Can property value double every ten years?

[Deltaberry]

Berry, can you PM where you believe will double in 2 years in recent years? Serious question, regardless of entry price

Thanks

I'm not sure. I think these things are very circumstantial and would depend on the asset in question.

For example, there was a house in a middle ring suburb that just sold for $2.6m this weekend. The reserve was $1.6m. There may have been some chance you could have offered the vendor $1.8m and nabbed it pre-auction, maybe. Pre-auction, I'm sure a lot of people thought $1.8m would be toppy.

So the point really was that, if you knew your market very well, you could probably buy well and beat this 10 year doubling rule pretty easily.

 

[joeExpat]

I'll be happy if my latest purchase is worth what I paid for it after 10 years. Even a 10% loss would be OK.

 

[MTR]

Some can probably double in 2 years. Others may take 15.

Absolutely right, its such a loaded question really, because there are so many different products, you can not possibly put them all in one basket.

The one thing I am pretty certain of is if you buy something that everyone wants all the time then you have a better chance of it doubling in a much shorter time frame than 10 years

MTR

 

[LoneWolf]

I'm not sure. I think these things are very circumstantial and would depend on the asset in question.

For example, there was a house in a middle ring suburb that just sold for $2.6m this weekend. The reserve was $1.6m. There may have been some chance you could have offered the vendor $1.8m and nabbed it pre-auction, maybe. Pre-auction, I'm sure a lot of people thought $1.8m would be toppy.

So the point really was that, if you knew your market very well, you could probably buy well and beat this 10 year doubling rule pretty easily.

Thanks mate, gotcha

 

[willair]

Hi all,

It is commonly agreed that property kind of double every ten years. Well what do the maths say? Doubling is an exponential function which I guess is known by many of you. Yes it happened during the last 100 years, but if it continues to double every ten years for the next 110 years, well the median property price will be just over 1 billion dollars .

Just wanted to share this interesting fact and if you have given it any thoughts? I have seen several exit possibles in other countries not that long ago, from a 'japonisation' of the economy (soon to become 'europeanisation'), super inflation or in some rare cases the end of paper money. Any views?

Yann

Iv'e had a few purchased from 1995 till 2001 that went up 100% in the first 2 years,but that was because the value of the properties went down 50% over the prior 4 years then the vendors sold out at a loss,on paper they were in the 50-65k range but the vendors paided over 120k in 1992
that"s the inequality that come in real estate chess..

 

[Tigger]

I paid 110,000 for my first IP in 1999, the bloke I bought it off paid 146,000 for it in 1993. I sold it in 2007 for 285,000.
I guess it depends which 10 year period you're looking at.

 

[Tigger]

I also had an IP purchased for 100,000 in 1999 that I sold in 2003 for 330,000 (in Sydney). Sydney flatlined for some years after that.

The month I sold was the last month that Sydney auctions had high clearance rates and the last month that prices were still going up before stagnation set in. Not sure how many years it took to build steam again.

 

[Deltaberry]

Absolutely right, its such a loaded question really, because there are so many different products, you can not possibly put them all in one basket.

The one thing I am pretty certain of is if you buy something that everyone wants all the time then you have a better chance of it doubling in a much shorter time frame than 10 years

MTR

That's a good one. I find sometimes that things which seem overpriced go up more over time than things which seem like a bargain. The question is, why is it a bargain?

 

[Big Will]

I did a bit of trawling and found very similar thread in 2006 with the same concerns.

http://somersoft.com/forums/showthread.php?t=25898

I have being saying the same thing for the last 25 - 30 years and continually been proved wrong . Two examples:

I bought my first property in 1979 (27 years ago), a 2 bedroom unit in East St Kilda (42 The Avenue) for $26,000. So doubling every 7 years, would mean that this property should be worth between $208,000 (3 doubles) and $416,000 (4 doubles) today, with it being closer to $400K (probably between $350K and $400K). I bet that would be about right.

I bought a house in Brisbane in 1988 (18 years ago) for $205,000. So doubling every 7 years, would mean that this property should be worth between $810,000 (2 doubles) and $1.6M (3 doubles) today. I would think it would be in that range today.

Kierank is my father and made this post in May 2006 would guess the property is worth about 3M today which is (4 doubles) from his original purchase price. In this time there has been the GFC, wages haven't doubled and whatever other excuse you can think of but to me this is evidence from my old man and I know it is true.

Looking at his St Kilda unit, found it sold a year ago for $512,000 (source http://www.auhouseprices.com/sold/view/VIC/341055647/10-42+The+Avenue,+St+Kilda+East+VIC/)

He bought the unit 1979 for $26,000 and double every 9 years (1987, 1995, 2003, 2015) would equal 416,000 and if it was 8 years (1987, 1995, 2003, 2011, 2019) in 2019 it should be worth $832,000 but if you took the 2011 figure and used 7% growth compounding till 2014 it would be $509,617 which is just short of what it sold for last year (2013).

Lets see the same excuses in another 10 years!