There is no such thing as a property market ‘timeline’, one cannot set a ‘property clock’ for when the next growth cycle will start, and there is no ‘Rule of Thumb’ for how frequently property prices double.
For proof of this one only needs to look at the property market performance over the last decade ending 2020, wherein 4 out of 8 capital cities plus a bunch of regional locations produced very little price movement.
Good, bad or otherwise, each individual property market does whatever it does due to the sum of all influencing factors. Without question, those influencing factors were at their best-ever during the 5-years ending 2005 when house prices in large parts of Australia doubled in value.
As outlined in Propertyology’s 2021 Property Market Outlook Report, Australia currently has its best conditions for capital growth in 15 to 20 years.
Anyone currently forecasting house price growth of circa 5 to 8 percent this year and next is grossly underestimating market conditions. I am anticipating that multiple markets will produce 20+ percent growth this year alone.
If ever there was a time when house prices in some locations might again double within a 5-year period it is right now.
Australia’s Most Prosperous Era
A graphical illustration of the last 30-years of Australian real estate history shows the 5-year block ending 2005 standing out like a beacon.
The millions of Aussies who put some skin in the game in that period would have accomplished more for their future financial security than from any other period in time.
The median house price of 5 out of 8 capital cities increased by more than 100 percent in that 5-year period.
With a whopping 147 percent capital growth in just 5-years, Hobart was the best performed capital city property market, while Sydney (57 percent) and (Melbourne 67 percent) were the ‘worst’.
There was a swag of regional towns and cities that outperformed every capital city over the 5-years ending 2005. Literally dozens of locations produced more than double the rate of Sydney and Melbourne’s capital growth.
Believe it or not, this big country of ours actually has 183 individual cities and towns that have a population of more than 10,000 people. The median house price effectively doubled in 128 of 183 locations in that 5-year window ending 2005.
Among Australia’s best performed property markets were the regions of Cooma NSW (186 percent), Southern Grampians VIC (183 percent), Bateman’s Bay NSW region (163 percent), Kempsey NSW (161 percent), Byron NSW (158 percent), Huon Valley TAS (156 percent), Hervey Bay QLD (152 percent) and Coffs Harbour NSW (150 percent).
From coastal communities to inland wonders and in every state, property ownership helped to drive household wealth from Tweed (146 percent) to Toowoomba (110 percent), from Tamar (138 percent) to Tamworth (107 percent) and Townsville (96 percent).
As illustrated in this graphic, real estate prices skyrocketed all over Australia!
Back then, home loan interest rates were circa 7 percent (more than double what they are today), yet that didn’t stop widespread, large increases in median house prices in fantastic regional locations like Launceston TAS (143 percent), Maitland NSW (133 percent), Maroochydore QLD (140 percent), Mount Barker SA (103 percent), Mackay QLD (134 percent) and Margaret River WA (128 percent).
During that 5-year period, Australia’s unemployment rate peaked at 7.2 percent in October 2001 and had reduced to 5.1 percent by December 2005.
Right now, the national unemployment rate sits in the mid 6-percent range however, there never has been a mathematical formula that connects unemployment rates to real estate prices [here’s proof].
Importantly, Australia’s most prosperous real estate era was one wherein this country had reasonable political stability (federal and state), governments were investing heavily into infrastructure, and they prioritised economic development initiatives. Today’s post COVID-19 conditions are similar to back then.
This, combined with banks having a positive attitude towards supporting the aspirations of responsible borrowers, provided the Australian public with both the confidence and support to acquire real estate.
For perspective, over the five calendar years ending 2020, only 18 out of 183 towns produced capital growth better than 40 percent. And house prices in 2 of the 8 capital cities and 34 regional locations declined over this most recent 5-year period.
Contrary to what most believe, population growth only plays a small role. Australia’s population growth rate throughout the most recent decade was noticeably higher than the two previous decades yet the rate of property price increases were underwhelming in comparison.
For those who have already forgotten, Sydney and Melbourne had record high population growth in 2017 to 2019 yet they produced their biggest ever property market downturns.
Related article: True meaning of ‘housing demand’
Things which influence the behaviour of 100 percent of the *existing* population are a gazillion times more important to property markets than the 1 percent that Australia’s population does not grow by due to COVID-19 international border controls. A dead-set give away for identifying a ‘fake expert’ is to look for those waffling about the importance of population growth.
The reality is that, right now, property prices in every location in Australia are currently rising and several started to boom in H2 2019, before COVID-19.
Related article: Australia’s biggest ever rent boom
In many cases, the strong property price growth that is currently occurring is well overdue. A few capital cities and numerous regional locations have seen very little change in their median house price since way back in 2007. They are about to receive a big boost.
All things being equal, Australia has just commenced an era of accelerated rates of home ownership and wealth creation, in a very similar way to the 5-years ending 2005.
As often happens, property investors usually follow the herd and arrive last to the party. But, if enquiry volumes at Propertyology are anything to go by, more mum-and-dad investors are starting to realise that conditions for investing in one’s future are currently as good as they have ever been.
It does not get any better than attractive rental yields (circa 5 percent) which more than cover interest expenses (sub 3 percent) plus intense upward pressure on (both) asset values and rents.
Here’s how to get in touch with Propertyology
Propertyology are national buyer’s agents and Australia’s premier property market analyst. Every capital city and every non-capital city, Propertyology analyse fundamentals in every market, every day. We use this valuable research to help everyday Aussies to invest in strategically-chosen locations (literally) all over Australia. Like to know more? Contact us here.
