Which cities delivered highest property price growth over 20 years?

There were plenty of surprises in the list of capital cities' property price growth over the past two decades, with Sydney, Melbourne and Brisbane lagging behind some of their smaller national counterparts.

Aerial view of Hobart and harbour.
Hobart was the star performer in terms of property price growth over the past two decades 'by a country mile'. (Image source: Shutterstock.com)

If you bought property 20 years ago, chances are you made the greatest gains if you bought in some of the nation’s smaller capital cities.

Much has been made of the skyrocketing real estate prices in Sydney but in terms of percentage increases in median prices over the past two decades the Harbour City only outperformed Perth and Darwin.

Property Investment Professionals of Australia (PIPA) board member and University of Adelaide property academic, Peter Koulizos, crunched the numbers to determine which capital city had the highest median house price growth since 2002.

Mr Koulizos’ analysis found that the median established house price in Hobart was 5.9 times higher in December 2022 than it was in March 2002, with its median price soaring from $123,300 to $727,000 over the period.

The second-placegetter was another small capital city, with Adelaide’s established median house price 4.1 times higher than 20 years ago with its price increasing from $166,000 to $680,000.

Coming third was Canberra, where its median house price is currently 4.08 times more than it was in March of 2002, with its price growing from $245,000 to $999,000 over the period.

Med Est House Values - Dec 2022

Speaking to API Magazine on Wednesday (12 April), Mr Koulizos, said Sydney’s unaffordability limited its capacity for higher growth.

“Hobart was the cheapest city (in 2003) and over time saw an influx of mainland investors, first from Melbourne and then as its investment potential became more widely recognised, from other states too.

“Then came Covid, and that turbocharged its growth as it coped well with pandemic and attracted even more Victorians escaping harsh lockdowns.”

Second-placed Adelaide would’ve been near the bottom of the list Mr Koulizos said, had it not been for Covid.

“With the influx of Victorians, rents rose and with that came higher property prices as investors looked to higher rental yields and renters took the plunge by buying their first property.”

Resource economies the weaker property performers

Mr Koulizos, who analysed the Australian Bureau of Statistics’ (ABS) median price of established house transfers from March 2002 to December 2022, said the results will probably surprise plenty of property pundits.

“We always hear about the property markets of our two biggest capital cities because a large proportion of our national population live there, but when it comes to the performance over the long-term, they both are well down the leaderboard according to my analysis,” Mr Koulizos said.

“Hobart was the star performer by a country mile over the past two decades, which just goes to show that smaller cities as well as major regional areas can be sound property investment locations.”

Peter Koulizos, Program Director - Master of Property, University of Adelaide

Peter Koulizos, Program Director - Master of Property, University of Adelaide

Mr Koulizos said our three biggest capital cities produced stellar established median house price increases over the period, too, with Brisbane’s quadrupling from $185,000 to $750,000; while Melbourne and Sydney’s more than tripled, increasing from $241,000 to $842,000 and $365,000 to $1.27 million respectively.

Rounding out the capital city list were Darwin and Perth, where their established median house prices are 3.16 and 3.05 times higher now than in March 2002, with Darwin’s price now $600,000, up from $190,000, and Perth’s median price currently $580,000, up from $190,000 two decades agox.

Mr Koulizos told API Magazine that Perth and Darwin differed from the other small capitals at the top of the list because of their mining dependent economies.

“These two cities suffered from a lengthy resources sector hangover and the trade dispute with China hurt the agriculture sector in Western Australia and the Northern Territory,” he said.

He added that Brisbane’s mid-table performance was hampered by the impact of floods.

Income disparity a driver of property prices

Given Canberra was only recently usurped by Sydney as Australia’s most expensive city for property, the fact the former outperformed the latter may have raised eyebrows.

But a look at the income and mortgage repayment disparity between the two cities sheds some light on the fact Canberra delivered more growth even without the benefit of harbour views and beach access.

Put simply, Canberrans earn more and spend less on the mortgage repayments, allowing them to buy property and drive up prices.

Median weekly household income in Canberra is $2,373, compared to Sydneysiders earnings of $2,077. At the same time, in the ACT borrowers are only paying $2,080 on their monthly mortgages compared to Sydney’s mortgagees forking out $2,427. Adelaide’s high placing on the growth table was similarly buoyed by having average mortgage repayments of just $1,548.

“What these statistics also showed was that every capital city had periods where median house prices fell, rose, or flatlined because of a variety of economic factors, including two major global events over the time period in the GFC and the pandemic,” Mr Koulizos said.

“As property investment professionals, we always encourage property buyers to purchase property as a long-term investment and to do their best to ignore any temporary impacts on median prices or markets more generally.

“That’s because, as these results show, real estate has a proven history of performance over the decades, with our nation offering a plethora of places – capital city and regional – where homeowners and property investors can strategically purchase property.”

Article Q&A

Which cities delivered the highest property price growth in the past 20 years?

Hobart was comfortably the star performer over the past two decades in terms of median property price growth, followed by Adelaide and Canberra.

Is Sydney the best performing property market?

Much has been made of the skyrocketing real estate prices in Sydney but in terms of percentage increases in median prices over the past two decades the Harbour City only outperformed Perth and Darwin.

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