cbd inner ring, property cycle questions

[eks883]

hi,

i'm just wondering why some people say the "within 15km of cbd" has better long term growth. does it mean that anything further really has less appeal? *lets exclude beachside locations* what is the reasoning, am just curious.

also, about property cycles and the doubling of properties in 7-10 years. not sure where to get data to backtest so i'm asking what is basis of this? is this consistently happening since a long long time ago? just thinking if properties keep doubling, in a few generations a lot of people will not be able to afford houses if for example 500k median houses end up as 1 million or even 2 million in 20 years time.

am thinking that this idea applies more to cheaper suburbs? am i right?

 

[MTR]

I think this is worth a read -

The 'buy and hold' theory which is widely accepted and is based on the past performance of the housing market in post war years, particularly the last thirty years from the 1980s onwards. It has led to common misconceptions in the housing market that property prices double very eight or nine years and that there is a "housing market cycle" which regulates the performance of the market over time, especially at capital city level.

This fiction is perpetrated by many so called "experts" because it makes their job easier by claiming that it does not matter where to buy, time will do the rest. In addition encouraging long term investment gets these spruikers off the hook if prices fall for the first few years, because they can then assure you that higher growth is sure to occur later to "compensate" for recent falls.

Here are some studies

Long term Housing Prices in Australia and some Economic Perspectives, Sydney University
A long Run House Price Index Maastricht: Real Estate Economics
Mastering the Australian Housing Market - J Lindeman
Demand and Prices in the US Housing Market


MTR

 

[eks883]

so its kind of like diminishing returns as price bracket goes up?

Thanks for the references btw Marisa.