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Feature Article - Average value of new houses AVERAGE VALUE PER HOUSE, New houses
The following graph presents the average value per new house in both original and chain volume terms, for Australia, over the last thirteen years. The chain volume estimates measure the change in value after the direct effects of price changes have been eliminated. In original terms, steep increases in prices of average value of new houses occurred before 1990-91. After stabilising for several years the average value grew steadily through the second half of the 1990's. Following the introduction of the GST in July 2000, the growth in average value rose strongly. In chain volume terms, a rise over the thirteen year period is evident but the average value has been relatively steady over the last two years. Average value per square metre The July 2001 issue of Building Approvals, Australia (Cat. no. 8731.0) included an article on the average floor area of new dwellings. It indicated that there has been an increase in the size of houses over time. The following tables examine the average value per square metre of new houses which has the effect of removing the size of houses as a factor in increases in the value of houses. In Australia, over the last thirteen years, the average value per square metre has increased steadily. There has been an increase of 74% between 1987-88 and 2000-01, from $364 to $633. The largest increase occurred in Western Australia over this time period. Over the last five years, the largest increases have occurred in the Northern Territory, South Australia and Western Australia. AVERAGE VALUE PER SQUARE METRE, New houses
The graph below compares the average value per square metre of new houses in original and chain volume terms. In original terms, noticeable increases occurred during the period up to 1990-91, in the late nineties, and in particular 2000-01. This is a similar picture to the analysis above on average value of completed houses. However, in chain volume terms, where the effect of price increases are removed, the average value per square metre for new houses has remained relatively flat over this time period. This suggests that the main reason for an increase in the value of new houses over time, once the effect of price change has been removed, has been due to the increase in house sizes. Ratio of earnings to average value of new houses It is interesting to analyse average earnings and its relation to the average value of new houses. When average earnings are a greater proportion of the average value of new houses, with other factors such as savings, interest rates etc. aside, new houses become more affordable. Annual earnings estimates were calculated using data from Average Weekly Earnings, Australia (Cat. no. 6302.0). The following graph depicts the ratio of average earnings to average value of houses over time. There was a sharp drop from the mid eighties up to 1990-91, followed by a slight increase in the early nineties, but the ratio has generally tapered off since 1994, with a noticeable decline in the last three years. One of the reasons for the decline observed over much of the period is the increase in the size of houses over time. For more information on this topic contact Roger Mableson on 08 8237 7494. Document Selection These documents will be presented in a new window.
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8731.0 - Building Approvals, Australia, Mar 2002
ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 03/05/2002
This page last updated 8 December 2006