Despite weakness in home values as interest rates rise, new data suggests the trend over the past 30 years has clearly been upwards.
According to CoreLogic, dwelling values across the nation have increased 382 per cent over the past 30 years, or in annual compounding terms, risen 5.4 per cent on average since July 1992.
CoreLogic Research Director Tim Lawless said it was important to put the current downturn in long-term context.
“The decline trend we are seeing at the moment will eventually level out, typically followed by a period of stability, then further growth,” Mr Lawless said.
“While housing values move through cycles of growth as well as declines, the long-term trend is undeniably upwards.”
Melbourne property prices have risen the most over the past 30 years, surging 459 per cent or 5.9 per cent each year.
Houses in the Yarra region saw the largest capital gain, with a 779 per cent increase in house values over the past 30 years, or a $1,405,850 gain in dollar terms.
The theory that house prices double every 10 years has also been debunked by CoreLogic, with the best-performed capital city market of Sydney seeing 97.6 per cent growth in the past decade.
Over the previous decade (2002-2012) Perth and Darwin were the only capital cities to double in value with gains of 103.8 per cent and 105.5 per cent respectively.
In total, Sydney home values increased 449 per cent, or 5.8 per cent a year, with the past 10 years behind the strong performance.
The Marrickville-Sydenham-Petersham area saw the largest rise in house values, increasing 660.1 per cent, or a dollar value gain of $1,539,280.
Brisbane home prices have surged 340 per cent, or 5.1 per cent a year, during the past 30 years, while Adelaide recorded a 357 per cent jump, or 5.2 per cent average annual growth.
Perth home prices have increased 303 per cent, or 4.8 per cent each year, while Hobart price have climbed 399 per cent, and the ACT is up 388 per cent, or 5.4 per cent a year, over the past 30 years.
Mr Lawless said each housing cycle has a catalyst at the outset of the upswing and the onset of the downturn.
“Over that 30-year period we have seen six distinct cycles of growth and an equal number of cycles of decline (including the current downswing) across the national index,” he said.
“Each of the upswings and downturns have been characterised by different environments and catalysts of change such as taxation policy, monetary policy decisions, economic shocks, fiscal stimulus and broader economic conditions.
“With the current downturn heavily influenced by rising interest rates, the cue for a stabilisation in housing values will probably be found when interest rates find a ceiling.
“As interest rates fall, which could be as early as Q4 next year, according to financial markets, we could see housing values starting to enter a new growth phase.”
Mr Lawless said improved affordability is the silver lining of a housing downturn, providing more affordable access to housing markets.
“Lower housing prices imply a lower entry point to the market for buyers and higher interest rates should help savers to accrue a deposit,” he said.
“The downside is that serviceability measures and borrowing capacity will be lower under a higher interest rate regime.”
Mr Lawless said the data should serve as a reminder to home buyers that property is a long-term game.
“Overall, the long-term trends highlight the cyclical nature of housing markets,” he said.
“Changes in housing values over decades are a clear reminder that time in the market is more important than timing the market.”