Research conducted by Propertyology found that median house prices in 111 Australian locations had trebled (or more) over the last 20 years.
Analysis was conducted over the 20-years ending December 2018, on more than 180 Australian towns and cities, all with a population of 10,000 people or more.
Whether someone purchased real estate in any of our eight capital cities twenty years ago or in a majority of Australia’s non-capital locations, today it’s worth at least three times what they paid for it.
I don’t know about anyone else, but an average annual capital growth rate of circa six per cent across 20 years sounds damn good to me, especially at a time when Australia’s two largest cities have dropped 10 per cent in value in the past 12 months.
The median house price in Sydney two decades ago was the most expensive in the country at about $220,000, however, anyone who bought in a major regional location back then would have paid a fraction of that price and achieved a similar growth rate over the same period.
Contrary to generalisations that ‘regional’ means ‘high risk’, local economies of numerous regional towns and cities are more diverse than several capital cities.
Related article: The rise and rise of satellite cities
There’s risks and opportunities within every location. For capital cities and non-capitals, the years when a location’s property market performs best are when local economic conditions and buyer confidence are strong, and vice versa.
Generally speaking, locations with a more affordable median house price have more upside potential for capital growth. For that potential to be realised, the real skill is being able to identify the locations with positive leading economic indicators.
Related article: Stick to the FUNDAMENTALS
There’s obviously plenty of people who enjoy the inner city our suburban life of capital cities. But only a select few have bothered to think why a whopping 8.4 million Aussies prefer not to live in one of those concrete jungles.
As a homeowner, beauty is in the eye of the beholder, however, as an investor, beauty is nothing but a barrier for the brain operating at its optimum potential.
The fact is that the median house price of 103 regional cities and towns trebled in price over the past 20 years.
Regional Australia’s population has increased by an average of 1 per cent per year over the last 17 years (when ABS records began). That’s a higher average annual population growth rate than Adelaide and not too far behind Sydney’s 1.4 per cent annual average across those 17 years.
Related article: Population tricks for young players
The lifestyles, the infrastructure, the food experiences and the scenery in most regional locations is significantly better than what those who haven’t been there appreciate.
Personally, I love investing in these locations. Instead of sinking large amounts of capital in to one expensive asset or loading up with multiple properties in the same city, I prefer to minimise my risk, while taking advantage of more opportunities. It’s smarter to break the investment capital into smaller pieces and invest in multiple affordable properties in a diverse range of locations.
In addition to the historical evidence confirming that there’s capital growth potential in and outside of capital cities, the higher rental yields from more affordable properties provides better cash flows. Big is not better!
Here are some examples of locations across Australia where the median house price has trebled over the past 20 years, each with a different mix of capital growth rates and rental return.
|Annual Capital Growth (20y average)||Rental Yield||Total Return|
|Bryon (median $987,500)||10.10%||3.70%||13.80%|
|Parramatta (median $1,190,000)||7.90%||2.50%||10.40%|
|Hawkesbury (median $770,000)||7.80%||3.00%||10.80%|
|Maitland (median $470,000)||8.20%||4.50%||12.70%|
|Parkes (median $245,000)||6.50%||6.20%||12.70%|
|Kempsey (median $350,000)||7.00%||5.10%||12.10%|
|Southern Downs (median $280,000)||6.50%||5.10%||11.60%|
|Brisbane City (median $680,000)||7.50%||3.60%||11.10%|
|Logan (median $425,000)||6.80%||4.70%||11.50%|
|Sunshine Coast (median $600,000)||7.10%||4.30%||11.40%|
|Scenic Rim (median $470,000)||6.80%||4.30%||11.10%|
|Port Pirie (median $155,000)||5.80%||7.20%||13.00%|
|Port Adelaide (median $445,000)||8.20%||4.40%||12.60%|
|Onkaparinga (median $365,000)||7.00%||4.80%||11.80%|
|Port Lincoln (median $296,000)||6.40%||5.30%||11.70%|
|Mount Barker (median $398,000)||6.30%||4.90%||11.20%|
|Derwent Valley (median $255,000)||7.50%||6.40%||13.90%|
|Glenorchy (median $390,000)||8.40%||5.20%||13.60%|
|Burnie (median $245,000)||6.50%||5.70%||12.20%|
|Launceston (median $320,000)||7.30%||5.40%||12.70%|
|Hobart City (median $700,000)||9.00%||4.10%||13.10%|
|Bass Coast (median $449,000)||9.40%||3.80%||13.20%|
|Surf Coast (median $835,000)||9.50%||3.10%||12.60%|
|Dandenong (median $685,000)||9.60%||3.00%||12.60%|
|Maribyrnong (median $900,000)||9.60%||2.80%||12.40%|
|Ballarat (median $365,000)||7.40%||4.60%||12.00%|
|Kwinana (median $325,000)||7.80%||5.10%||12.90%|
|Armadale (median $382,000)||7.60%||4.40%||12.00%|
|Mandurah (median $365,000)||6.40%||4.70%||11.10%|
|Busselton (median $510,000)||6.80%||4.10%||10.90%|
|Fremantle (median $705,000)||6.60%||3.70%||10.30%|
While it is always interesting to consider price changes over long periods of time, it’s impossible to invest in the past and that past performance is not an indication for future performance.
The most important lesson to learn from historical data was that 100-plus towns and cities produced great growth across two decades. While it occurred in different years for different locations, they all had stages of peaks, troughs and sideways movement.
We’ve all heard the story about a one-industry mining town called Moranbah losing $200,000 in one year back in 2013, but Sydney’s pricey Inner-West, the so-called ‘blue-chip’ Balmain, also lost $225,000 over the 18 months subsequent to Sydney’s peak in August 2017.
Related article: Blue-chip is BS
Frankly, in a country as big and diverse as Australia, I wouldn’t invest in Moranbah or Balmain, however, I suspect most people would be surprised to learn that the average annual change in median house price of their municipalities over the past 20 calendar years was 8.1 per cent and 7.8 per cent respectively.
Most Australians currently pay between $300,000 and $650,000 for a house in a town or city with a reasonably diverse economy, with plenty of regional locations having both in spades.
The research clearly shows that regional real estate has just as much potential as capital cities, which is why smart investors make an objective assessment of every location in Australia before buying.
The full list of locations where median house prices trebled between December 1998 and December 2018 is:
|New South Wales||Sydney, Newcastle, Wollongong, Lake Macquarie, Central Coast, Mid Coast, Port Macquarie, Port Stephens, Wagga Wagga, Armidale, Tamworth, Shoalhaven, Shellharbour, Maitland, Cessnock, Tweed, Bellingen, Ballina, Dubbo, Bathurst, Orange, Cabonne, Eurobodalla, Bega, Byron, Albury, Goulburn, Kempsey, Clarence Valley, Lismore, Mudgee, Singleton, Richmond Valley, Kiama, Lithgow, Cooma, Nambucca, Hilltops, Broken Hill, Yass Valley, Inverall, Parkes, Scone, Narrabri, Cowra, Gunnedah, Murray River, Gundagai, Forbes, Wingecarribee|
|Northern Territory||Darwin, Alice Springs|
|Queensland||Brisbane, Gold Coast, Sunshine Coast, Noosa, Gympie, Scenic Rim – Beaudesert, Toowoomba, Lockyer Valley, Whitsunday, Warwick, Stanthorpe, Hervey Bay, Bundaberg, Yeppoon, Somerset, Moranbah, Roma|
|South Australia||Adelaide, Mount Barker, Alexandrina, Barossa, Light, Victor Harbour, Port Lincoln, Port Augusta, Yorke Peninsula, Copper Coast, Renmark|
|Tasmania||Hobart, Launceston, Burnie, Devonport, Huon Valley, West Tamar, Central Coast, Meander Valley, Wynyard, Northern Midlands, Latrobe|
|Victoria||Melbourne, Surf Coast, Bass Coast, Geelong, Bendigo, Ballarat, Baw Baw – Warragul, Warrnambool, Wangaratta, Golden Plains, Horsham, Latrobe, Alpine, Strathbogie, Central Goldfields, Mount Alexander, Moyne, Indigo, Corangamite, Colac, Southern Grampians, Hepburn, Macedon Ranges, East Gippsland, South Gippsland, Moorabool, Wellington, Murrindindi|
|Western Australia||Perth, Mandurah, Busselton, Albany, Margaret River, Murray, Dardanup, Harvey, Capel, Ashburton, Northam|
Propertyology is a national property market researcher and buyer’s agency, helping everyday people to invest in strategically-chosen locations all over Australia. The multi-award-winning firm’s success includes being a finalist in the 2017 Telstra Business Awards and 2018 winner of Buyers Agency of the Year in REIQ Awards For Excellence. Managing Director Simon Pressley is a REIA Hall Of Fame Inductee and a three-time winner of the REIA and REIQ Buyers Agent of the Year award.