Unfortunately, if you’ve been an advocate of the long-held belief that property prices double every 10 years then you might be disappointed after recent research from CoreLogic RP Data found that it simply hasn’t been the case – at least not in recent times.
According to Corelogic’s research, home values across Australia’s capital cities have only grown by a total of 72.0 per cent in the 10 years to January 2016, well short of doubling in value.
If we look at the split between houses and units, house values are 73.1% higher compared to a 64.3% increase in unit values.
However, while the 10-year myth might not have held true for the last decade, it has applied to previously recorded decades and could be where it originated.
In the 10 years from January 1996 to January 2006 there was a significant increase in property prices, with a total increase of capital city home values of a whopping 151.7 per cent, which is more than double the growth we have seen in the last decade.
What about the future of property prices? Is there any chance that we will return to property prices doubling in value within a decade?
Again, it doesn’t seem likely for any Australian capital cities. If we look at the data from the last 5 years of property values, Sydney and Melbourne are the only capital cities to have seen an increase in home values of more than 10 per cent, so it’s unlikely that we will see prices double by 2021.
While there may be been a time when property values doubled every decade, Corelogic’s data suggests that the days of rapid property growth are well behind us.
But this could be a good thing. If property prices grow too fast, it becomes harder and harder for the average Australian to get into the property market, particularly if wages don’t grow at the same rate. So slower and sustained property growth is much better for everyone.
If you’re interested in reading the full CoreLogic RP Data report visit www.corelogic.com.au.