A new report has shone a light on the mountain of equity long-time homeowners are sitting on, revealing how powerful a wealth-creation tool it is in the face of rampant inflation.
Exclusive REA Group data has showed just how much South Australian homes have increased in price even when adjusting values for the changing value of money.
It showed Adelaide house values have soared by three-and-a-half times the rate of inflation since 1980, with units up by almost three times the rate of inflation.
A typical Adelaide house cost $73,500 in 1980 and would have been worth $263,900 today if it had followed inflation, however it but now sits at $920,000.
Rises were even higher in Adelaide’s fastest-growing suburbs, with house values recording current prices at seven times the rate of inflation since 1990 in Blakeview in Adelaide’s north.
If following inflation, its median price would be $97,800, up from 1990’s $38,708.
It now sits at $685,000.
Long-time Adelaide homeowners have seen huge home value growth. Picture: Brenton Edwards
At $1.235m, Hampstead Gardens houses sit $1.0418m above – or 6.4 times – what its price would be if home prices followed inflation.
North Brighton and Somerton Park house prices have also tracked at six times the rate of inflation, while a further 20 suburbs have tracked at 5 times the rate of inflation since 1990.
This relentless wealth explosion has handed older property owners a huge dividend, but the sheer scale of this jackpot has exposed a flaw in recent Budget reforms.
Government announced in May that capital gains tax discounts introduced in 1999 would be replaced from mid-2027 with an indexation system that follows inflation.
Existing property investors will have discounts on any gains made before the deadline “grandfathered”.
The changes were sold to the public as a way to address “intergenerational inequality” but critics have argued the inflation-adjusted numbers show the opposite could occur.
Some argue the changes will instead raise taxes for Millennials and Gen Z trying to build wealth for their retirement, while leaving previous generations with generous tax discounts.
REA Group economist Angus Moore pictured
REA Group economist Angus Moore said adjusting for inflation revealed just how big of a wealth creator property had become.
“It is interesting to see how much inflation has jumped, and the fact that home price rises are up so much more than inflation is quite incredible.”
Mr Moore said closing the loophole only for new buyers means the next generation will take a hit, Mr Moore said.
“If we see the kind of growth as before, the new system is less generous for most property owners,” Mr Moore said.
“It is unlikely we would see gains of the last 30 years repeated,” Mr Moore said.
Andrew Rose of LJ Hooker Craigmore/Elizabeth/Salisbury.
LJ Hooker Craigmore/Elizabeth/Salisbury sales agent Andrew Rose said he wasn’t surprised to hear Blakeview had had the biggest growth over the past 25 years.
“It’s long been seen as a destination suburb in the north and one people aspire to move up into,” he said.
“There are some beautiful big blocks out there – some of them 1000sqm – and you get some really impressive views from the higher blocks.
“It’s really well serviced too with some fantastic amenities, so there’s been a lot that’s been driving that growth.
“I can’t see why home prices would not keep rising because there’s so much land out there to be released yet and the quality and cost of these new builds keeps rising.
Taylor Opperman-Grant and Angus McNeair in their recently purchased Blakeview home. Picture: Tim Joy
Youth support worker Taylor Opperman-Grant, 28, and her partner, industrial services worker Angus McNeair, 29, have recently purchased in Blakeview and said she looks forward to seeing home values continue to climb.
“We loved the area and we really wanted a backyard and wanted something that was more than just your two or three bedrooms,” she said.
“It’s a wonderfully family-oriented area
“We didn’t realised it had had this much growth and in the future if we look to sell it would be great to see that growth continue.”
– with Aidan Devine
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