Looking back at property prices
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.