Are you always kicking yourself for not purchasing property 40 years ago, seeing how exponentially the prices have increased?
Let’s take a trip down memory lane and assume you bought your first home or investment property in 1975.
Across Australia’s capital cities in 1976, median house prices looked like this:
- Sydney – $36,800
- Canberra – $35,100
- Melbourne – $32,900
- Adelaide – $29,800
- Hobart – $31,575
- Perth – $33,000
- Brisbane – $26,275
There’s a few interesting things that come out of these figures.
- How cheap property prices seem when you look back today (not that they seemed inexpensive at the time)
- Brisbane was the cheapest capital city 40 years ago, well behind Hobart and Adelaide.
It’s important to keep things in perspective, though.
The average wage in the mid 1970s was around $6,000, according to the Australian Bureau of Statistics, so the median Sydney house price was almost six times’ the value of the average annual income.
Forty years on, both wage and house prices are considerably higher, although they haven’t grown at a consistent pace.
Sydney’s median is now 27 times higher than it was in 1975; if wages had matched that pace, the average wage would now be $162,000.
Of course two of the big reasons behind this are:
- There are more two-income families (both partners working) today than there were 40 years ago, increasing disposable household income.
- Interest rates have virtually halved substantially; increasing affordability. The standard variable interest rate in 1976 was 9.88%, meaning you needed to pay twice as much interest to service the same dollar value of loan.
House prices today:
Median capital city property values at the end of October 2017 were as follows:
- Sydney – $905,917
- Melbourne – $710,420
- Perth – $462,624
- Canberra – $582,882
- Brisbane – $490,525
- Darwin – $437,910
- Adelaide – $430,303
- Hobart – $396,393
Knowing what you know now, who wouldn’t have liked to buy their parent’s house for what your parents paid years ago?
Wouldn’t it be great to have a crystal ball and take a peek into property markets of the future and see where real estate prices will be in another 40 years? In its absence, it’s a pretty safe bet to assume that in the long-term, property values will continue to grow, underpinned by our growing population and the general wealth of our nation.
It’s important to keep this in mind when you’re negotiating your next property deal, as squabbling over $2,000, $5,000 or even $10,000 in today’s dollars is unlikely to have a huge impact on your eventual wealth.
Buying smart, investing in strong growth locations and negotiating the best price for the current market conditions: these are the most important tenants of property investing.
Follow these steps and you’ll be less likely to lament ‘the one that got away’ in years to come!
If you’d like some more information about buying your next home or investment property, feel free to get in touch! We’d love to guide you through the process. Send us an email at firstname.lastname@example.org, or give us a call on 6254 6333.