Australian house prices soar 500% in 25 years

As for other dwelling types, including units and apartments, capital values have increased by just over 400 per cent over the past decade and a half, REIA’s latest Real Estate Market Facts has shown.

This difference in growth is, however, slightly offset by the fact that units and apartments do produce higher yields.

In fact, over the 25-year period, Australian housing yields tightened from 5.1 per cent to 2.9 per cent, while other dwellings have recorded a slight drop in yields from 5.2 per cent to 3.7 per cent.

Looking at the individual capital cities, houses in Darwin recorded the highest return, averaging 4.2 per cent.

“In 1996, housing investments in Darwin were yielding 6.4 per cent. Melbourne and Sydney have always had the lowest yields, both falling from around 4 per cent in 1996 to just 1.8 per cent in 2020,” REIA president Adrian Kelly said.

“The pandemic saw Melbourne and Sydney experience rising vacancies, with Melbourne now the highest in Australia at 5 per cent while Sydney is currently at 3.7 per cent,” he added.

According to Mr Kelly, it is these losses that have led to a decline in investor activity, but the situation is on the upswing as demand continues to lift.

“Despite rising vacancies and the low yields, we are starting to see investors reemerge as they respond to a rising market with further growth expectations and low borrowing costs,” he added.

As such, in the December quarter 2020, the weighted average capital city median price for houses increased by 6.0 per cent, while other dwellings added 0.9 per cent.

This took Sydney’s median house price to the top of the pile at $1,211,488 or 46.8 per cent higher than the national average. At $490,000, Perth has the lowest median house price across Australian capital cities, 40.6 per cent lower than the national average.

Having also analysed the last five years, REIA put the overall house price growth at 25 per cent, while other dwellings rose by 10 per cent to $600,000 since 2015.