{"id":21566,"date":"2018-06-24T01:00:44","date_gmt":"2018-06-23T15:00:44","guid":{"rendered":"https:\/\/realestatetalk.com.au\/?p=21566"},"modified":"2018-06-24T01:00:44","modified_gmt":"2018-06-23T15:00:44","slug":"we-plot-the-double-digit-price-growth-in-our-capital-cities-simon-pressley","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/we-plot-the-double-digit-price-growth-in-our-capital-cities-simon-pressley\/","title":{"rendered":"We plot the double digit price growth in our capital cities \u2014\u00a0Simon Pressley"},"content":{"rendered":"<p>How often have we seen double digit price growth in our capital cities?\u00a0 What city has reached this milestone the most?\u00a0 You will be astounded when <strong>Simon Pressley<\/strong> tells us.\u00a0 He has done the research and put the facts together.<\/p>\n<p><strong>Transcript:<\/strong><\/p>\n<p><strong>Kevin:<\/strong>\u00a0 Gee, haven\u2019t we seen some tremendous price growth in the capital cities in recent times? It makes me wonder how often we\u2019ve seen double-digit price growth in the cap cities around Australia. So, that\u2019s the question we posed. We\u2019ve asked Simon Pressley that question from Propertyology.<\/p>\n<p>Simon, welcome back to the show. Good to have your company again, Simon.<\/p>\n<p><strong>Simon:<\/strong>\u00a0 Thanks, Kevin. Yes, always good to talk about these things.<\/p>\n<p><strong>Kevin:<\/strong>\u00a0 Simon, how many times since the turn of the century has each capital city produced that double-digit price growth?<\/p>\n<p><strong>Simon:<\/strong>\u00a0 It\u2019s different in every city, but the record-holder for the number of calendar years over the last 18 years that double-digit price growth has been achieved \u2013 it\u2019s a surprise, people \u2013 is Darwin.<\/p>\n<p>Darwin has had more double-digit price growth years in 18 years than anywhere else. It\u2019s had 11 out of 18 years of double-digit price growth, which is one of the reasons why we like to do these historical studies from time to time, because Darwin, as we all know, over the last three years, now probably into its fourth year, has been in price decline.<\/p>\n<p>Sometimes looking at history can be a good reminder that things are never as good as they seem nor are they as bad as they might seem at the time.<\/p>\n<p><strong>Kevin:<\/strong>\u00a0 Talking about timing, how do you compare performance, say, pre- and post-GFC?<\/p>\n<p><strong>Simon:<\/strong>\u00a0 Certainly, pre-GFC Australian property markets right across the board, eight out of eight capital cities, pretty much every regional location produced some spectacular growth. Let me give some examples.<\/p>\n<p>The year 2000, the turn of the century, to the end of 2008, which we all recall was the onset of the GFC, that nine-year period of time, Brisbane\u2019s median dwelling price increased by 203%. 203% in nine years.<\/p>\n<p><strong>Kevin:<\/strong>\u00a0 Wow.<\/p>\n<p><strong>Simon:<\/strong>\u00a0 Perth increased by 245%. Canberra and Adelaide were pretty close in third place, 186%. Actually, Hobart was ahead of them, 205% growth in nine years. The worst-performing capital city \u2013 I use the term \u201cworst\u201d lightly \u2013 Sydney, that nine-year period, prices grew by 93% in nine years, which is still spectacular growth but it was easily the worst growth.<\/p>\n<p>And then post-GFC, well, for a few years there, Darwin did again strong for a few years there. Perth had a strong year in 2013, but it\u2019s predominantly been a story of Sydney and Melbourne post-GFC to date, although they\u2019re in decline now, and Hobart more recently.<\/p>\n<p><strong>Kevin:<\/strong>\u00a0 What are some of the biggest years of price growth?<\/p>\n<p><strong>Simon:<\/strong>\u00a0 It\u2019s fascinating when you look at what\u2019s been achieved before. Here are some stats for you. Hobart in 2003, 44% price growth in a calendar year and then the following year, 32%. So, property almost doubled probably in two and a half years in that period of time. But it\u2019s not unique to Hobart. Brisbane\u2019s strongest year of growth, 36% in 2003. Do you remember that, Kevin?<\/p>\n<p><strong>Kevin:<\/strong>\u00a0 Wow, that is amazing. It is interesting to look back because we do forget this, don\u2019t we?<\/p>\n<p>Another question for you \u2013 you may or may not be able to answer this one \u2013 which city holds the record for the most consecutive years of double-digit growth?<\/p>\n<p><strong>Simon:<\/strong>\u00a0 Yes, it\u2019s Darwin again. Nine years in a row of double-digit price growth, so 2002 through to 2010 inclusive, double-digit price growth. Phenomenal. Now, I can\u2019t see anything on the immediate horizon for Darwin, but it has its own economic assets as every location does, and there will be time in the sun again for Darwin at some stage in the future.<\/p>\n<p>Sydney and Melbourne had eight years of double-digit price growth over the last 18 years, which is the second most after Darwin. Brisbane and Hobart had only four, but that said, it\u2019s probably proven to be more consistent than some of the other big capital cities.<\/p>\n<p>Years of decline, to keep this discussion balanced, every market has years of decline. Darwin has had the most, five out of 18 years, and Perth, sorry, six out of 18 years. That could imply boom-and-bust markets, when they have lots of years of double digit price growth and also the most years of decline. But the actual closer analysis of the data doesn\u2019t suggest boom and bust, certainly some big booms, but the years where there have been decline, we\u2019re talking single-digit declines. And Sydney and Melbourne are experiencing that now, aren\u2019t they?<\/p>\n<p><strong>Kevin:<\/strong> \u00a0Yes, they are.<\/p>\n<p>Simon, when was the last time that a capital city produced 20% price growth in a calendar year?<\/p>\n<p><strong>Simon:<\/strong>\u00a0 Again, Darwin: 22% price growth in 2007, so we\u2019re going back ten years ago. I actually think the closest candidate to break that record \u2013 time will tell; there are seven months ago in the calendar year \u2013 Hobart. If anyone\u2019s going to break it, it\u2019s on track. It\u2019s a big call to say it will get 20%. I\u2019m not saying it will. But the metrics we look at, we know it\u2019s already had two really strong years and growth seems to be accelerating.<\/p>\n<p>Out of Hobart, not a chance at 20%. What I call metro Hobart \u2013 a seven- to eight-kilometer ring of the CBD. As I said, if anyone is going to break 20% in a calendar year, it\u2019s Hobart in 2018.<\/p>\n<p><strong>Kevin:<\/strong>\u00a0 At the other end of the spectrum, how often do property prices decline in a calendar year?<\/p>\n<p><strong>Simon:<\/strong>\u00a0 They don\u2019t decline that often. As I said, Darwin has declined five times in 18 years, and Perth, six times. Canberra has only produced price declines in one calendar year in 18 years, and five other capital cities have only declined twice over 18 years. But anyone who says property prices never go backwards we know is telling some porkies there.<\/p>\n<p>Not that long ago, 2011, eight out of eight capital cities declined, and the following year, 2012, five out of eight capital cities declined. One of the three that didn\u2019t decline had zero growth, and that was Sydney.<\/p>\n<p>There would have been a lot of people\u2026 And sometimes investors can have short memories. Sydney was a flat market for a long, long period of time while most of Australia did really, really well. When it declined in 2011, a lot of people bowed out and said \u201cI\u2019ve had enough of this market.\u201d It did nothing in 2012 and then the rest is history, what happened in the next four and a half years. They had a big boom.<\/p>\n<p>So, those who are sitting on an asset now who think \u201cI\u2019m miserable, I shouldn\u2019t invest,\u201d or whatever, just have a think about what all those Sydney might have thought in 2012 and then what happened after that. Things are never as bad as what they seem, no matter what we\u2019re reading in the media each day. We always need housing.<\/p>\n<p><strong>Kevin:<\/strong>\u00a0 Mate, can I just round this conversation out, just with probably a pretty open question, but I\u2019m hoping you can answer it for me about the factors that influence this double-digit price growth and whether or not you think we can expect to see it any time again soon?<\/p>\n<p><strong>Simon:<\/strong>\u00a0 Look, it\u2019s a combination of things that cause really strong price growth, which obviously includes double-digit price growth, but in no particular order, it\u2019s when an economy improves. So, Sydney and Melbourne, the start of their boom was after coming out of several years of a very miserable economy.<\/p>\n<p>If we can remember back in that era, we had I think it was a Gillard Government, we had Wayne Swan as treasurer, and we were hearing every day about this two-speed economy. The resources sector was really, really strong, so it was parts of regional Australia that were the only ones who had a healthy property market, and all the capital cities were miserable.<\/p>\n<p>But when the economies started to improve and it was the service sector that saw the improvement first, then confidence was gained in those communities and markets started to rise. So, improving economies, general confidence is a flow-on effect from that.<\/p>\n<p>Availability of credit: that\u2019s probably one of the key differences between this current era and pre-GFC, when credit was a lot more readily available back then even though interest rates were twice as high then as what they are now.<\/p>\n<p>And affordability: there is no coincidence here that when we look at years of double-digit price growth, that the more affordable capital cities have had much bigger years. We use Brisbane as an example, 36% in 2003; Hobart, 44% in 2004.<\/p>\n<p>The more affordable capital cities have had much bigger price growth. Even though Sydney and Melbourne \u2013 the more expensive cities \u2013 have had double-digit growth, they\u2019ve been in the teens rather than the 20s, 30s, and in some cases, 40s.<\/p>\n<p><strong>Kevin:<\/strong>\u00a0 Fascinating, mate. It\u2019s great research, and it\u2019s really nice to be able to bring it all together like this, so a great learning experience.<\/p>\n<p>Simon Pressley from Propertyology, thank you so much for your time and that really interesting look into double-digit price growth. Thanks, mate.<\/p>\n<p><strong>Simon:<\/strong>\u00a0 My pleasure. The glass is half-full, always is.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>How often have we seen double digit price growth in our capital cities?\u00a0 What city has reached this milestone the most?\u00a0 You will be astounded when Simon Pressley tells us.\u00a0 He has done the research and put the facts together. Transcript: Kevin:\u00a0 Gee, haven\u2019t we&#8230;<\/p>\n","protected":false},"author":176692473,"featured_media":21559,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[32,10,11,13,36,22,27],"tags":[101],"class_list":["post-21566","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-buying-a-property-topic","category-kevin-turner-sponsored-channels","category-kevin-update","category-latest-story","category-property-investment-topic","category-research-topic","category-trends-topic","tag-podcast"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.5 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>We plot the double digit price growth in our capital cities \u2014\u00a0Simon Pressley - Realty Talk<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/channels.realty.com.au\/realtytalk\/we-plot-the-double-digit-price-growth-in-our-capital-cities-simon-pressley\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"We plot the double digit price growth in our capital cities \u2014\u00a0Simon Pressley - Realty Talk\" \/>\n<meta property=\"og:description\" content=\"How often have we seen double digit price growth in our capital cities?\u00a0 What city has reached this milestone the most?\u00a0 You will be astounded when Simon Pressley tells us.\u00a0 He has done the research and put the facts together. 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