How House Prices Have Grown Since 1966

Melbourne has seen a number of periods of very strong growth in house prices.

In addition to the last few years, Melbourne has recorded four periods of sustained growth in demand and prices in the past 40 years.

Yearly growth in house prices of over 10 per cent was recorded between 1972–1974, 1984–1985, 1987–1990 and between 1997 and 2002.

The highest growth was recorded in 1973, when the median house price grew from $14,500 to $19,800. This result was nearly repeated the following year, when the median grew from $19,800 to $25,800. Over two years this represented a 78 per cent increase – substantial in anyone’s language.

To put that into perspective: if that were applied over the past two years, the median would have increased from $472,000 to $847,800. Thankfully, this has not happened.

While the last few years have not been as robust as those recorded in the earlier REIV sales data, we are in another period of strong price growth.

They key difference between now and the other periods is that in 2008 the median house price fell by $66,500 or 14 per cent, due to the global financial crisis. That was the most significant reduction since the REIV started recording median prices in 1966.

This means that when assessing current strong price increases, the fact that most of the growth last year was recovering lost ground needs to be taken into account.

Success Of The First Home Buyer Assistance Shows It Should Continue

The REIV has welcomed State Government figures showing that Victorians responded very positively to the higher levels of assistance for first home buyers and said it is time to consider its future.
REIV CEO Enzo Raimondo said that the Grant, Bonus and Federal Government Boost had a significant and positive impact on the property market and the wider economy.
“The Federal Government Boost has now stopped and the State Government Bonus is due to end on 30 June.
“The latest ABS housing finance figures show a direct link between the assistance and the number of first home buyers. There was an 18.6 per cent drop in the number of loans to first home buyers in November 2009.
“The number of first home buyers will continue to drop as the assistance continues to be reduced.
“In light of the positive impact on the property market and the wider economy it is time that the State considered the future shape of the assistance.
“When the Grant was introduced in 2000 the median price of a house was around $242,000, and in the September quarter 2009 it had doubled to $480,000. Over that time the Grant has remained at $7,000.
“When the assistance was increased through the Boost and the Bonus it had a positive impact and it would be a shame if after 30 June the only assistance for first home buyers was the Grant.
“As part of its May budget, the State Government should consider restoring the total assistance back to the value it was in 2000 or giving first home buyers an exemption from stamp duty,” Mr Raimondo concluded.

**articles taken from REIV website.