House Prices Have Doubled 5 Times in 40 Years

Darebin is a Council Area in Melbourne's north that trends pretty closely to overall Melbourne market. The below graph shows when House Prices doubled in value over the last 4 decades.

It's taken anywhere between 3 to 10 years for prices to double. Three further insights jump out from this graph:

1. Gee it would have been good to have bought a house in 1997 - values doubled twice in the following 12 or so years.
2. It looks like hockey stick growth from 2011.
3. We've copped some nasty bumps in recent years.

Another way to view Price Cycles is looking at Year-on-Year % Changes. At any given time, were House Prices higher than the previous year or lower?

Considering the 3 points above.. The mid 1990s were absolutely a great time to purchase given the 15+ years of uninterrupted capital appreciation. 

The % growth from 2011 hasn't been unusually high. The 1st graph suggests hockey stick growth from 2011 because the $ value levels are so much higher than previous decades (e.g. 15% growth from $600,000 is a lot more in dollar terms than 15% growth from $50,000).

Lastly, in 2018/19 we experienced the sharpest market correction in living memory. Price growth returned for a few years but then 2022/2023 came along!! Price drops are pretty rare, so it's natural to feel beaten up over the recent topsy turvy market.

Many variables drive market downturns. We've highlighted what we think are the major causes in the 2nd graph above: global economic shocks, supply/demand imbalances, government interventions, and interest rate rises.

What to expect in coming years?

For Darebin House Prices to double from September 2000, they need to rise by $1m. That sounds fanciful, but I'm reminded of my wife telling her Dad "You're crazy for not buying two Houses in 1997 for $100k each!".

House Price growth will return. I encourage you to consider your finances and get ready to take advantage of the next upswing.