Guess what the median Australian house price was in 1976?

We all have one of these stories.

I’m referring, of course, to the ‘one that got away’ in property. 

If we haven’t personally looked back on a property that, in retrospect, we could have bought for next to nix, then we know someone who does.

This was the case with a Sydney investor I met recently, who lamented the fact that his grandma sold her prime piece of real estate for a song in 1985.

The family was given the opportunity to buy the apartment, perched on Sydney’s harbour – quite literally on the waterfront, overlooking the Harbour Bridge and Opera House – for around $180,000, but no one was interested.

So some lucky buyer picked up the two-bedroom apartment, which would currently be worth well over $1.8 million.

In these situations, investors can often become annoyed or frustrated over their ‘lost opportunities’, but not much can be gained from that mindset.

After all, it’s not exactly news that property prices increase significantly over time.

Most people are fairly clued up to the fact that the price and value of real estate generally grows as each decade ticks over.

That’s why it’s often said that time in the market, rather than timing the market, is the safest way to invest in property.

That’s one of the reasons I’ve always encouraged young home buyers and investors to get into the property market, because I believe that the earlier you start, the better off you’ll be in the long run as compounding (of property price growth) and time work their magic.

The proof of this philosophy is pretty much in the pudding, as property values have grown exponentially over the years.

Let’s assume that you bought your first home or investment property just over 40 years ago, in 1976.

Across Australia’s capital cities in 1976, median house prices looked like this:

• Sydney – $36,800
• Canberra – $35,100
• Melbourne – $32,900
• Adelaide – $29,800
• Hobart – $31,575
• Perth – $33,000
• Brisbane – $26,275

There’s a few interesting things that come out of these figures.

1. How cheap property prices seem when you look back today (not that they seemed inexpensive at the time)
2. Brisbane was the cheapest capital city then, well behind Hobart and Adelaide.

It’s important to keep things in perspective, though.

The average wage in the mid 1970s was around $6,000, according to the Australian Bureau of Statistics, so the median Sydney house price was almost six times’ the value of the average annual income. 

Forty years on, both wage and house prices are considering higher, although they haven’t grown at a consistent pace.

Sydney’s median is now 27 times higher than it was in 1975; if wages had matched that pace, the average wage would now be $162,000.

Of course two of the big reasons behind this are:

1. There are more 2 income families (both partners working) today than there were 40 years ago increasing disposable household income.
2. Interest rates have virtually halved substantially increasing affordability. The standard variable interest rate in 1976 was 9.88%, meaning you needed to pay twice as much interest to service the same dollar value of loan

House prices today:

According to CoreLogic , median capital city property values at the end of November 2019 were as follows:

• Sydney – $840,072
• Melbourne – $666,833
• Perth – $437,080
• Canberra – $611,841
• Brisbane – $497,491
• Darwin – $388,018
• Adelaide – $433,845
• Hobart – $474,186

And this is a great time to enter the property market.

Sure property prices seem expensive in some locations, but knowing what you know now, who wouldn’t have liked to buy their parent’s house for what your parents paid years ago?

Wouldn’t it be great to have a crystal ball and take a peak into property markets of the future and see where real estate prices will be in another 40 years?

In its absence, I think it’s a pretty safe bet to assume that in the long-term, property values will continue to grow, underpinned by our growing population and the general wealth of our nation.

It’s important to keep this in mind when you’re negotiating your next property deal, as squabbling over $2,000, $5,000 or even $10,000 in today’s dollars is unlikely to have a huge impact on your eventual wealth.

An opportunity like the present – the beginning of a new property cycle – doesn’t come around too often in your life.

That doesn’t mean you should buy any old property

Just like over the last 40 year, in the next 40 years some properties are going to out perform others  – that why you need to buy “investment grade properties.”

And remember the location of your property is going to do around 80% of the heavy lifting with regards to it’s capital growth – so chose your location wisely.

When you invest there are 3 main variables:

1. Your budget – and that’s generally determines by the banks
2. Location – as I said, don’t compromise on this
3. The property you purchase in that location – as I said,, an investment grade property.

WHAT CAN YOU DO TO STAY AHEAD?

If you’re looking at buying your next home or investment property here’s 4 ways we can help you:

Sure our property markets are improving, but correct property selection is even more important than ever, as only selected sectors of the market are likely to outperform.

Why not get the independent team of property strategists and buyers’ agents at Metropole to help level the playing field for you?

We help our clients grow, protect and pass on their wealth through a range of services including:

1. Strategic property advice. – Allow us to build a Strategic Property Plan for you and your family.  Planning is bringing the future into the present so you can do something about it now! Click here to learn more
2. Buyer’s agency – As Australia’s most trusted buyers’ agents we’ve been involved in over $3Billion worth of transactions creating wealth for our clients and we can do the same for you. Our on the ground teams in Melbourne, Sydney and Brisbane bring you years of experience and perspective – that’s something money just can’t buy. We’ll help you find your next home or an investment grade property.  Click here to learn how we can help you.
3. Wealth Advisory – We can provide you with strategic tailored financial planning and wealth advice. Click here to learn more about we can help you.
4. Property Management – Our stress free property management services help you maximise your property returns. Click here to find out why our clients enjoy a vacancy rate considerably below the market average, our tenants stay an average of 3 years and our properties lease 10 days faster than the market average.

from Property UpdateProperty Update https://propertyupdate.com.au/guess-what-the-median-australian-house-price-was-in-1976/