Affordable property areas key to long-term value growth

Scott Kuru January 22, 2025 4 min read

Image from Investors Edge Real Estate

KEY POINTS

New research reveals that areas considered underperformers in recent times have experienced some of the best long-term price growth over the past 20 years
Growth varies widely across regions, with stronger performance in smaller capital cities and more affordable regional areas
Findings show that property investment in the right locations outperformed Australian shares over the same period

New research looking at the median growth of property prices over a 20-year period has produced some surprising results.

The data shows that some parts of Australia that have been regarded as relative underperformers when it comes to price growth in recent times have been some of the best performers over the medium to long term.

The research tends to back the famous property thesis that “time in market” is more important than trying to “time the market”.

The data also shows that longer-term growth is heavily skewed towards affordable areas and regions.

The details

Recent data from CoreLogic shows continuing growth in the booming markets of Perth, Regional WA, Adelaide, Regional SA, Brisbane and Regional Queensland.

These areas have seen extremely strong growth in dwelling values over the last 18 months to 3 years, although the pace of that growth slowed towards the end of 2024 as affordability constraints and more than a year of high interest rates bite.

Some of the most muted growth over the past year has come in places like “Regional Tasmania”, Hobart and “Regional Victoria”.

However, new research shows that these have been some of the best-performing areas for house price and value growth over the past 20 years.

To come up with the list, property investor and Adelaide University academic, Peter Koulizos, analysed Australian Bureau of Statistics’ established median dwelling values figures from June 2004 to June 2024.

He found a wide variation between the performance of property based on its location, with the top location (“Rest of” or Regional Tasmania) recording growth of 233%, while the bottom location (“Rest of” or Regional NT) only managed 100% growth over the same two-decade period.

Mr Koulizos, who is also a board member of PIPA - Property Investment Professionals Australia - says the results prove that property is a safe and stable performer over the long term, with location selection key.

“What I found most interesting was the fact that, over the past 20 years, it has mainly been smaller capital cities or more affordable regions that have produced the very best results,” he says.

In the Rest of Tasmania grouping (which includes rural Tasmania, plus the regional cities of Launceston, Burnie and Devonport), the established median house price has soared from $169,000 to nearly $449,000 over the past 20 years.

Not far behind “Rest of Tasmania” were Adelaide, Hobart and Brisbane.

Peter Koulizos says these were some of the nation’s most affordable capital cities throughout the 20-year period.

In fifth place was “Rest of Victoria”, which has seen some of the worst price growth and value performance in recent years.

“These sorts of results also show that property markets are not linear – rather, price growth occurs at varying points through the years,” Mr Koulizos says.

“Consider that Hobart has experienced a softening of prices over the past few years, but its established median house price has risen by 193% since June 2004.

“Likewise, with Adelaide and Brisbane, whose markets are very strong at present, but both had long periods of flat-lining price points throughout the years.”

Long-term view

Property Investment Professionals Australia says the findings make an interesting comparison with the performance of Australian shares, with the S&P/ASX 200 increasing by just 120% over the same period of time.

However, while PIPA’s Chair, Nicola McDougall, says savvy property owners should always adopt a long-term mindset, that’s becoming increasingly more difficult for investors with higher holding costs, constantly changing tenancy legislation, as well as new property taxes.

Citing findings from PIPA’s latest investor sentiment survey, Ms McDougall says, “61% of investors who sold in the past year had a holding period of less than 10 years.

“Plus, about 17% of those investors who sold indicated they had owned the property for less than three years.

“With property transactions attracting such high entry and exit costs, it is safe to assume that these investors simply could no longer financially afford to hold onto their properties and made the difficult decision to sell, including in Melbourne, where prices have been falling.”

Darwin and the Rest of NT were the bottom performers over the past 20 years, with established median house price growth of 136% and 100% respectively.

“These markets remain affordable compared to the majority of the country, however, the region’s economic fundamentals have been far from stellar over the years, which has resulted in their under-par property market performance,” Ms McDougall says.