Melbourne the Best Housing Return
Australia’s housing markets are changing … but not in the way you’ve expected.
The latest forecast from the respected Deloitte Economics says interest rates will start rising from next year – but those increases, when they come, will be slow … to avert the prospect of a housing a family financial collapse.
The reason is that no matter where you live, there’s financial stress when buying a house. If you’re in Sydney or Melbourne … even Canberra … the prices are higher … but so are average wages.
In Adelaide, Hobart, Perth and, to a lesser extent Brisbane … the typical wages are lower, but so are house prices.
Its the relativity of house prices around the states that got me thinking.
Go back to 1982 – 35 years ago – as financial deregulation was about to hit Australia – that transformed banking and housing markets.
At that time an average house in Sydney was $79,000. In Melbourne $46,000. Brisbane, more, $55,000. Adelaide $42,000, Perth $48,000 and Hobart $40,000.
You can see that apart from Sydney and Melbourne, prices were about the same.
Today it’s quite different. Average Sydney houses are over $1 million. Melbourne $745,000. Brisbane $525,000. Adleaide $460,000, Perth $500,000 and Hobart about $382,000.
Best housing market
So, over 35 years, which has been the best performing housing market? Sydney you’d say. You’d be wrong. It’s Melbourne … 8.35% a year for 35 years. It’s head and shoulders above the rest. Try getting that tax free from almost any other investment.
In Sydney the 35 year return is 7.6 percent; Adelaide next 7.06%; Perth 7%, Hobart 6.66 percent and Brisbane around the same.
The reason is largely Melbourne’s growing population which is pushing it close to Sydney’s population today.
It also says that as people contemplate where to live, raise a family and build a career … population growth is one of the key drivers to long-term prosperity … not short-term interest rate movements.
Dow jones on Friday up 84 … Dollar this morning 78 and a quarter US cents.
This month Money Minute links