The average capital city home owner is almost $30,000 better off since Australia’s housing market started to recover in June last year.

Over the past five years to July 2013 dwelling values across Australia’s capital cities have increased by 14.8%.  That’s interesting information, but for a lot of people it actually doesn’t mean much at all.  A percentage shift doesn’t provide a great deal of context about the raw magnitude of the change.  Home owners are more interested in how much money they have gained or lost.  Expressed in dollar terms, a 14.8% rise in dwelling values over the past five years has provided the average home owner with roughly an additional $63,000 onto the value of their home.

Estimated dollar value growth over time, combined caos

Compared to the previous five year periods, the most recent half decade growth rate is relatively tame.  Between July 2003 and July 2008 capital city dwelling values increased by just over 34%, equating to roughly $108,500 in capital gains over the period.  The five year period from July 1998 to July 2003 recorded an even larger capital gain of 89.5% or a gross wealth injection of just under $150,000 for the average home owner.

The above figures are calculated by indexing the current median dwelling price across the combined capital cities historically based on the percentage change in the RP Data-Rismark Home Value Index (which specifically measures the change in dwelling values across the complete portfolio of properties).  The same technique can be applied across the capital cities, with the results shown in the table below.

Dollar value and percentage change table

All capital cities have seen a rise in dwelling values from their respective low points.  The recent recovery trend at the combined capital city level has seen the average home owner gain just under $30,000 in the value of their home based on a 6.5% recovery to date.  As can be clearly seen from the graph below, the estimated average dollar value gain is quite different from city to city based on the extent and timing of the new growth phase.

Estimated dollar value gain from market trough to end of June 2013

Darwin, where the housing market has recorded growth of more than 13% since bottoming out in January 2012 has recorded the most substantial dollar value increase at $56,638, followed by Perth at $50,249 then Sydney at $46,160.  At the other end of the scale are Adelaide and Brisbane where the rate of recovery has been much more subdued with dollar value gains of $4,319 and $7,018 respectively.

 

About Tim Lawless

Tim heads up the RP Data research and analytics team, analysing real estate markets, demographics and economic trends across Australia

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