Tim Lawless, CoreLogic’s head of research, said that strong capital gains in Sydney and Melbourne over the last 10 years “have created a significant boost in wealth for home owners who were fortunate enough to own a property through the latest growth cycles”.
Properties that haven’t been so successful and have seen a fall in their purchase price, however, have been especially evident in areas that heavily relied on the mining sector.
The overall proportion of dwellings where property value is at least double its purchase price, according to CoreLogic data, has fallen to 39.1 per cent, down from 45.4 per cent last year.
The highest benefactor of properties worth double their purchase price are those in Sydney with 48.1 per cent of all dwellings, up from 37.2 per cent in 2007, followed by Melbourne at 47.3 per cent, up from 38.1 per cent in 2007.
Meanwhile, the area with the highest proportion of properties worth 10 per cent less than their purchase price after 10 years is regional Western Australia at 17 per cent.
This is a stark difference compared to 10 years ago in the early stages of the mining boom, where only 2.3 per cent of dwellings were worth 10 per cent less than their purchase price.
Suburbs that saw the largest proportions of falling values over the last 10 years include Queensland’s Dystart and Gladstone Central at 65.7 per cent and 64.2 per cent, respectively, then Western Australia’s South Hedland at 64 per cent.
However, it is not all happy days for Sydney and Melbourne and doom and gloom for these once thriving mining areas, as Mr Lawless said that conditions are pointing to the end of their cycle.
“As growth eases across Sydney and, to a lesser extent, Melbourne, we may start to see a slow reversal of these trends,” the expert said.
“It will be harder to double the value of a property in Sydney and Melbourne after such a sustained period of high capital gains. However, markets such as Hobart and Canberra, which have gathered some momentum, are likely to see home owners benefit from improved capital gains that is likely to boost their overall wealth profile.
“Similarly, the worst appears to have past across the mining sector… [as] transaction numbers are generally rising and advertised stock levels are reducing, which should help to promote some value recovery in these regions… although it is likely to take many years before property values recover to their previous highs in many of these regions.”