How the capital cities rank on long-term capital growth

Posted on 22/02/2018  
How the capital cities rank on long-term capital growth

Hobart is not only the current leader among the capital cities for capital growth in the past 12 months - but it’s the national leader on long-term capital growth.

Research put together by Property Investment Professionals of Australia - using the House Price Index figures from the Australian Bureau of Statistics - shows that Sydney ranks last among the capital cities for long-term house price growth.

The research looked at growth in house prices in the eight capital cities over the 15 years from 2002 and 2017.

Hobart ranked No.1 in the nation, with prices up 220% over 15 years, compared to the relatively modest 142% achieved by Sydney.

While media has obsessed over Sydney’s price growth in the past four  years, this period of uplift was preceded by 10 years in which Sydney showed little or no growth in house prices.

Until Sydney started its run in 2013, I often referred to Sydney as “the great under-achiever of Australian real estate”.

Melbourne was the second ranked city on long-term capital growth, with prices up 208% since 2002. 

It would also surprise many consumers to learn that Darwin is the No.3 ranked city. Darwin has had falling house prices over the past four years, but before that was one of the national leaders on growth, particularly during the period of the resources investment boom. Darwin’s house prices are now 161% higher than they were in 2002. 

Perth’s growth figure is only slightly lower (159%). Like Darwin, Perth has had a declining market in the past four years, but before that had significant periods of growth.

Indeed, fHrom 2003 to 2007, Perth had one of the most spectacular periods of price growth in real estate history, with annual price growth rates topping 40% in 2006.

Many writers and commentators have characterised Sydney’s recent surge as “an unprecedented boom” but it is nothing of the sort. 

Sydney’s price growth of recent years, while strong, was relatively tame compared to the growth that occurred in Sydney and in the other major cities in the early years of this century - which was the last time Australia had a genuine, national, property boom.

in 2003, all eight capital cities had price growth of at least 13%, with most of them rising by more than 20% (and some were above 30%). That was a true national boom, having been preceded by strong growth also in 2001 and 2002.

During its recent run, Sydney’s annual growth rate briefly touched 20% - in the middle of 2015 - according to the ABS House Price Indexes, but for most of this growth period its growth rate has been between 10% and 16%.

That’s big growth, but tame compared to some of the growth in 2003. In that year, annual price growth rates reached 38% in Brisbane, 27% in Adelaide, 20% in Perth, 30% in Canberra and, rather remarkably, 55% in Hobart (off a very low base).

Despite being the city with the highest percentage growth in prices over 15 years, Hobart remains the cheapest of the capital cities, with a median house price below $400,000.

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