MBL has been asking for proof that house prices in Australia have doubled every 10 years for the past 50 years. I couldn't find anything going quite that far back (I guess the records weren't so good back then) but I did find this report that goes back to 1970, and uses Treasury sources, so it should be reasonably accurate. It took about an hour of searching the web to find this document!
I'm sorry to say my findings do not support the claim that house prices have doubled every 10 years since 1970. In fact, the authors make this conclusion...
'Between 1970 and 2003, Australian real house prices rose by over 3 per cent per annum. On a quality-adjusted basis, house prices rose by about 2.3 per cent per annum. Over this period, there were four house price booms: 1972-74, 1979-81, 1987-89 and 1996 to 2003. In between these booms, real house prices tended to fall.'
My observations:
1. The booms have been getting larger...
- During the first ten years, prices rose by approx. 30%
- During the second ten years, prices rose by approx. 40%
- During the third ten years, prices rose by approx. 70%
2. These prices would include lower growth regional areas. Carefully selected properties close to capital cities, near water etc. would have performed much better than the average.
3. If the booms are getting progressively larger, what does this mean for the next ten years? We may see prices increase by more than 100%. Or we may return to the long term trend of 3% per annum.
4. Many cities around the world are more expensive than Australia. Australian prices should have ample room for further growth, before we become as expensive as Moscow, Seoul, Tokyo, Hong Kong, London, Osaka, Geneva, Copenhagen, Zurich, Oslo, New York, St Petersburg, Milan, Beijing, Istanbul, Paris, Singapore or Dublin.
Top 50 Expensive Cities: http://www.smh.com.au/news/world/top-50-cities/2006/06/26/1151174117013.html
House Prices 1970 to 2003: http://www.econ.mq.edu.au/research/2005/HousePrices.pdf
Some food for thought!
Cheers, Shadow.
I'm sorry to say my findings do not support the claim that house prices have doubled every 10 years since 1970. In fact, the authors make this conclusion...
'Between 1970 and 2003, Australian real house prices rose by over 3 per cent per annum. On a quality-adjusted basis, house prices rose by about 2.3 per cent per annum. Over this period, there were four house price booms: 1972-74, 1979-81, 1987-89 and 1996 to 2003. In between these booms, real house prices tended to fall.'
My observations:
1. The booms have been getting larger...
- During the first ten years, prices rose by approx. 30%
- During the second ten years, prices rose by approx. 40%
- During the third ten years, prices rose by approx. 70%
2. These prices would include lower growth regional areas. Carefully selected properties close to capital cities, near water etc. would have performed much better than the average.
3. If the booms are getting progressively larger, what does this mean for the next ten years? We may see prices increase by more than 100%. Or we may return to the long term trend of 3% per annum.
4. Many cities around the world are more expensive than Australia. Australian prices should have ample room for further growth, before we become as expensive as Moscow, Seoul, Tokyo, Hong Kong, London, Osaka, Geneva, Copenhagen, Zurich, Oslo, New York, St Petersburg, Milan, Beijing, Istanbul, Paris, Singapore or Dublin.
Top 50 Expensive Cities: http://www.smh.com.au/news/world/top-50-cities/2006/06/26/1151174117013.html
House Prices 1970 to 2003: http://www.econ.mq.edu.au/research/2005/HousePrices.pdf
Some food for thought!
Cheers, Shadow.