Australian house prices have increased by almost half in the past six and a half years, spurred on by rapid rates of growth in Sydney and Melbourne.
And the increase is even larger if you look at it across the past 20 years, with house prices increasing a whopping 436.6% since 1995.
With affordability now widely acknowledged as the number one concern among home owners and first home buyers, experts say there are no signs of a market slowdown – particularly in Melbourne and Sydney.
The latest CoreLogic RP Data Property Pulse report shows combined capital city home values increased by 43.1% between December 2008 and June 2015.
In Sydney and Melbourne growth was significantly higher, with Sydney home values increasing 68.8% and Melbourne increasing 43.1%.
House prices increased by more than 400% in the past 20 years.
CoreLogic RP Data senior research analyst Cameron Kusher says the above average rate of growth in those two markets has been an ongoing trend since the end of the financial crisis in 2008.
“Over the six and a half years since the end of 2008, value growth in Sydney and Melbourne has stood head and shoulders above all other cities,” he says.
“Capital city home values have trended much higher for a long time. Since we commenced our Index towards the end of 1995, combined capital city house values increased by 436.6% and unit values are up 330.4%. While we’ve seen periods where values have fallen however, values largely continued to rise over that time despite variances across specific cities.”
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Sydney – 68.7%
Melbourne – 54.1%
Darwin – 22.2%
Canberra – 22.2%
Perth – 14.3%
Adelaide – 12.4%
Brisbane – 8.9%
Hobart – 0.2%
The latest report comes as Social Services Minister Scott Morrison acknowledged that a lack of affordable housing was at the centre of most of Australia’s social problems.
He told the Institute of Public Affairs that secure housing is essential to protect vulnerable Australians – particularly those dealing with unemployment and family breakdowns.
“There are few issues more important to ensuring the welfare of Australians than housing. Housing provides the stability and certainty needed for individuals and families to deal with the many challenges they face – a place to care for those who need care, a place of refuge from violence and the list goes on.”
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Morrison says affordability not only affects the most vulnerable in society, but is a factor for thousands of people struggling to but their first home or meet repayments on their existing home.
He notes that home prices have increased more that twice the amount of wages in the past 25 years and that more than 30% of household income now goes to meet loan repayments in most cases – “breaching a commonly accepted housing affordability threshold.”
There appears to be no quick fix to Australia’s housing affordability problem, with the market predicted to continue growing in the next financial year.
Sydney and Melbourne are the strongest housing markets for capital growth
CoreLogic RP Data’s Property Pulse report shows Australians continue to prefer detached housing to units and apartments and Kusher says this will continue to drive growth in the sector.
“Sydney and Melbourne are the strongest housing markets for capital growth and we expect this to continue over the coming financial year,” he says.