How house prices have grown since 1966
I have argued long and hard with stockbrokers and share-traders about the value of investing in real estate over shares. They usually trot out the old worn out phrase; that real estate cannot be liquidated in a hurry. And I say why would you want to; because if you are an investor you always look long term. This article from the REIV backs up my argument that real estate grows and grows. If you look at the drop in the median value in 2008, you will notice that this was caused by some top end suburbs losing ground. Many of the lower end suburbs actually increased in value. So please read on.
Melbourne has seen a number of periods of very strong growth in house prices.
In addition to the last few years, Melbourne has recorded four periods of sustained growth in demand and prices in the past 40 years.
Yearly growth in house prices of over 10 per cent was recorded between 1972–1974, 1984–1985, 1987–1990 and between 1997 and 2002.
The highest growth was recorded in 1973, when the median house price grew from $14,500 to $19,800. This result was nearly repeated the following year, when the median grew from $19,800 to $25,800. Over two years this represented a 78 per cent increase – substantial in anyone’s language.
To put that into perspective: if that were applied over the past two years, the median would have increased from $472,000 to $847,800. Thankfully, this has not happened.
While the last few years have not been as robust as those recorded in the earlier REIV sales data, we are in another period of strong price growth.
They key difference between now and the other periods is that in 2008 the median house price fell by $66,500 or 14 per cent, due to the global financial crisis. That was the most significant reduction since the REIV started recording median prices in 1966.
This means that when assessing current strong price increases, the fact that most of the growth last year was recovering lost ground needs to be taken into account.
Source: REIV
Cheers
Bertram
BERTRAM DANIEL FREI CEA(REIV)
LICENSED ESTATE AGENT & AUCTIONEER
It’s a Breeze – Real Estate Solutions
M 0418 313 299 Bus 03 9848 6224
Posted via email from itsabreezerealestatesolutions’s posterous
