National dwelling values have surged 382 per cent over the past 30 years with an average annual increase of 5.4 per cent in compounding terms, according to figures from CoreLogic.
As short-term trends including recent price decreases continue to grab the attention of many, CoreLogic research director, Tim Lawless, has indicated that the long-term trend for housing values in Australia has been “undeniably upwards”.
“Given the focus on the surge in housing values through the pandemic, and the more recent weakening in home value trends as interest rates rise, it's worthwhile providing a refresher on how significantly housing values have changed over time, specifically the past three decades,” Mr Lawless said in a new report.
Over this period, Mr Lawless noted six distinct cycles of growth and an equal number of cycles of decline, including the current downswing.
“Each of the upswings and downturns have been characterised by different environments and catalysts of change such as taxation policy, monetary policy decisions, economic shocks, fiscal stimulus and broader economic conditions,” he explained.
The largest decade of gains was 1992 to 2002, during which prices climbed by 77 per cent, followed by 2012 to 2022 (72 per cent) and 2002 to 2012 (59 per cent).
However, Mr Lawless pointed out that local market dynamics had led to significant differences in how the various regions of the country had performed in these three decades.
“For example, the mining boom and subsequent bust in WA saw Perth housing values rise by 104 per cent between 2002 and 2012, but today's values are only 14 per cent higher over the current decade,” he said.
“In Hobart, the 1992–2002 period was the weakest of the three decades analysed, with values up 30 per cent, while the most recent 10 years has seen Hobart housing values surge 99 per cent on the back of stronger migration and an ongoing undersupply of housing.”
Long-term trends identified by the report include the notable outperformance of the capitals. Dwelling values across the combined capital cities were reported to have increased by 409 per cent in the past 30 years compared to the 294 per cent rise for the rest of state regions.
Melbourne had the highest 30-year growth rate among the capital cities at 459 per cent while regional Tasmania was the top-performing area regionally with growth of 361 per cent.
In contrast, the lowest 30-year growth rates were recorded in Perth (303 per cent) and regional Western Australia (214 per cent).
House values were also reported to have risen substantially more than unit values over the decades across most regions of Australia.
In the combined capitals, house values were up 453 per cent and unit values were up 307 per cent. This gap was narrower in regional areas, where house values increased by 314 per cent and unit values had lifted 213 per cent.
“Overall, the long-term trends highlight the cyclical nature of housing markets. Changes in housing values over decades are a clear reminder that time in the market is more important than timing the market,” Mr Lawless concluded.
Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.