{"id":1253,"date":"2021-12-17T02:44:36","date_gmt":"2021-12-17T02:44:36","guid":{"rendered":"https:\/\/royabhishek.in\/urbanbuyer\/where-will-house-prices-be-25-years-from-now\/"},"modified":"2021-12-17T02:44:36","modified_gmt":"2021-12-17T02:44:36","slug":"where-will-house-prices-be-25-years-from-now","status":"publish","type":"post","link":"https:\/\/royabhishek.in\/urbanbuyer\/where-will-house-prices-be-25-years-from-now\/","title":{"rendered":"Where will house prices be 25 years from now?"},"content":{"rendered":"

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While most\u00a0real estate\u00a0investors worry\u00a0about the value of their properties today, particularly\u00a0in light of our flat and falling property markets, in my mind a much better question is \u201cwhere will property prices be 25 years from now?\u201d<\/b><\/p>\n

\"Depositphotos<\/strong>And the good news is that, believe it or not, the median house price in Sydney could be over $6million<\/strong> and the median apartment price in our Harbour City could be close to $3.5 million in 25 years\u2019 time.<\/p>\n

Now before you say \u201cNO that can\u2019t be! Housing is already unaffordable\u201d let me explain\u2026<\/p>\n

I bought my first investment property in Melbourne in 1973 for $18,000.<\/p>\n

I had to buy it in partnership with my parents because house prices were so expensive<\/em>, and we took out a 30 years loan because we had no idea how we were going to repay that much money.<\/p>\n

At the time we received $12 a week rent and were excited.<\/p>\n

I still own that property today \u2013 we\u2019ve since built two townhouses worth well over $2million where the original run-down house stood.<\/p>\n

What\u2019s happened to property in the last 25 years<\/h2>\n

According to Corelogic<\/a> research reported by Aussie<\/a> nationally, the median house value has delivered an annual growth rate of 6.8% and have risen in value by 412%, from $111,524 to $459,900 over the past 25 years.<\/span><\/p>\n

Apartments delivered an annual growth rate of 5.9% and have increased in value by $392,000 (+316%) since 1993.<\/p>\n

In 1993 <\/strong>the median house value across Australia was just interesting, apartments showed a slightly higher median value, at $123,840.<\/p>\n

It\u2019s the old story\u2026who wouldn\u2019t like to buy the home their parents bought for the price hey paid 25 years ago?<\/p>\n

\"7893\"<\/p>\n

Source: Corelogic and Aussie<\/a><\/em><\/p>\n

But as always growth rates were diverse with average rates of growth over the last 25 years being:<\/p>\n

\"5788994\"<\/p>\n

Source: Corelogic and Aussie<\/a><\/em><\/p>\n

Of course, a significant trend in the last 25 years has been Australian\u2019s adoption of apartment living.<\/p>\n

Here\u2019s how apartments have been performing:<\/p>\n

\"6600898jpg\"<\/p>\n

So what\u2019s ahead?<\/h2>\n

While past performance isn\u2019t always the best predictor of the future, and housing trends are likely to change with a shift to smaller housing since more of us will be trading back yards for balconies and courtyards; if property prices were to rise in the future at the same rate as over the past twenty-five years, here\u2019s what Aussie\u2019s report forecasts:<\/p>\n

\"6790<\/p>\n

\"468904\"<\/p>\n

\u00a0<\/p>\n

Source: <\/em>Aussie and CoreLogic<\/em><\/a> Median values have been extrapolated based on applying the annual compounding growth in median values over the past twenty five years to current median house and unit values.<\/em><\/p>\n

Yes, it\u2019s hard to believe that the median house in Sydney\u2019s value could be $6.35 million and $5.82 million in Melbourne.<\/p>\n

Obviously, these are simple extrapolations and don\u2019t, in fact, can\u2019t, account for the many economic, demographic and political variables that will play out over the next quarter of a century.<\/p>\n

However, Australia has a \u201cbusiness plan\u201d to keep growing its population.<\/p>\n

This plus the ongoing wealth of our nation should underpin the growth in value of our property markets.<\/p>\n

With Australia\u2019s current annual population growth of 1.4 percent, this adds around 340,000 people to our population each year.<\/p>\n

While this may not sound like much, we\u2019re adding the equivalent of one new Darwin every 20 weeks or a new Tasmania is stuffed into our capital cities every 18 months.<\/p>\n

\"DepositphotosSydney is growing much faster than the national averages and will add almost two million people to its population by 2037, which is the equivalent of adding a new Perth into Sydney.<\/p>\n

Of course, Melbourne is Australia\u2019s fastest-growing city, growing 18% faster than Sydney.<\/p>\n

At this rate, Melbourne is set to overtake Sydney as Australia\u2019s biggest city sometime in the 2030s.<\/p>\n

What does all this mean for house prices?<\/h2>\n

Well, the law of supply and demand would suggest that all else being equal, where population growth will be strongest, house price rises are likely to rise the most.<\/p>\n

\"8588085\"<\/p>\n

Source: Sydney Morning Herald<\/a><\/em><\/p>\n