Sydney and Melbourne have benefitted most from price growth in last decade

Property prices growth in Australia over the past decade has been characterised by substantial value rises in Sydney and Melbourne while elsewhere capital gains have been materially lower, indeed negative in some regions.

During this time the housing market has been impacted by the Global Financial Crisis (GFC), periods of rising and falling mortgage rates, heightened levels of investment and growing demand for housing from offshore buyers.

The latest analysis report from real estate firm CoreLogic reveals that in the 10 years to January 2018 nationally prices have increased by 41.8%, heavily influenced by the two largest housing markets in Sydney and Melbourne.

Only Sydney, Melbourne and regional Victoria have recorded value growth in excess of that figure at 79.3%, 72.4% and 42.7% respectively. While prices in regional Western Australia are down 29.5% over the decade.

Two other markets now have prices lower than in 2008. Prices in regional Queensland are down 5.1% and prices in Perth down 6.9%. The lowest decade long growth is 4% in regional South Australia and 5.4% in Darwin.

The analysis reveals that values began to slow in 2008 but growth returned in 2009 and overall the declines were fairly short and sharp. The declining housing market was reversed due to two main factors: a swift reduction in mortgage rates and the introduction of Government stimulus including additional first home buyer incentives which helped stimulate growth in demand and subsequently values.

During the downturn all regions of the country recorded declines with national values falling by 7.9% between February 2008 and January 2009. Western Australia was particularly hard hit by the downturn with values falling by 11% in Perth and 12.2% in regional Western Australia.

All other regions avoided double digit price falls. The decline was relatively minor in Darwin at 1.5%, down 2.4% in regional South Australia and down 2.2% in regions in the Northern Territory.

However, with the removal of the first time buyer incentives and an increase in interest rates market values once again started to fall. Between 2010 and 2012 the national housing market once again experienced value declines.

Between June 2010 and February 2012, national dwelling values fell by 6.5% with capital cities experiencing slightly larger falls than regional markets. The biggest fall was 11.1% in regional Queensland, followed by a fall of 10.6% in Brisbane.

By comparison the smallest fall was 3% in regional South Australia, 3.6% in reginal Victoria and 3.7% in Sydney.

More recently, softer housing market conditions have become evident with a number of regions starting to see values decline and nationally, values are 0.7% off their peak with the combined capital cities down 1% and the main driver of the weakness.

Brisbane and Hobart are the only capital cities in which values at the end of January 2018 were not lower than their previous peak. Perth, Darwin and regional Western Australia currently have dwelling values which are more than 10% below their previous peaks with falls of 10.9%, 21.7% and 29.5%.

‘The data shows overall that despite most regions of the country having seen values increase over the past decade, within that decade there have been periods in which values have fallen and growth has very much been slanted towards the Sydney and Melbourne markets, said Cameron Kusher, CoreLogic head of research.

‘With dwelling values now falling in a number of regions, it will be interesting to see how rapidly values, fall, what may or may not be done to slow the falls and how the market declines will compare to other periods of decline over the past decade,’ he added.