Look­ing back at prop­erty prices

The Weekend Post - Real Estate - - Front Page - AN­DREW WIN­TER

WITH in­ter­est rates at a his­toric low, the hous­ing mar­ket boom­ing (not ev­ery­where I know), I thought I would take a lit­tle trip down real es­tate mem­ory lane just to re­mind us of how home loan rates and house prices were per­form­ing in the past.

Was Syd­ney al­ways top of the house price tree and Perth al­ways pricey?

This re­search cer­tainly re­veals some in­ter­est­ing statis­tics.

First, let us look at home loan rates, right now it seems many lenders can of­fer deals as low as 4 per cent, but how about we turn the clock back?

Dur­ing 2013/2014, rates were around the 5 per cent range.

That dif­fer­ence is just 1 per cent, but in real terms your monthly costs will have gone down around 20 per cent.

If you go back five years to 2010, rates were about 7.79 per cent; 10 years ago they were at 7.3 per cent.

Travel back 20 years to 1995 and see rates of 10.5 per cent, 30 years to 1985 and that fig­ure was then at 12 per cent and that had just re­duced a lit­tle from pre­vi­ous months.

Ad­mit­tedly, in many cases you could se­cure lower rates, but ne­go­ti­at­ing over your home loan rate is a more mod­ern phe­nom­e­non.

The head­lines are not mis­lead­ing. Th­ese truly are his­toric lows.

The last time rates were even close to this was in the early 1960s and even I wasn’t born then.

As for the bad days, and I do re­mem­ber th­ese as this tied in with a mas­sive prop­erty value crash, th­ese were back in 1989 when rates hit the peak at 17 per cent.

So your mort­gage is cheap right now, there is no doubt, but how about our me­dian house prices in the cap­i­tal cities?

What did they used to be and which cities topped the house price charts?

To­day we all ac­knowl­edge that key ar­eas of Syd­ney and Mel­bourne are not just a lit­tle bit more ex­pen­sive than just about ev­ery­where else, but those of us not in those cities or oth­ers in re­gional ar­eas want to say “tell ’em they’re dreamin’” when we hear the sale prices be­ing quoted.

So my trip back in time re­vealed some more in­ter­est­ing stats re­lat­ing not only to the value of homes but which of the cities used to rule.

Last year saw Syd­ney with Australia’s high­est me­dian house price of $760,000 and gor­geous Ho­bart with the low­est at $340,000.

Back in 2010, the top and bot­tom of the city house price charts were the same.

Syd­ney prices were lower though at $620,000, while in Ho­bart, prices were ac­tu­ally $5000 more.

If we go back to 2005, the or­der hasn’t changed at the top or bot­tom, ex­cept the cap­i­tal house value growth be­tween 2005 and 2010 for Ho­bart was about the same as Syd­ney!

All the way back to 1995 and things were a lit­tle dif­fer­ent, Syd­ney still ruled the roost and yes, Ho­bart you were still the cheap­est (sorry, “best value”).

Mel­bourne, how­ever, was not sec­ond.

Dar­win and Can­berra took sec­ond and third place re­spec­tively; even Bris­bane was ahead of the Vic­to­rian cap­i­tal.

Fi­nally look at 1985, 30 years ago. Syd­ney was ac­tu­ally beaten to the top spot by Can­berra. Syd­ney was sec­ond and Mel­bourne third.

As for the “good value” spot in 1985, this was not Tas­ma­nia.

The cheap­est cap­i­tal city then was Perth. As for me­dian house prices in 1985 they ranged from just $52,000 to $90,000.

So the an­swer is Perth wasn’t al­ways pricey, Syd­ney it would seem is al­most al­ways our priciest place to live and home loan rates are not just low, they are al­most off the scale.

The one fun­da­men­tal el­e­ment this ret­ro­spec­tive study of our hous­ing mar­ket clar­i­fies is that it has all hap­pened be­fore and it will hap­pen again; “it” be­ing low and high home loans and house price growth. That is why I love real es­tate. Give it time, the boom will bust and the bust will boom.

You just need to get your tim­ing right and add a lit­tle luck for good mea­sure.

Perth wasn’t al­ways pricey, Syd­ney it would seem is al­most al­ways our priciest place to live and home loan rates are not just low, they are al­most off the scale.

COSTLY VIEW: Syd­ney has al­ways been near the top of the list of ex­pen­sive places in Australia to buy prop­erty.

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