If you live in Australia and have owned your home, or an investment property, for at least a decade, you’d be feeling fairly chuffed right now.
Why? This chart, courtesy of CoreLogic, provides all the answers:
It shows the percentage change in the median selling price for houses and apartments in each Australian capital city over the past decade.
The gains have been enormous, and made a lot of people wealthy in the process. No wonder they’d be feeling chuffed.
For houses, Melbourne, Sydney and Darwin have all seen the median price skyrocket by over 80%. At 73%, 70%, 67% and 60% respectively, apartment owners in Sydney, Darwin, Adelaide and Melbourne have also done well.
From a national perspective, the median selling price for houses increased by an average of 51% over the past decade, and 44% for apartments.
While these are nominal prices, to provide some indication as to how much they’ve increased in real terms, consumer price inflation over the same period rose by just 18.55%.
“Looking at median selling prices over the past decade, the national median house price ten years ago was recorded at $330,000, while the median unit price was $310,000,” says Cameron Kusher, research analyst at CoreLogic. “Ten years on and the median selling prices are now $499,000 and $445,000 respectively.”
While, on average, property prices didn’t double over the past decade, as Australians have become all too aware of in recent years, particularly in Sydney and Melbourne, not every property market was created equal, at least in terms of price performance.
Just have a look at the table below, supplied again by CoreLogic, as evidence.
It shows the proportion of suburbs in each capital city that have seen their median price double over the past decade, breaking the figures down by house and apartment prices.
That collective thud you can hear is the sound of jaws dropping across the country.
Over 51% of suburbs in Melbourne have seen their median house price double in just 10 years based on selling prices, closely followed by Sydney at 44%.
For apartments, those two same cities trade places, with 21% of suburbs in Sydney seeing their median apartment price double over the same period, narrowly edging out Melbourne at 18%.
Long-term property owners in both cities, particularly those located close to the city centre, have seen some amazing levels of capital growth.
While record-low interest rates, tax incentives, population growth and increased foreign investment have provided a boon to property owners, it’s unlikely to do much to lift the spirits of those looking to enter the property market.
Quite the contrary, in fact.
For many prospective buyers it means a choice between either taking on an enormous mortgage to buy or having to settle for the uncertainty of renting.
That’s certainly being reflected in the proportion of owner-occupier loans being issued to first home buyers which fell to 13.2% in July, leaving it sitting at the lowest level seen since March 2004.
Even forgiving that some first home buyers are now entering the market as investors, not owner occupiers, and concerns surrounding the robustness of reporting of first home buyers by lenders, it’s a far cry from the average seen last decade of close to 20%.
Given the reduction in first time buyers, increased availability of high density housing stock and interest rates unlikely to move much lower based on current market views, the question many will be asking themselves is whether the strong capital growth seen over the past decade can continue in the years ahead.
The odds seem stacked against it, but we’ve all heard that said before.
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