They say the best things come to those who wait… and never a truer word when it comes to property; the recent Core Logic report reviewing the past 30 years of property values shows just how significantly housing values have changed over time.

Using an analysis of value index which takes into account house characteristics, rather than relying solely on sales transactions, the recent Core Logic report reveals that over the past 30 years, property values have increased nationally by 382%; in annual compounding terms, that’s a 5.4% rise per year on average since July 1992.

East Lake Macquarie and Newcastle in the top 20

When we look at the report a bit closer, two of our regions are listed in the list of top 20 regional growth areas.

Coming in at number nine, east Lake Macquarie saw the median value of a house rise from $159,000 in 1992 to $923,000 in July this year, an increase of 480%, or in annual compounding terms 6% a year in annual compounding terms and placed east Lake Macquarie ninth on CoreLogic’s national regional growth ranking.

Meanwhile at number 13 of the top regional growth area regions Newcastle, saw house values increase from $162,000 in 1992 to $913,000 in July this year, up 462%, or 5.9%.

Showing that our really is a region of choice, growth in Newcastle and Lake Macquarie exceeded the 30-year increases in Sydney (449 %) and Melbourne (459 %).

Other areas in our region faired pretty well too.

The report says house values in west Lake Macquarie have also risen faster than the national average, up 410 per cent in three decades from $158,000 to $807,000.

Generally, NSW regional house values have increased 98% in the past decade, compared with 50 per cent from 1992 to 2002 and 43% from 2002 to 2012.

Property cycles

CoreLogic research director Tim Lawless said regional NSW prices had boomed in the past three years.

“If you look at some of these numbers, it just highlights that time tends to heal all wounds, that markets do trend higher even though they are cyclical,” he said.

As stated in the report: “With 57% of household wealth held in housing, it’s understandable that Australian’s will be interested in the shorter-term ups and downs of the housing sector.

“However, residential property is rarely ‘traded’ like equities; housing is liquid and comes with extremely high transactional costs such as stamp duty, conveyancing costs, and expenses associated with due diligence, along with long settlement periods and a high financial commitment.”

“For home owners, changes in property values will have an influence on the equity they hold in their property, which can be used to leverage into other purchases or investments. Higher debt to asset value ratios can have a negative impact on borrowing capacity. Additionally, higher housing values generally translate to increased wealth and a greater willingness from households to spend.

A more direct impact from short-term changes in housing market conditions are felt by the small proportion of households that are considering a property purchase or sale; from year to year only 4-6% of properties are transacted. A housing downturn may be seen as a positive outcome for prospective buyers, but viewed from a negative perspective for those looking to sell, although selling in a market downturn could be an opportunity if the seller is re-buying.”

How the long-term cycles evolve from here is open for debate

Forecasting where housing trends are going is hard enough over the short-term, let alone over the next 10, 20 or 30 years. However, the report points out long-term cycles can teach us a few things about the future of the market:

“The decline trend we are seeing at the moment will eventually level out, typically followed by a period of stability then further growth. Analysing each downturn across the combined capitals from the early 1980’s shows the longest period of falling values has been 21 months, recorded over the most recent down phase (2017-2019) and also through the 1989-91 downturn.”

Read more about the report and download it here.

With interest rates being raised for the fifth time in as many months, now is the time to review finances and stay focused on long term goals.

As Core Logic’s report reveals, the market does move in cycles; there are times when property prices rise considerably quickly and there are times when prices don’t appear to move at all and even decrease. For investors and homeowners alike, there are pros and cons to the different cycles.

With nearly 50 years of property management experience behind us, we understand property cycles, and we’ve helped thousands of people realise their dreams through property and our aim is to make your life easier.

Whether you’re looking for a property manager, or looking to sell, simply give us a ring on 02 4954 8833, send us an email to mail@apnewcastle.com.au or pop into our Cardiff office to see how our services can help you.