CANBERRA: Australian housing prices have surged by a massive 6,556 per cent since the early 1960s — an average increase of 8.1 per cent every year. Compared to other advanced economies in the past five decades, Australia had the sixth highest rise in annual property prices. It was beaten by Spain (+9.9pc), UK (+9.3pc), New Zealand (+8.8pc), Italy (+8.8pc) and Ireland (8.7pc).
The United States, in comparison, had a 1,332 per cent lift in housing prices in the last five decades, and an average gain of 6 per cent per year. Those findings were from the Switzerland-based Bank of International Settlements (BIS), which researched the impact of short-term interest rates on house prices across 47 countries (advanced and emerging economies). BIS also considered whether housing is a “good long-term investment”. Short-term interest rates were a “surprisingly important” driver of housing prices, according to BIS’s research. Unsurprisingly, its conclusion was “an unqualified ‘yes'” as housing prices rose by nearly 7 per cent each year across 20 advanced economies. “One striking feature of house-price growth is its persistence,” said the report’s authors Gregory Sutton, Dubravko Mihaljek and Agne Subelyte. “With the exception of Germany, Portugal and Switzerland, advanced economies have seen real house prices growing by an average of at least 6 per cent per year for 40 years or longer.” The BIS authors analysed “upswings” and “downswings” across the 47 countries in its sample. In the report, they defined “upswings” as periods of three years (or more) where property prices increase. The corollary is that “downswings” are when housing prices fell for a period of at least three years or more. “The upswings lasted on average 13 years; with the longest one, in Australia, still continuing after half a century,” the BIS authors wrote.
