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Australian house price growth over the last 30 years has averaged 6.4% each year, despite Australia having experienced the global financial crisis and an economic recession during that period.
To put thatlong-term growth into perspective, CoreLogic figures indicate that anAustralian home bought for the median price of $122,870 in 1991 was worth$795,208 in 2021. That’s more than six times the dollar value.
CoreLogic data released every five years, with the next update in 2026.
It’s important to understand that the property market moves in cycles. There have been times over the last 30 years when growth rates have been higher or lower than the average annual rate of 6.4%.
It’s the long-term trend that matters because property is a long-term investment to build wealth and secure your financial future.
Like any market, prices in the property market are driven by demand and supply. When demand is strong, prices rise. When supply is limited, prices also rise.
The long-term demand for housing in Australia is likely to be strong due to our strong population growth. Our current population of 27million is forecast to increase to 40 million over the next four decades. This will help to ensure ongoing strong demand for properties, especially in highly desirable locations.
According to experts, between 240,000and 280,000 new homes need to be built in Australia each year for the foreseeable future just to keep up with the growing demand.
On the flip side, supply is likely to remain weak. Australia is currently in the middle of a housing crisis that shows no signs of easing in the short to medium term.
Put simply, the demand for properties exceeds supply, especially in the rental market. Vacancy rates in many areas are at record lows as a result, which is driving both property price growth and rental income increases.
It’s important to understand that even a small difference in capital growth rates can make a big difference to your property’s long-term value.
For example, suppose you buy a property today for $800,000. The table below shows how much the property would-be worth at average annual growth rates of 6.4% (the rate over the last30 years) and 7.4% for the next 10, 20 and 30 years.
As you can see, just getting a 1% above-average return would make a massive difference to the property’s value.
Figures from Money Smart calculator.
Put simply, the demand for properties exceeds supply, especially in the rental market.
1. Investing in strategic locations with above-average growth potential.
These are locations that will have strong ongoing demand due to a range of factors, such as having:
2. Investing in strategic property types that supercharge your investment returns.
For example, dual income, duplex and co-living properties that provide multiple rental incomes and are therefore attractive for investors.
Australian house prices have grown strongly over the last 30 years and are well placed to continue that trend in the decades to come. It’s important to:
Many Australians have built substantial wealth and secured their long-term financial futures by making smart property investment decisions.
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