Australian house prices soar by 500% over the past 25 years

Australian housing prices have soared by more than 500% over the past 25 years but while capital values have grown, yields have fallen to all-time lows.

Real Estate Institute of Australia (REIA) President, Adrian Kelly said housing investors have been driven more by expected capital gains rather than rental yields.

According to data from REIA, the median price for Australian housing inflated from $160,000 in 1996 to $825,000 in 2020.

It’s a tale of two cities with other dwellings, such as units and apartments seeing capital values increase by just over 400% in comparison however these assets produce higher yields.

The data shows that over the past five years, housing grew by 25%, from a median of $683,000 to $825,000 while other dwellings rose by 10% to $600,000.

Mr. Kelly said that over the 25-year period, Australian housing yields tightened from 5.1% to 2.9% while other dwellings have recorded a drop in yields but not as dramatic, falling from 5.2.% to 3.7%,” he said.

“Houses in Darwin have the highest return averaging 4.2%. In 1996, housing investments in Darwin were yielding 6.4%.

“Melbourne and Sydney have always had the lowest yields both falling from around 4% in 1996 to just 1.8% in 2020.

“The pandemic saw Melbourne and Sydney experience rising vacancies with Melbourne now the highest in Australia at 5% while Sydney is currently at 3.7%,” he said.

Mr. Kelly said that there has been a decline in investors in the market in recent times particularly as concerns have emerged with moratoriums on evictions and rising vacancies.

The increasing vacancy rates had made residential property less attractive as a proposition for investment, particularly in inner Sydney and Melbourne.

Source: Australian house prices soar by 500% over the past 25 years (propertyupdate.com.au)