Tim Lawless from Core Logic RP Data and I chat about the top 25 best & worst performing areas for median house price increases over the past 20 years
Top 25 Best and Worst Performing Areas Over The Past 25 Years.
Ross Greenwood: I want to go to something else because there’s been a new report put out today in regards to property prices. We know the pressures on property prices right around Australia as we speak, but in this particular case it actually goes back, not just over the last two or three years, it goes back over 20 years and looks at where you should have really had your money over that period of time. This is from CoreLogic. Now, CoreLogic does a lot of the performance reviews of property prices around the country.
It effectively goes back and says in the 20 years to the end of December last year that average property price on a national basis have grown at a compound annual rate of 7.2% which is pretty close to where your super fund would have been during that same 20 year period I suspect. It’s where you should have been that’s the interesting thing. Let’s go to the man who puts a lot of his research together. Tim Lawless with CoreLogic RP data on the line right now. Many thanks for your time Tim.
Tim: Good day, Russ.
Ross Greenwood: All right, tell me, in hindsight, where should have I put all my money?
Tim: Well, as you said there was a 7.2% annual growth rate over the past 20 years nationally but it varied really substantially. The number one performer, this is based on local government areas around the country, was actually Murrumbidgee.
Ross Greenwood: Hang on, that’ll be pretty cheap to buy Murrumbidgee in that whole district, I would have thought.
Tim: This is one of the fascinating things when you’re working with numbers, a 13% growth rate per annum looks quite substantial but when it moves from a really low base like Murrumbidgee has, it can really magnify the numbers. You can still buy in the Murrumbidgee for under $170,000 on average, but some of the more I suppose more central locations are generally around inner Melbourne. You’ll find that of this top 25 list we’ve put together, 17 of the regions are actually located in Victoria with most of them around Melbourne.
Victoria Best Performing State
Ross Greenwood: What we’re talking the double digits, let’s just have a look at some of those because there’s some fascinating ones and most of them are Victorian. Monash, Whitehorse, Boroondara, Glen Eira, Maribyrnong, Yarra, Darebin, they’re the ones that actually stand out and most of those now have a median price above one million dollars.
Tim: That’s right. 20 years ago you could have bought into many of these suburbs for around say $300,000 or so and, of course, with the benefits of compounding growth, we’ve seen some spectacular wealth being created out of these markets. And one of the reasons why they’ve seen so much appreciation, particularly around inner Melbourne, is simply because a population growth has been so strong and the economy has been so strong. Melbourne, consistently, over each of the growth cycles over the past 20 years has performed generally above average compared to the other capital cities.
Ross Greenwood: Notwithstanding the fact that Sydney has had such a big catch up and just for those people in Sydney. Some of the top performing areas include Boorowa with other prices there have been very cheaper, an average price or median price around 235,000, there’s also Liverpool, Byron, and Waverley, they’re the key ones. Waverley is the most expensive of the suburbs, although the regional areas in there with a median price now have around 2.6 million dollars.
Tim: If you look around Sydney, there’s really two types of suburbs in that regions that make this list, it’s the outer flung areas where the land prices have just risen quite spectacularly. If you buy into a market around the outer region, say in Liverpool, in Sydney, say suburbs like Austral or Cecil Hills, we’ve seen prices in those markets based on too many rural sales that have been subdivided and now attracting upwards of say one to even three million dollars.
Whereas we go to markets at a closer to the city like the eastern suburbs and Waverley and so forth, clearly it’s the inherent undersupply of housing and just a scarcity of land in those markets and the fact that demand remains so high to buy into those areas.
Ross Greenwood: It’s really funny because Boorowa was an interesting one to look at also, just looking down towards Yass, those types of areas and that’s about land values going up in a significant hurry around there. In Queensland, not too many areas actually copped the gong but Isaac, Banana, they’re not in the city, they’re actually out in some of the regional areas.
Tim: This is absolutely fascinating because Isaac is essentially Moranbah, the heartland of the coal-mining Bowen Basin. It’s one of the regions where prices over the past couple of years have fallen by about 30% but to really highlight how strong the run-up in prices was prior to 2012 but there still increased in Isaac by 11.5% per annum over the past 20 years.
Ross Greenwood: It’s fascinating to watch it. The small tip is that those small cheaper areas that maybe over the next 20 years, because it’s great for you to tell me what’s happened over the past 20 years. What everybody’s saying is, “Please, Tim, tell us what’s going to happen in the next 20 years.”
Tim: Well, the past is never an indication of the future.
Top two traits to look for.
Ross Greenwood: well, thanks very much, that’s what everybody says. [laughs] What would be the trait? if you were thinking about this much you learn from this what are the traits you look for?
Tim: I think there’s absolutely two golden rules here, one of them is buying the scarcity and buying the markets where people absolutely desire to live. That’s the eastern suburbs effect and that’s the inner suburbs regions that have really shown a strong growth. The other one would be the absolute underlying land value in a city that’s iconic like Sydney. Look at the outer lying suburbs where a lot of people never would have desired to live, if you had bought in many of those outer-flung suburbs, bought a large block of land that can now be subdivided, you’re sitting on the gold mine. That’s probably the two things I take out of this.
Ross Greenwood: And also to remember over the next 20 years that the cities of Melbourne, Sydney, Brisbane, all of those are going to grow again, the populations are going to grow and as a result that growth in the city is going to see property values over the very long term continue to increase notwithstanding some of the dips and drops that they will have along the way. Tim Lawless from CoreLogic RP and always great to have you in the program, Tim, we appreciate it.
Tim: Thanks, Ross.