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House prices over the decades
Tuesday, 21 September 2010 00:00
Tim Lawless
The Australian property market moves in cycles which are influenced by a wide range of factors including unemployment, interest rates, consumer confidence and of course previous rates of growth that impact on rental yields and levels of affordability.
Over the last three decades Australian house prices have increased at the average annual rate of 8.4%. That's a pretty decent rate of growth when you consider that prices double every ten years based on an annual compounding rate of 7.2%. In comparison, the rate of inflation has averaged about 4.6% over the last 30 years and 3.2% over the last decade.
Of course, there have been some periods where growth rates have well and truly eclipsed this average rate of growth and periods where prices have well and truly underperformed.
Tuesday, 21 September 2010 00:00
Tim Lawless
The Australian property market moves in cycles which are influenced by a wide range of factors including unemployment, interest rates, consumer confidence and of course previous rates of growth that impact on rental yields and levels of affordability.
Over the last three decades Australian house prices have increased at the average annual rate of 8.4%. That's a pretty decent rate of growth when you consider that prices double every ten years based on an annual compounding rate of 7.2%. In comparison, the rate of inflation has averaged about 4.6% over the last 30 years and 3.2% over the last decade.
Of course, there have been some periods where growth rates have well and truly eclipsed this average rate of growth and periods where prices have well and truly underperformed.
So, what about a prediction, Tim?
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For prospective buyers it is worthwhile considering the long-term trends in the market. The average length of tenure for Australian home owners is about 7.3 years; a time frame that is likely to smooth out the peaks and troughs of price growth encountered through the cycles.
The economic and demographic foundations of the market remain solid which suggests that we are likely to see ongoing improvements in Australian house prices, albeit at a much more modest rate that what was seen between 2009 and the first quarter of 2010.
The economic and demographic foundations of the market remain solid which suggests that we are likely to see ongoing improvements in Australian house prices, albeit at a much more modest rate that what was seen between 2009 and the first quarter of 2010.
"Improvements in Australian house prices" eh? Excellent news. Look out below!
