Sydney and Melbourne are regularly in the real estate headlines, but it’s a much smaller capital city that has come out on top as recording the best median house price growth over the past 20 years.
Respected University of Adelaide property academic and Property Investment Professionals of Australia board member Peter Koulizos has released exclusive new research that shows Hobart provided the best capital growth over the past two decades.
He said Hobart’s median house price was 5.9 times higher in December 2022 than in March 2002, rising from $123,300 to $727,000.
To crunch the numbers, Mr Koulizos analysed the Australian Bureau of Statistics median price of established house transfers.
“We always hear about the property markets of our two biggest capital cities because a large proportion of our national population live there, but when it comes to the performance over the long-term, they are both well down the leaderboard, according to my analysis,” he said.
“According to the ABS data, Hobart was the star performer by a country mile over the past two decades, which just goes to show the smaller cities, as well as major regional areas, can be sound property investment locations.”
Mr Koulizos said Adelaide’s median house price was 4.1 times higher in December 2022 than in March 2002, followed by Canberra (4.08 times higher), Brisbane (4.05 times higher), Melbourne (3.49 times higher) and Sydney (3.48 times higher).
Darwin’s median house price was 3.16 times higher over the 20 years, while Perth’s was 3.05 times higher.
“Each capital city has a reason for being where it is,” Mr Koulizos said.
“Hobart was one of the favoured destinations for interstate investors. Going back 20 years, Hobart would have been the cheapest capital city in Australia and because of that, it gained the attention of interstate investors.”
He said greater demand for housing in Hobart pushed prices higher, and this has more recently corresponded with a rise in demand for short-term holiday rentals, which has reduced supply.
‘So if you increase demand and reduce supply prices have only got one way to go and that is up,” he said.
But Mr Koulizos warned that Hobart had started to experience a “hangover” as supply increased.
“That’s not to say it’s going to slip down from its number one position, but it won’t be streaks ahead,” he noted.
Mr Koulizos said investors should perhaps turn their attention to two other smaller capitals – Adelaide and Brisbane – for future long-term capital growth.
He said Brisbane would have many long-term benefits leading up to the 2032 Olympic Games, while Adelaide had opened up as a lifestyle destination during Covid and was still considered favourably given people could now work from anywhere.
“Now you can either live in the regions or even a completely different state, so I think Adelaide and Brisbane would be where I’d be suggesting people consider buying,” Mr Koulizos said.
Mr Koulizos also urged investors to remember that investing in real estate was a “long game” and one where you not only had to consider the right city but the right suburb.
“Within each capital city you have suburbs that perform differently,” he said.
“You have to get the micro location, which is the suburb and the street, correct as well.”
Mr Koulizos also said it was difficult to correctly select short-term hotspots one after the other.
“So you’re much better off putting your research into finding the right type of house in the right suburb and street and staying there, rather than trying to pick the next hotspot,” he said.