Melbourne has seen a number of periods of very strong growth in house prices.
In addition to the last few years, Melbourne has recorded four periods of sustained growth in demand and prices in the past 40 years.
Yearly growth in house prices of over 10 per cent was recorded between 1972–1974, 1984–1985, 1987–1990 and between 1997 and 2002.
The highest growth was recorded in 1973, when the median house price grew from $14,500 to $19,800. This result was nearly repeated the following year, when the median grew from $19,800 to $25,800. Over two years this represented a 78 per cent increase – substantial in anyone’s language.
To put that into perspective: if that were applied over the past two years, the median would have increased from $472,000 to $847,800. Thankfully, this has not happened.
While the last few years have not been as robust as those recorded in the earlier REIV sales data, we are in another period of strong price growth.
They key difference between now and the other periods is that in 2008 the median house price fell by $66,500 or 14 per cent, due to the global financial crisis. That was the most significant reduction since the REIV started recording median prices in 1966.
This means that when assessing current strong price increases, the fact that most of the growth last year was recovering lost ground needs to be taken into account.
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Tags: cent, global financial crisis, house, house prices, median house price, median prices, number, reiv, result
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