Back in the 1980s property prices used to be way below were they are now. Many nations prices ranged between $50,000-$120,000. What happens if you invested in a $100,000 property back then? How would Australia have compared to other nations?
We will look at 13 countries over this period of time. Australia, Belgium, Britian, China, Canada, France, Hong Kong, The Netherlands, Singapore, Spain, Sweden, Switzerland and The USA.
The house price index shows how prices have performed from a given date. We have chosen 1980 to 2017. The data has been sourced from the economist.com. Prices from these 13 countries have increased by more than 8 times over this 37 year timeframe.
We have compiled a basic column graph image below comparing house price growth, house prices versus incomes and house prices versus rents.
From the graph we can see New Zealand had the highest price growth over 19.5 times the median property price since 1980. Australia followed at 13.3 times the national price, then Spain, Hong Kong, Britain and China. New Zealand also tops the list with prices 15.9 times average national incomes followed by Australia at 15 times national incomes followed by Hong Kong. New Zealand also the tops the list with prices at 21.4 times average rents followed by Canada at 20.4 times average rents then, Hong Kong, Sweden and Australia.
What is the relevance of this data besides some dinner party facts? It’s not extremely clear from this data why some countries have increased at much higher rates than others. We could hypothesise a huge number of variables impacting each specific country.
Variables could range from population changes and the countries demographic makeup including densities, urban migration and net overseas migration. Economic changes, industry makeup and general country wide tax rates. Financial deregulation, interest rates and globalisation of money flow. Consumer and business confidence.
A $100,000 investment in Australia in 1980 would have rated second in property price growth against the above 13 countries. In todays terms the investment would be worth more than $1.3m.