Over two decades, property doubles pace of rent price growth

Housing prices have doubled over the past two decades while rentals have recorded half that growth.

That was the finding of the Real Estate Institute of Australia (REIA) President, which initiated research into rental and price movements since 2002.

REIA President Hayden Groves said, the report, Real Estate Market Facts: 20 years, found the weighted average median house price for the eight capital cities increased 103.8 per cent to $1,011,208 from 2002 to 2022.

“The real median house price increased in all capital cities with increases ranging from 75.4 per cent in Perth to a staggering 269.1 per cent in Hobart.

“Over the past 10 years, the weighted average median house price for the eight capital cities grew by 56.1 per cent, with the highest increase in Sydney (91.7 per cent) and the lowest Adelaide’s 33.6 per cent

“Perth and Darwin had decreases over the past decade, down 10.2 per cent and 18.1 per cent respectively.”

According to Mr Groves, the weighted average median price for other dwellings for the eight capital cities has grown by 51 per cent over the past 20 years.

“Over the past 10 years the weighted average median other dwelling price for the eight capital cities grew by 19.6 per cent.

“Over the decade, the median price for other dwellings increased in Hobart (59.2 per cent), Sydney (34.4 per cent), Melbourne (18.9 per cent), Canberra (14.6 per cent) and Adelaide (12.8 per cent), remained stable in Brisbane and decreased in Perth and Darwin (-3 per cent).”

Behind in the rent

Mr Groves said that over the past 20 years the weighted average median rent for three-bedroom houses in the eight capital cities increased 41.4 per cent to $506 per week. The median rent for three-bedroom houses increased in all capital cities over the 20 years ranging from 30.6 per cent in Melbourne to 84 per cent in Hobart.

“Since 2002, the weighted average median rent for two-bedroom other dwellings grew by 39.3 per cent to $474 a week. The median rent increased in all capital cities over the ranging from 26.1 per cent in Sydney to 90.9 per cent in Hobart.”

Mr Groves commented that over the past 20 years there have been 3,390,189 new dwelling completions. Of these 63.7 per cent were new houses and 36.3 per cent were other residential.

“March 2012 saw the lowest number of new house completions (19,836) and September 2018 had the highest number (33,853).

“For other residential, March 2002 saw the lowest number of completions (7,294) and December 2016 had the highest number of new completions (30,328).”

He said that in June of 2002 the average median house price was six years of annual family income, in June of 2007 and 2012 it increased to around six and a half years on annual income. By 2017 median house prices had increased to over eight and a half years of annual income.

“As of June 2022, the median house price was eight years and nine months of annual income.

“The highest house price to annual income was in December 2021 (9 years 2 months) and the lowest was in June 2002 (6 years).”

The report found that lending to investors was at its highest in June 2015 ($33.9b), 45.1 per cent of all housing loans. It was at its lowest point ($15.2b) in June 2020 the start of the pandemic. The volume of lending to owner-occupiers was at its highest in June2021 ($71.6b), and at its lowest in the March quarter of 2003 ($31.6b).

“Commonwealth Rent Assistance is not keeping pace with rent increases.

“For a family with two children, in 2002 rent assistance met 24.4 per cent of the median rent for a three-bedroom house, whereas in 2022 this had reduced to 16.9 per cent, although the level of assistance varied across capital cities.”