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Australia’s housing market recorded an average annual growth rate of 8.4 per cent over the past three decades, according to new research.
RP Data’s latest findings found that Australian house prices double every 10 years based on an annual compounding rate of 7.2 per cent.
In comparison, the rate of inflation has averaged about 4.6 per cent over the last 30 years and 3.2 per cent over the last decade.
According to RP Data’s national research director Tim Lawless, there have been some periods where growth rates have well and truly eclipsed this average rate of growth and periods where prices have well and truly underperformed.
As an example of one of the weakest periods for Australian house prices, over the five years from 1990 to 1995 the median house price across Australia increased by just 2.8 per cent per annum.
“The soft market conditions came at a time when Australia was entering the 'the recession we had to have' and unemployment raced upwards from 5.8 per cent in January 1990 to peak at 10.9 per cent in December 1992. Mortgage rates during this five year period averaged 11.75 per cent and peaked at 17 per cent,” Mr Lawless said.
At the other end of the spectrum, the most spectacular five year run was recorded during the ‘boom’ which ran from 2001-03 around most areas of Australia. Despite a slowing in growth rates between 2004/05, the five year period ending July 2005 saw average house price growth of 13.9 per cent per annum.
Mr Lawless said the residential housing market is currently transitioning out of a strong growth phase.
A house refers to a building or property used as living quarters or an individual’s place of permanent or temporary residence.