RESEARCHRESIDENTIAL PROPERTY

Wealth via real estate, house prices up 500pc

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HOUSE prices across the country have grown by more than 500% in the past 25 years, while yields have fallen to record lows.

Data from REIA data shows that the median price for Australian houses rose to $825,000 in 2020, compared to the median of $160,000 in 1996.

Other dwellings have seen capital values increase by 400%, while this is lower in comparison, dwellings such as apartments and units have produced greater yields for the same period.

Yields in houses have tightened from 5.1% to 2.9%, while other dwellings have seen a smaller drop from 5.2% to 3.7%.

According to Adrian Kelly, REIA president, housing investors have been more spurred on by capital gains than yields.

“Houses in Darwin have the highest return averaging 4.2%. In 1996, housing investments in Darwin were yielding 6.4%. Melbourne and Sydney have always had the lowest yields both falling from around 4% in 1996 to just 1.8% in 2020,” said Kelly.

“The pandemic saw Melbourne and Sydney experience rising vacancies with Melbourne now the highest in Australia at 5% while Sydney is currently at 3.7%,” added Kelly.

Over the past five years, house prices went from a median of $683,000 to $825,000, for an increase of 25%, while other dwellings rose to $600,000, an increase of 10%.

“Despite rising vacancies and the low yields, we are starting to see investors reemerge as they respond to a rising market with further growth expectations and low borrowing costs,” said Kelly.

The weighted average capital city median price was up for both houses and other dwellings over the December Quarter, up 6.0% for houses and 0.9% for other dwellings.

The median house price also increased in all capital cities for the quarter, with the weighted average median house price for all eight reaching $825,205.

“At $1,211,488, Sydney’s median house price continues to be the highest amongst the capital cities, 46.8% higher than the national average. At $490,000 Perth has the lowest median house price across Australian capital cities, 40.6% lower than the national average,” added Kelly.

In the more immediate term, house prices continued to climb into March, with the home auction market breaking records, with strong buyer demand and resulting competition driving up numbers.

According to Archistar, all capital cities saw an increase in median prices for houses sold at auction, with Brisbane seeing the greatest growth in annual change, surging by 29.3%. This was followed by Sydney with 16.4%, Canberra with 12.2%, Melbourne with 11.0% and Adelaide with 10.9%.

“Weekend home auction markets as expected have continued to produce boom-time results over March with prices and clearance rates now clearly at record levels,” said Dr Andrew Wilson, chief economist at Archistar.

“Although April is typically a quieter month for auction activity with buyers and sellers distracted by holidays, results will nonetheless likely continue to track at record levels with home prices set to go  higher – and higher,” he added.

Meanwhile, Sydney reported the highest median price for houses sold at weekend auction over March with $1,609,375, Brisbane with $1,099,750, Melbourne with $1,010,750, Canberra with $926,875 and Adelaide with $757,375.

Auction clearance rates were also up in March, Sydney and Adelaide topped the bunch with 90.0%, followed by Canberra with 89.6%, Melbourne with 82.0% and Brisbane with 81.4%.

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