Melb Property prices - 2050

[dan_89]

Trying to get my head around these figures (based on actual sale figures on a home in Glen Waverley)..

Property purchased 1977 - $35,000

Property current value 2014 - $1,200,000

That's a 3328% increase in value over a 37 year period?

If property growth was to continue at the same rate (IMO it won't happen) then the figures would look something similar to this..

Property purchase 2014 - $500,000

Property value in 2051 (at same growth rate) would be worth - $16,640,000?

Am I doing something wrong or has my mind just been completely blown at the price rises since 1977!?

Apologies in advance for the maths magicians as I realize this is simple stuff.. Ha!

 

[D.T.]

"Past performance does not guarantee future results."

 

[dan_89]

"Past performance does not guarantee future results."

Obviously too many variables to predict. Im sure my old man would have laughed at you if you told him his newly purchased home in 1977 would be worth $1,200,000 in 2014 too

 

[albanga]

Let's not forget the annual average inflation over the past 40 years has run at around 4.6% meaning prices now compared to then are about 410% higher due to inflation.

 

[dan_89]

Let's not forget the annual average inflation over the past 40 years has run at around 4.6% meaning prices now compared to then are about 410% higher due to inflation.

Ofcourse.. Still left with a hefty return though! If only he had kept buying after he paid his PPOR off in under 10 years! As they all say, SHOULD have bought this or that etc etc..

Also how did you come to the 410% inflation figure? At an average of 4.6 over 40 years that leaves you a total of 184%? Please explain..

 

[luce.rocks]

I don't know Melbourne that well, so I don't know if Glen Waverley is a good, bad, or average suburb. What I do know is this: 50 years ago or more, my grandfather decided to move from Dee Why to the grassy paddocks of Greenacre. He could have chosen to move to any number of other suburbs (or other areas that weren't suburbs yet) but he chose Greenacre. So instead of a house worth a million or two in Bondi, or Randwick, or St Ives, or wherever, he's got a house worth 500k in Greenacre. A lot can happen to a suburb in 30 or 40 years. They won't all perform the same.

 

[spludgey]

Apparently a massive crash is coming up, so I'd say it'd be worth 127,000 Globos.

 

[Big Will]

Apparently a massive crash is coming up, so I'd say it'd be worth 127,000 Globos.

Bitcoins I think

The past is only an indication of what might happen.

People would of laughed in 1977 about the house being worth 1.2M the same as in 2050 that 500k house being 16M.

Would you be upset if the property in 2050 was only worth 12M? I wouldn't be but I would be happier if it was worth 20M

 

[albanga]

Also how did you come to the 410% inflation figure? At an average of 4.6 over 40 years that leaves you a total of 184%? Please explain..

Oh don't worry I m not a maths genius! That figure is from an inflation calculator but you are just doing 4.6*40 = 184. To get the 410 the figure continues to add on top of the previous figure (maths guru care to explain this better?)

 

[HomePage]

4.6% compounded over 40 years is 1.046^40 = 6.043 times the original amount. To get the overall % gain, you have to subtract the original amount of 1 then multiply by 100 to turn it into a percentage ie. 6.043 - 1 = 5.043 multiplied by 100 gives 504%.

In summary, any figure annually compounded at 4.6% for 40 years will yield a result 504% greater than, or 6.043 times, the original figure.

 

[albanga]

4.6% compounded over 40 years is 1.046^40 = 6.043 times the original amount. To get the overall % gain, you have to subtract the original amount of 1 then multiply by 100 to turn it into a percentage ie. 6.043 - 1 = 5.043 multiplied by 100 gives 504%.

In summary, any figure annually compounded at 4.6% for 40 years will yield a result 504% greater than, or 6.043 times, the original figure.

What they said
See even my online inflation calculator was wrong.