Have Sydney property prices doubled in the past seven to 10 years?

September 30th, 2011

percent

It is often said in property circles that house prices in Australia double every seven to 10 years. Prompted in part by the fact that September 2011 marks the seventh anniversary of a relatively sharp downward correction in Sydney housing prices following a boom which peaked around 2003, we thought we would test that proposition by analysing all reported September 2011 sales over $1 million of Sydney houses or units purchased in the last 10 years to see what capital gains or losses were made by the vendors of those properties.

In carrying out this exercise, all transfer costs such as stamp duty and holding costs including interest and land tax have been excluded. We are therefore dealing with raw or gross figures. Also excluded are properties which, according to Council searches and other research carried out by Sydney buyers’ agents, Curtis Associates, derived capital gains partly as a result of re-building or substantial renovation.

The results, in ascending date order, are presented in the following table and they make interesting reading:

Address Description Sales
Price
September
2011
($)
Purchase
Date
Purchase
Price
($)
Capital
Gain/Loss
$
Capital
Gain/Loss
%
Holding
Period
(years)
Average
Annual
Capital
Gain/Loss
%
7 Montague Road, Cremorne 3bh 1,900,000 2001 1,350,000 550,000 41 10 4
8 Consett Avenue, Bondi Beach 3bh 1,445,000 2001 765,000 680,000 89 10 9
36 Clark Road, North Sydney 3bh 1,225,000 2001 530,000 695,000 131 10 13
15 Small St Putney 3bh 1,000,000 2001 602,000 398,000 66 10 7
 2001 8.25
84 Chatham Rd, Denistone 3bh 1,075,000 2002 720,000 355,000 49 9 5
10 Blaxland St, Hunters Hill 2bh 1,257,500 2002 900,000 357,500 40 9 4
28 Seaforth Cres, Seaforth 3bh 2,082,212 2002 1,300,000 782,212 60 9 7
80 Park Rd, Homebush 6bh 1,330,000 2002 850,000 480,000 56 9 6
3 Crandon Rd, Epping 7bh 1,060,000 2002 805,000 255,000 32 9 4
 2002 5.2
44 Byrne Av, Drummoyne 4bh 1,470,000 2003 861,000 609,000 71 8 9
8 Fernhill St, Hurlstone Park 3bh 1,106,000 2003 700,000 406,000 58 8 7
207 Carrington Av, Hurstville 5bh 1,065,000 2003 780,000 285,000 37 8 5
73 Greens Rd, Paddington 3bh 1,050,500 2003 840,000 210,500 25 8 3
 2003 6
41/16 Beach St, Curl Curl 2bu 1,590,000 2004 811,119 778,881 96 7 14
 2004 14
48 Ulundri Dr, Castle Hill 5bh 1,230,000 2005 1,250,000 -20,000 -2 6 0
2 Glenrock Av, Wahroonga 4bh 1,200,000 2005 1,000,000 200,000 20 6 3
45 Sinclair St, Wollstonecraft 3bh 1,250,000 2005 817,000 433,000 53 6 9
 2005 6
61 Clarence St, Belfield 4bh 1,251,000 2006 905,000 346,000 38 5 8
100 Abbotsford Rd, Homebush 4bh 1,140,000 2006 1,005,000 135,000 13 5 3
 2006 5.5
45 Read St, Bronte 3bh 1,425,000 2007 1,281,500 143,500 11 4 3
34 Wolseley Rd, Lindfield 4bh 1,760,000 2007 1,700,000 60,000 4 4 1
8/10-18 Bay St, Coogee 2bu 1,042,500 2007 975,000 67,500 7 4 2
32 Wilson St, Strathfield 3bh 1,240,000 2007 1,040,000 200,000 19 4 5
44 Rawson Av, Queens Park 2bh 1,050,000 2007 1,085,000 -35,000 -3 4 -1
 2007 2
12 Birchgrove Rd, Balmain 3bh 1,125,000 2008 945,000 180,000 19 3 6
17 Brady St, Croydon 8bh 1,403,000 2008 900,000 503,000 56 3 19
13 Malua St, Dolls Point 4bh 1,300,000 2008 1,285,000 15,000 1 3 0
87 Ourimbah Rd, Mosman 3bh 1,020,000 2008 875,000 145,000 17 3 6
48 Connell Rd, Oyster Bay 4bh 1,321,000 2008 1,225,000 96,000 8 3 3
17 Byrne Av, South Coogee 4bh 1,425,000 2008 1,225,000 200,000 16 3 5
4/21 Bridgeview Av, Cammeray 3bu 1,015,000 2008 850,000 165,000 19 3 6
 2008 6.4
38 Allenby Park Pde, Allambie Heights 5bh 1,063,000 2009 1,020,000 43,000 4 2 2
20 Beresford Ave, Chatswood 4bh 1,106,000 2009 1,060,000 46,000 4 2 2
23/95 Milson Rd, Cremorne Point 3bu 1,280,000 2009 1,200,000 80,000 7 2 3
17 Winkurra St, Kensington 4bh 1,930,000 2009 2,240,000 -310,000 -14 2 -7
141 Rosa Street, Oatley 4bh 1,535,000 2009 1,258,500 276,500 22 2 11
 2009 2.2

Trends:

  • Of a total 37 vendors, 92% made a capital gain.
  • Conversely and despite ten years’ worth of stock market gyrations (including the GFC) as well as interest and exchange rate fluctuations, only three vendors or 8% of the total number analysed incurred a capital loss.
  • Two of three properties whose vendors incurred a capital loss were in the eastern suburbs.
  • Cyclical buyers derived the lowest average annual capital gains across all suburbs on re-sale. Proof of that is the 2% average annual capital gain derived by the vendors who bought during the pre GFC credit excesses of 2007.
  • Counter cyclical buyers derived the highest average annual capital gains across all suburbs on re-sale. Proof of that is the 6.4 % average annual capital gain derived by the vendors who bought during the GFC in 2008 and, albeit based on only one sale, the 14% average annual capital gain derived by the vendor who bought in the fallen 2004 Sydney property market.
  • The 11 properties whose vendors derived average annual capital gains above 6% were spread across Sydney with the exception of the upper north shore. Three of those 11 were on the lower north shore; two in each of the inner west, Canterbury Bankstown and on the northern beaches and one in each of the Sutherland Shire and eastern suburbs.
  • Of those 11 properties, 10 were houses and only one was a unit.
  • Contrary to another property adage that Australians sell their houses on average every seven years, 59% of vendors sold within seven years of buying their property. The future will tell whether or not that trend was an aberration influenced by profit takers who purchased during the GFC.

Conclusion:

Just as the trends discussed earlier in this article in relation to cyclical and counter cyclical buyers demonstrate that ‘timing the market’ is important, so too is ‘time in the market’. In the latter regard, it is difficult to ignore the generally wide divergence between the 8.25% average annual capital gain derived by those vendors who sold their properties after ten years and the average annual capital gain derived by all other vendors. On this evidence at least, it seems therefore that the answer to the question posed in the title to this article, at least over $1 million,  is ‘yes but closer to 10 than seven years.