Property still a sound investment

According to RP Data’s ‘Property Value Accumulation Report’, Australia’s residential housing market was worth an estimated $4.83 trillion at the end of June 2012; more than three-and-a-half times the value of the Australian equities market.

In addition, over the ten years to June 2012, capital city home values have increased by about 73 per cent, providing a significant wealth boost to most home owners over this period.

Despite the growth over the past decade, values have appreciated at a much slower rate over the most recent five years, as housing market conditions have changed and capital growth has slowed.

Additionally, since late 2010, the Australian housing market has been comparatively weak, with home values falling by 6.5 per cent across the combined capital cities since the market peaked.

Buyers who purchased a home since this time have, in many instances, seen the value of their home move below the contract price.

The headline results from our value accumulation analysis reveals that 5.9 per cent of Australian homes are currently valued at less than or equal to the price at which they were purchased; 0.5 percentage points higher than at the end of the March 2012 quarter.

But, at the other end of the spectrum, about 41 per cent of Australian homes are worth more than twice what their owners originally purchased them for; highlighting that many home owners have recorded a significant increase in the value of their home.

Moving forward, the report found that property will continue to be a key investment tool for Australians, especially as just 2.9 per cent of homes purchased before 2008 are now worth less than or the same as their purchase price.