Have property prices in Australia been rising faster than pensions?

Anyone who bought a house on Sydney’s northern beaches ten years ago would have earned an average of 145.9 percent. The average cost of a home in the area is nearly $ 2.7 million.

Homes in sought-after parts of Sydney, including the eastern suburbs, the inner west, north Sydney and the Hornsby region, as well as the Bolham Hills and Hawkesbury districts, have grown by at least 130 per cent. Victoria and Queensland did not enter the top 10 housing markets with the highest growth.

At these levels, housing was competitive with some individual superfunds whose yields on high-growth products ranged from 117 to 190 percent.

Even the best-performing commodity markets were again less profitable, and units in regional hotspots topped the list after the pandemic prompted city residents to change trees or the sea.

Bendigo divisions have grown 106.9 percent in ten years, while Geelong, the NSW Central Coast and Ilawara, the Richmond-Tweed region around Byron Bay, Hobart and Sunshine Coast have grown at least 89 percent.

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Sydney’s eastern suburbs and northern beaches offered a return of almost 100 percent each.

Some homeowners have been unlucky to see a drop in property prices over the past decade.

The cost of housing is lower in several remote or resource-affected areas that have experienced a cycle of ups and downs during the mining boom, such as Western Australia – Outback (North), which includes the iron ore port of Port Hedland, where housing costs at 46, 4% less than 10 years ago.

The figures do not take into account the obvious non-financial benefit of property – the ability to live in your own home.

Eliza Owen, head of CoreLogic’s Australian Housing Research Division, said there was some element of success in terms of the best and worst housing market performance over the past decade, stressing the shift to remote work that has fueled regional remote cities while cities have been affected by resources.

But she said the highest performance in Sydney’s expensive areas suggests that “it takes money to make money”.

“It benefits those who have higher incomes or have family wealth and support that allows them to enter these markets,” she said.

“Perhaps, from a financial point of view, it is more profitable to be able to buy high-cost housing, and this is another form of inequality that is evident in this scheme.”

She highlighted the intangible benefits of the program, which ensures the security of home ownership and the way out of rent.

Because past figures do not guarantee future profitability, Owen added that as interest rates begin to rise, housing could lead to less growth in the coming years than in the period of low interest rates after the GFC. But with the increase in rent, owning a home can be profitable.

AMP Capital chief economist Dr Shane Oliver said both stocks and assets have benefited from the transition to low interest rates over the past decade, but added that super-profitability figures have been rising over a 10-year period. In 2011, amid the debt crisis in the eurozone, stocks were weak.

According to him, in the very long run, for example, in the last century, property and stocks offered a similar return, so the initial assumption of the buyer should be that the two asset classes will be about the same.

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For potential home buyers, their profits will depend on where they buy, he said.

“If you’re buying an area that seems to have very strong growth potential and therefore could bring higher capital gains than you could get from a high-growth retirement fund, then it would make sense to take advantage of it financially,” he said. .

“If, on the contrary, you are buying an area where the potential benefits are much smaller, then it is more questionable from a purely financial point of view. It will be very difficult for homebuyers to try to make that point. “

He added that neighborhoods that have recently seen rapid growth and are now facing accessibility challenges may not have such strong growth prospects, while cities that have not had time to work may catch up.

“First, homebuyers face enough stress to enter the real estate market, and then find out what is better here – stocks or property,” he said.

“I’m a little annoyed that both sides of the policy are still largely resorting to demand-side measures … The problem with them is that they just lead to higher prices in the long run and do nothing with affordability.”