CG trend of Melb

[primaus]

Just a quick Q...

If one were to buy well positioned property in a middle of the road suburb for a fair/median price - what is the long term CG trend in today's market?

On avg - interest rates are around the 7% figure so if CG was around 7% per year - the property will be paying for itself.

Also, is there different rates of growth for <800k and 800k> properties.

I know there are lots of variables involved but I am trying to gain an basic understanding of the growth rates.

I have commonly heard that property tracks inflation (c. 3%) - Is this valid?
If this was the case, it would mean property owners are losing 4% of the value per year.

 

[mortgageman]

Hi Primaus,

I would have a look at either RP Data or Australian Property Monitors, and you should be able to access that information for specific suburbs.

Regards,

Cameron Perry

 

[Propertunity]

On avg - interest rates are around the 7% figure so if CG was around 7% per year - the property will be paying for itself.

Not exactly
Long term CG could be assumed at 7-8%
IRs currently around 7%
Rental income around 4-5%
Running costs around 1.5%

Also, is there different rates of growth for <800k and 800k> properties.

Yes there can be. If the median price for a suburb was say $400K now, then you could reasonably expect that 10 years hence it might be worth $800K, whereas the $800K property now would probably not be worth $1.6M then.

I have commonly heard that property tracks inflation (c. 3%) - Is this valid?

No that's not valid.

 

[wisty]

No that's not valid.

Property will tend to track income (long term), which tends to be above inflation.