There’s always conversation among owners and buyers about the price of property and how quickly values have risen since the outbreak of the pandemic.
Have we had an historic boom because of Covid? Have prices been rising faster than ever before?
New data from industry researcher CoreLogic says value increases have not matched the boom of 25 years ago but have still surged 39.1% in the past five years.
That’s added $230,000 to the median dwelling value.
Tight supply, high demand and a strong economy – even during Covid – have been the key contributing factors to helping Australians build their wealth through property investment.
Dig into the history books, and you’ll see this Covid spike has been moderate compared with two previous booms.
In the five years to March 1989, property values jumped 75.5%.
Even that period cannot outdo the five years to December 2003 when prices recorded a leap of 79.7%.
CoreLogic says these two 70%-plus booms were fuelled by “financial deregulation, strong economic growth and favourable demographic shifts”. And there have been associated factors, like low interest rates at the time of the Asian financial crisis, and our mining boom.
The introduction of capital gains taxes in 1985, with an exemption for primary residences, also drove an increase in owner-occupier demand in the late 80s.
Changes to capital gains taxes benefiting investors, and the introduction of first-home buyer grants, stimulated housing demand in the early 2000s.
Kaytlin Ezzy, an economist at CoreLogic, said, “Outside of a few short months of declines, values have seen strong upward pressure over the past five years, driven by low stock levels and increased demand.”
The strongest rolling five-year rise in Sydney values was recorded in the late 1980s (80.7%). Similar lifts were seen in Melbourne.
Perth’s peak of 137.8% was recorded over the five years to September 2006.
Today, CoreLogic estimates the combined value of residential real estate is $11.3 trillion.
National home values rose 0.7% over the rolling quarter, with the state capitals up 0.5% and the regions up 1.4%.
CoreLogic estimates there were 42,553 sales nationally in March, taking the rolling 12-month count to 528,212.