Historical Australian House Prices

As part of my general research on Australian Property I have been looking for graphs showing long term price trends, probably like most other property investors. Unfortunately, I have not been able to find these kinds of graphs other than the typical 10 or maybe 20 year trend graphs - but that is not really the long term horizon I want. I want more something like the last 50 years and I didn't want to pay for the data.

With some persistence I have found two datasets over different time periods, being:

• Median Australian house prices from 1986 to 2006 from REIA as quoted in Michael Yardney's book "How to build a multi-million dollar property portfolio in your spare time"

• Median Melbourne house prices from 1960 to 1986 from BIS Shrapnel as quoted in Jan Somer's book "Building Wealth through Investment Property".

Even though these datasets are different in that the REIA data are median prices for the whole of Australia and the BIS Shrapnel data is median price data for just Melbourne, I believe that they provide a representive overview when combined as long as you are looking for long term trends. In fact, median price data is quite unreliable other than for general, longer term trends anyway.

The first graph below is therefore based on the above datasets with the BIS Shrapnel data running from 1960 to 1985 and the REIA data from 1986 to 2006. It clearly shows strong exponential growth, but with periods of limited growth where the curve remains relatively flat.

If you look closely at the supporting data you can see that from a median price of $8,300 in 1960 it took some 12 years for the median price to double by mid 1972, but then from mid 1972 to mid 1975 the prices doubled again - just three years. Below, I have summarized the doubling periods taking 1960 as the basis:

1960 - 1972 = 12 years
1972 - 1975 = 3 years
1975 - 1983 = 8 years
1983 - 1988 = 5 years
1988 - 2001 = 13 years

Table of Australian House Prices
between 1960 - 2006

Source: REIA median house price data for 1986-2006 across Australia and BIS Shrapnel data for median house price in Melbourne between 1960 - 1985

Interestingly enough most property experts state that Australian residential property values double in 7-12 years with the long term average indicating a doubling in values every 7 years, which suggests an annual growth just over 10%. Now the dataset I have used here is not internally consistent so I have to be careful with drawing conclusions, but to me the data does suggest that the typical doubling period is much more erratic than the established property experts would have us believe. And the averaged annual growth between 1960 to 2006 was 8.7% rather than in excess of 10% annual growth.

You can also see from this that the value of timing the market can be significant - if you can get it right. Problem is, that most of us can't call the exact top or bottom of a cycle let alone predicting whether the doubling will be in 3, 5, 8 or maybe even 12 years. So, I personally don't try to "time the market" and in stead rely on "time in the market". Not very glamorous and certainly not a get rich scheme, but it is a sure way to build wealth. Hopefully significant wealth.

I am looking to find a single consistent dataset from 1960 or earlier and will then update this page. In the process I have found house price data for Brisbane from 1970 onwards and developed a similar set of graphs, but with limited commentary.

When you redraw the above chart using a logarithmic vertical axis you get the chart shown below. It uses the same data, but by plotting it this way you can more easily determine how annual growth has varied over the years. If annual growth had been constant over the years, the graph would be a perfect straight line, like the dashed trend line. Instead, you can see certain periods where growth lagged, typically followed by a few years of accelerated growth.

Now the graph above can be a bit misleading in that it suggest a very stable growth pattern, but when you annualize the median price data more carefully and calculate annual price increases you see that there are years of extreme, moderate, low and sometimes even negative growth.

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