Australian Housing Prices Up 500% Over 25 Years

Proving itself as a reliable investment, research from the Real Estate Institute of Australia (REIA) shows the price of Australian housing is up 500% over 25-years.

According to data from REIA, the median price for Australian housing inflated from $160,000 in 1996 to $825,000 in 2020.

Other dwellings, such as units and apartments have seen capital values increase by just over 400% in comparison however these assets produce higher yields.

The data shows that over the past five years, housing grew by 25%, from a median of $683,000 to $825,000 while other dwellings rose by 10% to $600,000.

Mr Kelly said that over the 25-year period, Australian housing yields tightened from 5.1% to 2.9% while other dwellings have recorded a drop in yields but not as dramatic, falling from 5.2.% to 3.7%.

“Houses in Darwin have the highest return averaging 4.2%. In 1996, housing investments in Darwin were yielding 6.4%.

“Melbourne and Sydney have always had the lowest yields both falling from around 4% in 1996 to just 1.8% in 2020.

“The pandemic saw Melbourne and Sydney experience rising vacancies with Melbourne now the highest in Australia at 5% while Sydney is currently at 3.7%,” said Mr Kelly.

Further, Mr Kelly said that there has been a decline in investors in the market in recent times particularly as concerns have emerged with moratoriums on evictions and rising vacancies.

“Despite rising vacancies and the low yields, we are starting to see investors reemerge as they respond to a rising market with further growth expectations and low borrowing costs,” Mr Kelly added.

REIA’s latest report, Real Estate Market Facts found that in the December quarter 2020, the weighted average capital city median price for both houses and other dwellings increased in the Australian residential property market.

“The weighted average capital city median price increased by 6.0% for houses and by 0.9% for other dwellings. The weighted average median house price for the eight capital cities increased to $825,205. Over the quarter, the median house price increased in all capital cities.

“At $1,211,488, Sydney’s median house price continues to be the highest amongst the capital cities, 46.8% higher than the national average. At $490,000 Perth has the lowest median house price across Australian capital cities, 40.6% lower than the national average.”

For years, tech entrepreneur Asher Waldfogel and his wife, Helyn MacLean, dreamed of building a modern house in Palo Alto, Calif.

The couple, however, worried about clashing with the Mediterranean-style architecture typically associated with their neighborhood of Old Palo Alto.

So they tapped architect Steven Ehrlich to create a design that paid homage to its surroundings with stucco, mahogany and titanium zinc cladding. They spent $20 million over several years building the house, completed in 2005.

Designed for indoor-outdoor living, the house has matching mahogany paneling and limestone both inside and out. Arthur Sharif/Sotheby’s International Realty

The dining room is between an outdoor garden and the staircase. Arthur Sharif/Sotheby’s International Realty

Now looking to be closer to their adult daughter on the East Coast, they are putting the five-bedroom home on the market for $44 million—the most expensive listing in Palo Alto.

Waldfogel is an angel investor who co-founded Redback Networks, a telecommunications-equipment company. MacLean previously had a career in fundraising.

The kitchen and family room open to the garden and pool. Arthur Sharif/Sotheby’s International Realty

Cast alcoves and mahogany shelves house the couple’s books and ceramics. Arthur Sharif/Sotheby’s International Realty

The couple purchased the roughly 0.4-acre site for $7.1 million in 2000 and demolished a circa-1930s Spanish Colonial home. The house they built pinwheels around a central staircase. It has 7,900 square feet of livable space, with four distinct courtyards and a pool.

A key feature of the home is a cast-in-place concrete wall, or spine, that is two stories high and about 80 feet long. “There’s a little bit of controlled chaos in what comes out of the form,” unlike a perfectly uniform surface, Waldfogel said. “If you want that, you do it in plastic.”

Ehrlich said it took a few tries to get the concrete wall right. Arthur Sharif/Sotheby’s International Realty

‘It’s a really hard material to tame,’ Ehrlich said of concrete. Workers learned as they went, and Waldfogel and Helyn grew to appreciate the imperfect material. Arthur Sharif/Sotheby’s International Realty

A central staircase is housed in a glass tower. Arthur Sharif/Sotheby’s International Realty

Waldfogel said he and his wife are thinking about the next phase of life now that their daughter is grown, although they have not decided where they will move. They also have a home in Sun Valley, Idaho.

“Right now we’re just trying to emotionally let go and decide what to do next,” he said.

Arthur Sharif/Sotheby’s International Realty

Two wings of the house are connected by horizontal planes. Arthur Sharif/Sotheby’s International Realty

Palo Alto, an epicenter of venture capital and tech startups in Silicon Valley, is home to some of the country’s biggest tech titans. Sales volume and prices are rising, with a median sale price of $3.5 million for the three months ending in August, up 5.8% year-over-year, according to real-estate brokerage Redfin.

Arthur Sharif of Sotheby’s International Realty—San Francisco Brokerage has the listing.

Australian Housing Prices Up 500% Over 25 Years

However, yields have fallen to all-time lows.

A five-bedroom Palo Alto home designed by Steven Ehrlich is listed for $44 million, making it the city’s most expensive listing. Built around a dramatic concrete spine, the home features four courtyards and a pool.