Brisbane the best long-term performer - and Sydney the worst - since 1970

Posted on 5/01/2015  

Brisbane has been the best long-term performer in real estate among Australia’s eight capital cities.

It has averaged 11% a year in house price growth since 1970, which means Brisbane prices have doubled every 6 years or so over the past 35 years.

The growth has not been even, with the Seventies being particularly strong for Brisbane real estate. The Eighties were also healthy, but in the Nineties value growth was sluggish in all cities.

Melbourne has also averaged better than 10% a year price growth since 1970, with its prices doubling every seven years on average. But the bulk of Melbourne’s high growth came before 1990 and the city has been a mediocre performer since.

The Nineties were the worst years for residential real estate since 1970. Even with the latest price boom, no capital city has averaged better than 8% annual growth since 1990.

When you consider that Brisbane, Melbourne, Perth and Sydney have all averaged 9%-11% a year since 1970, it shows how much the Nineties have dragged down overall property performance. It took the market quite some time to recover from the high interest rates of the late Eighties and the economic recession of the early Nineties.

The poor performance of the Nineties means that no capital city has averaged 10% annual price growth since 1980. The best performer in that time period is Brisbane which averaged 9.7%, marginally ahead of Perth. Melbourne and Canberra also did better than 9% a year.

Whichever set of numbers you look at, Sydney has been poor relative to other cities:-

Its growth performance since 1970 is inferior to both Brisbane and Melbourne;

Since 1980 it has been out-performed by Brisbane, Perth, Melbourne and Canberra – and matched by Adelaide;

Since 1990 Sydney’s average growth rate is the lowest of the capital cities, except Melbourne; and

Since 2000 Adelaide, Canberra, Brisbane, Hobart and Perth have all done better than Sydney.

The performance of Melbourne has also fallen away. After being a market leader in the Seventies and Eighties, Melbourne has lagged behind. Its average growth in house values since 1990 is the lowest of the capital cities.

It could be argued that other cities are growing off a lower base, making it easier to produce high percentage growth figures. Affordability may be constraining growth levels in the two biggest and most expensive cities.

Below, in Table 1, we present median prices for the eight capitals over 35 years. The data was published in the December 2005 edition of Australia Property Investor magazine (www.apimagazine.com.au) and reproduced with the editor’s permission. In Tables 2 and 3, we present our calculations for growth rates by the various cities.

Many noteworthy things are revealed by the data:-

 A typical Sydney house could be bought for around $18,000 in 1970 – and in Brisbane you would have paid just $8,500.
 
In 1990, the typical house cost no more than $140,000 in every city except Sydney.
 
As recently as 2000, the average home cost less than $200,000 in every capital city except Melbourne and Sydney, with Adelaide $132,000 and Hobart $129,000.
 
Melbourne and Sydney have under-performed since 2000, relative to other cities. Adelaide, Brisbane, Canberra and Hobart all averaged annual growth between 13.6% and 15.4%, while Melbourne and Sydney were less than 10%.
 
Perth and Darwin still have growth left in them. Both have averaged considerably less than the leading cities since 2000 but are still rising.
 
Hobart and Adelaide did some catching up after 2000 - both lagged during the 1990s and entered the recent price boom under-valued. Perth, which under-performed up to 2000 relative to other cities, is still playing catch-up.

Table 1: Median house prices for capital cities

City
1970
1980
1990
2000
2005
Adelaide
    n/a
36,600
  99,000
132,000
270,000
Brisbane
  8,500
34,500
108,000
185,000
350,000
Canberra
    n/a
39,700
119,000
175,000
352,000
Darwin
    n/a
   n/a
  95,500
190,400
279,800
Hobart
    n/a
   n/a
  89,000
129,500
260,000
Melbourne
11,800
40,800
140,000
241,000
363,000
Perth
14,600
40,000
101,000
171,800
297,000
Sydney
18,500
64,800
185,000
308,000
495,000

Sources: Real Estate Institute, BIS Shrapnel

– reproduced with the permission of Australian Property Investor magazine.

 
Table 2: Average annual rise in house values up to 2005
 
City
Since 1970
Since 1980
Since 1990
Since 2000
Adelaide
   n/a
  8.3 %
  6.9 %
15.4 %
Brisbane
11.2 %
  9.7 %
  8.1 %
13.6 %
Canberra
   n/a
  9.1 %
  7.5 %
15.0 %
Darwin
   n/a
  6.3 % *
  7.4 %
  8.0 %
Hobart
   n/a
   n/a
  8.0 %
15.0 %
Melbourne
10.3 %
  9.1 %
  6.6 %
  8.5 %
Perth
  9.3 %
  9.6 %
  7.5 %
11.6 %
Sydney
  9.8 %
  8.5 %
  6.8 %
  9.9 %

* Darwin’s figure is the growth since 1986.

Source: calculations by hotspotting.com.au based on the figures in Table 1

 
Table 3: Average annual rise in values – by decade
 
City
1970 to 1980
1980 to 1990
1990 to 2000
2000 to 2005
Adelaide
   n/a
10.5 %
  2.9 %
15.4 %
Brisbane
15.0 %
12.1 %
  5.5 %
13.6 %
Canberra
   n/a
11.6%
  3.9 %
15.0 %
Darwin
   n/a
   n/a
  7.1 %
  8.0 %
Hobart
   n/a
   n/a
  4.3 %
15.0 %
Melbourne
13.2 %
13.1 %
  5.6 %
  8.5 %
Perth
10.6 %
  9.7 %
  5.5 %
11.6 %
Sydney
13.4 %
11.1 %
  5.2 %
  9.9 %

Source: calculations by hotspotting.com.au based on the figures in Table 1

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