Has Australia's property market turned the corner?
Investments | 7/05/2019 |
8 min read
If the glut of home reno shows and media coverage is any indication, Australian’s are obsessed with real estate and the property market. But a new report from HSBC shows we still have a ways to go before we can compete with the world’s best.
According to the recent online report, Australian’s spend an average 2.5 hours a week focused on the property market. That’s well behind the United Arab Emirates (6.6 hours). US (4.95 hours) and Singapore (3.3 hours).
While we’re certainly enthusiastic, in global rankings we come out seventh in the 10 nations that were surveyed. That may have something to do with the housing market downturn we’ve seen over the past year. As prices have dipped and the market has cooled and less properties have come onto the market.
That being said, we may be over the worst of it. Speaking to the AFR, CoreLogic's Kevin Brogan said activity had picked but was yet to reach the levels seen in previous years and the May 18 federal election still weighed on sellers and buyers.
"In the context of the overall housing market we are actually seeing a reduced rate of value decline," Mr Brogan said. "We've seen the values coming off relatively rapidly for a year but it does look like that has slowed down a bit."
CoreLogic's April house price figures showed a 0.7 per cent drop in Sydney, a fall of 0.6 per cent in Melbourne. Sydney property values have plummeted 14.5 per cent and Melbourne's values have dropped 10.9 per cent since they both peaked in 2017.
On a more positive note, property is long term investment, and if we consider the past 25 years there’s a clear trend. According to the 25 Years of Housing Trends report prepared by Aussie, median house values have risen by 400% over the last quarter century.
Twenty five years ago the typical national house price was $111,500. Since then the value have risen by an average 6.8% per annum, reaching $571,400. That's an average dollar value increase of almost $18,400 per annum.
It's important to note that past performance is no indicator of future trends. But the same report notes that if the next 25 years pans out in a similar fashion the median house price in Melbourne will hit $5.8 million.
As RealEstate.com.au points out, "Increasing at the same annual rate of 8.1 per cent as it has since 1993, Melbourne’s median of $825,000 would soar to $5.825 million in 2043. And the apartment market would also surge deep into the millions. It’s annual rise of 6.6 per cent to $574,000 would take the median value to $2.847 million by the same date."
In other words, It's unlikely that Australia’s enthusiasms for property is going anywhere. And once those prices start heading north again we can expect our global ranking to join them.
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