permanent home of choice for more Australians.

“The inter-regional migration index —which tracks regional to regional relocations — has fallen by 5.1 percent, suggesting that more regional residents are content to stay where they are. With the continuing strong jobs market across regional Australia, increasing city property prices and ongoing cost-of-living pressures, it’s no surprise the regions remain desirable,” Ms Ritchie said.

She said this had significant implications for planners, with a better understanding of infrastructure needs required by planners.

“Regional Australia is truly the nation’s new frontier. There are so many opportunities in our regional communities, but likewise we know there are challenges. Housing for example remains a key ongoing concern in many communities,” she said. “Regional Australia is growing and for that to continue we need adequate foundations. The time to lay them is now.”

Among the areas to benefit from this shift over the past quarter was the Hunter Valley city of Maitland in NSW which saw a 3.4 percent increase in net migration from the cities and other regional areas. Long seen as the less desirable locale in the wine growing region, Maitland has attracted more buyers looking for an affordable home with lifestyle benefits. CBA Executive General Manager Regional and Agribusiness Banking Paul Fowler said it was an area on the rise.

“There is significant development happening around Maitland, with extensive land releases for residential, industrial, commercial and retail fuelling strong employment and construction industry opportunities,” Mr Fowler said.

“Maitland is also set to benefit from major investments in the area including the nearby Newcastle Airport which will welcome international flights from 2025, further enhancing the region’s accessibility and economic profile.”

And while Melbourne property prices continue to experience a lull, it’s a different story outside the capital, with regions closer to main city centres performing particularly well.

“A move to regional Victoria remains on trend among those relocating, with the state’s regional areas experiencing the largest surge in popularity in the 12-month period to September 2024, with its share of net regional inflows rising from 21 percent to 30 percent,” Mt Fowler said. “Trending scenic LGAs like Queenscliffe on the coast, as well as Moira, Wangaratta and Strathbogie located further north, offer attractive and more affordable lifestyle opportunities for many Australians.

“With more corporate employers setting up or relocating to Geelong, Queenscliffe’s proximity to Greater Geelong and the Melbourne CBD means more regional Australians can enjoy diverse employment opportunities while living in a beautiful location with enhanced lifestyle opportunities.”

Australian Housing Prices Up 500% Over 25 Years

However, yields have fallen to all-time lows.

Buyers are moving there in their droves while existing residents know they’re on a good thing