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Residential property cycles are influenced by a wide range of factors including unemployment, interest rates, consumer confidence and rates of growth that impact on rental yields and levels of affordability.
Much data on real estate is publicly available and careful examination can yield useful ratios that go back over a century and offer context for where the market is now.
To create a simple snapshot, news.com.au asked property expert Peter Koulizos to crunch the numbers of house prices over the decades to show the best and worst times.
Best 12 months in 100 years
The best one-year period was 1950 when property prices increased a whopping 132.5 per cent. This occurred after six years of no price growth as the government put a cap on the amount you could sell property for straight after WW11. After the cap was lifted, property prices skyrocketed.
Worst 12 months in 100 years
The worst one-year period was 1930. This year saw property prices drop by 18 per cent. The Great Depression started in late 1929, after the crash of the stock market in October of that year. Many people lost their jobs as a result of the dire economic situation and as a result could not pay their mortgages. This in turn, led to a relatively large drop in property prices.
Best five years
The best-five year period was from 1949 to 1954 where property prices increased a total of 172.4 per cent. Most of the growth in this five-year period occurred in 1950 for the reasons outlined above but property prices continued to increase beyond this year.
Worst five years
The worst five-year period was from 1891 to 1896 where property prices fell a total of 34.9 per cent. This coincided with a recession which was brought about by some great turmoil in the country, including major strikes by shearers and miners and a banking crisis.
Best 20 years
The best 20-year period was from 1969 to 1989 where prices increased a total of 941.5 per cent; that’s the equivalent of annual increase of 12.4 per cent. This was during a time of generally great economic prosperity, mainly due to a large number of migrants settling in Australia, creating a great demand for property.
Worst 20 years
The worst 20 year period was from 1885 to 1905 when property prices dropped a total of 20.9 per cent. In this 20 year period, there were more years of nil or negative growth than price increases. Median property prices dropped from $910 to $720. That’s right. we haven’t left off any zeros. It’s interesting that just over 100 years ago you could buy property with hundreds of dollars whereas now we need hundreds of thousands of dollars.
Happy House Hunting!
Written by Peter Koulizos, university lecturer, author and buyers advocate.