annual capital growth is volitile however long term capital growth is secur
Real Estate has periods of high capital capital growth, even double digit, then they slow down and even become negative during recessionary times. Some say the cycles are every 7 years.
10 years capgrowth can look like this:
12%, 8%, 5%, 2%, 2%, 3%, 3%, 2%,8%, 8%
the average growth rate above is 5.3%. The national 30 year average is over 7%.
In our example prices would have been typically highest in year 4
So if you bought in year 4 your average capgrowth for the remaining 6 years would have been 4%
I guess the point I am trying to make is that annual capgrowth is very volitle.
Rather than just rely on the capital growth of an area, you can create value just by purchasing strategically
Ways to get early capital growth:
- Buy early off the plan
- Build house and land
- follow infrastructure growth and buy before its completed
- mortgage sales
- worst house in the best street
Getting an early capital gain or equity growth sets you up to build safety buffers to help avoid being forced to sell in a down market. this is key from those partnering with banks in order to increase their overall returns with the relatively cheap bank money at the moment.
Create an early capital gain for your purchase don't just aim for the average return of an area, look at the 10 year historical return of that area and see how volatile it is.
By purchasing strategically you can create an early double digit equity growth.