Adelaide Property Tops 25-Year Growth Race but Affordability Feels the Strain
Australia’s capital city housing markets have surged so strongly since 2000 that even the powerful US share boom has been left behind on capital growth, as runaway gains in cities like Adelaide and Brisbane support wealth creation but also push home ownership further out of reach for many buyers.
At the start of the 2000s, Australian housing was still relatively affordable and interest rates were trending lower while immigration was lifting demand and new supply failed to keep up. Over time, this mix of cheap borrowing and limited construction allowed prices in key cities to compound steadily, even as global sharemarkets swung through major crises such as the dotcom bust, the global financial crisis and the pandemic. Behind the scenes, a long standing cultural preference for “bricks and mortar” and generous tax treatment of the family home helped funnel more capital into property.
Across the first quarter of the 21st century, detached houses in every Australian capital city delivered at least 400% price growth, with some markets doing far more. Adelaide stands out with its median house price rising from about $130,500 to roughly $860,000, a gain of around 559%. Brisbane followed with about 533% growth from $150,000 to $950,000 while Hobart climbed roughly 519% to about $730,000 and Sydney rose around 455% to nearly $1.72 million. Over the same 25 year window, US share indices still performed strongly but not quite at the same pace, with the tech heavy Nasdaq advancing about 415% and the S&P 500 rising roughly 348%. Local listed property was a notable laggard, with Australian real estate investment trusts gaining only about 38% as commercial assets were hit hard during the financial crisis and the pandemic while the broader Australian share index rose about 158%.
Stretching the time frame to 30 years tells a different story and underlines how starting points can skew comparisons. If the clock is wound back to the mid 1990s, before the big late decade US tech boom, the major American indices dominate with cumulative gains measured in four digits that leave most other assets trailing. In that longer view, Sydney’s housing market also looks even stronger with price increases of about 770% from the mid 1990s, helped by a sharp run up ahead of the 2000 Olympics. Over very long periods, returns from shares and property appear to cluster around similar annual averages once rents, dividends and reinvestment are factored in but each asset class cycles through long stretches where it leads or lags the other.
The bigger picture for investors seems to be that relying on capital growth alone in property has become riskier as price to income ratios climb and rental yields drift lower from previous norms of 7–8% to around 3–4% in many cities. Owning an investment property also brings extra costs such as land tax, council rates, maintenance, insurance, property management fees, stamp duty and interest on loans, which all eat into rental income, particularly in retirement when regular cashflow becomes more important than headline gains. Shares, by contrast, offer easier entry and exit with smaller amounts and typically provide franked dividends that can slightly boost effective returns, and bundle most “maintenance” costs inside the company before profits are paid out. At the same time, property still benefits from powerful tax incentives on the main residence and tends to be less volatile day to day than equities, which suggests that a mix of both assets rather than betting entirely on one looks like the more resilient strategy for long term investors.
Beyond this property versus shares debate, other assets have staged their own remarkable runs. Gold has climbed more than 1,400% since 2000 after years of drifting sideways and digital assets such as Bitcoin, which emerged only in 2009 and rose from less than one US dollar to tens of thousands, show how new investment themes can radically change the landscape in a short period. Taken together, the past quarter century suggests that timing, diversification, tax treatment and personal cashflow needs matter just as much as headline growth charts when deciding where to invest.
