No Capital Gains for 10 Years?

[Andrew_A]

Ok... I had to sign up just to comment.

If we take your “theory” and plug some simple numbers into it this is what we get:

You have said centuries, so let’s say 200 years.

You have said it doubles every 7-10 so let’s take the worst case of 10.

let’s even plug in an overgenerous average house price of $1M today.

To get to $1M today it would have had to start at less than $1 200 years ago.

Maybe you should do your research and you will see that the "theory" only really holds true if you start your data from around 1970. The further you go back the less it works as pre 1970 there was very little inflation.

It completely breaks if you run data from 1800 – 1900.

We could compound the threads dealing with this issue into a fairly big number!

Nothing compounds forever, why is that surprising?

I have posted before about the subdivisions in areas I have researched in Brisbane from the 1850's and 1860's selling for 1 pound per acre, which translates very roughly into your 7-10 yr doubles with modern land sales in the same areas, so the 1970's assertion is a little flaky, but the compound point is .. well math.

 

[Aaron Sice]

Considering the Colony of New South Wales was founded in 1788 and the Colony of Victoria was founded in 1803, it's pretty rich to try to run this data from 1800.

Or were you trying to run it on France which underwent the Napolenic Era, or China which overthrew the Qing Dynasty in the late 1800s? You should also try running this data on the Ottomon Empire - oh wait that doesn't exist any more.

....should also add the dropping of the gold standard, the change from imperial to metric currency and a couple of world wars chucked in for good measure.

 

[Ausprop]

....should also add the dropping of the gold standard, the change from imperial to metric currency and a couple of world wars chucked in for good measure.

and womens lib and the pill. and medical advances and nutritional advances and the lead up to peak oil

 

[locko24]

Yeah!
We'll teach you for signing up, Mathboy!

 

[Aaron_C]

Although I have this background, I am sick of university students trying to show how smart they are by using excel and a few formulas. True investors don't rely on such gimmicks

 

[BayView]

The market needs a breather, economy is tanking at the moment. Thanks no less to the carbon tax

I've been ranting for about a year now about the terrible state of our economy looking through my "grass roots" binoculars - I think the Carbon Tax is just the end of a line of factors causing the (real) economy to tank.

When I say "real" I'm talking about the mainstream activities of living for the majority of us.

Ju-liar can wang on about fantastic exports and mining are right now, but that doesn't directly affect the majority in the shops and at the bowsers etc.

Word has it that the next interest rate move will be back down.

This might be followed by a fall in the Aussie dollar due to perceived lack of confidence in the economy from the higher-ups.

 

[buster]

Maths boy 200 years years ago you could get property for free just claim it. Some property cost a couple of beeds or a steel axe. Ever heard of selection, 90 years ago to encourage settlement, you could select the land you wanted for free. All you had to do was clear a portion and build a shelter on it with in 2 years.

 

[Andrew_A]

I just read a recession is coming

 

[charlieandkath]

property will have negligible falls / zero growth / negligible growth over the next decade for sure.

my interest is what happens as per devo76 mentioned.

line yourself up now because the breakout will be huge.

Good call Aaron especially Sydney. Should have lined up at least ten IP's in Sydney on the date you wrote this 11/7/2011

 

[z611143]

property will have negligible falls / zero growth / negligible growth over the next decade for sure.

my interest is what happens as per devo76 mentioned.

line yourself up now because the breakout will be huge.

You think we are going to stagnate for a period of time?

 

[Intrinsic_Value]

For god sake,
Property will not double every 7-12 years.

Are people so stupid as to believe this.

Well a fool and their money will be parted one day on this belief.

 

[Intrinsic_Value]

The theory of property doubling over 7-10 years is an historical average using figures collated over centuries.

Property tends to stagnate for a number of years before virtually doubling in 1-3 years. It's the old "herd mentality", properties gain in value,
Marg

This post is so so interesting. Because it does highlight many of the long term statistical facts that are hidden in shorter run statistical plays.

And yes its very true, property can do nothing, and then double in just a few years.

 

[Ausprop]

And yes its very true, property can do nothing, and then double in just a few years.

which is why timing can be a difficult game to play and development fraught with danger as well as enormous upside

 

[albanga]

http://en.wikipedia.org/wiki/Million_Dollar_Listing_New_York
I am just waiting for the Melbourne version

 

[BayView]

If you believe what you read here, it means no capital gains for 10 years. Blows the theory of a property doubling in value every 7 - 10 years, if it pans out this way, right out of the water.

Not too fussed to be honest if this prediction turns out to be true; as a property investor, you can still add significant value to your property through renos and subdivision / development. The benefit will be that you don't need to worry about escalating property prices as you move from one project to the next; glass is always half full for me.

http://www.heraldsun.com.au/news/mo...-property-market/story-fn7x8me2-1226091381419

The cycles of growth are not consistent or steady.

We had a PPoR that doubled in value in just over 2 years, and had an IP that did zero in just over 2 years...a few years apart from each other and in different parts of Melb.

But, if you can be bothered going to the effort of picking a fairly average house in a fairly average suburb and traced it's sales history back say; 40 years, you might see the long term average of growth.

 

[knightm]

90 yrs or so is good enough for me.

 

[knightm]

The cycles of growth are not consistent or steady.

thank goodness for that.

 

[MTR]

cycles not consistent, steady and don't always double 7-10 years, sometimes triple +. Don't you just love these graphs, everything in the same fish bowl, wonderful, that's why I avoid them like the plaque.

 

[Dan_p]

Yeah!
We'll teach you for signing up, Mathboy!

Should have kept up this ruthlessness on a few more of the new guys

 

[carole]

The Doomesday book

Back in the 60s when I was a kid, in the UK, there was a survey of the DD book to modern property, My grandfather's farm (1000 acres of arable pototoes) was a 'swamp with 3 pigs and 1 churl' some brainiac worked out the value had doubled every 9 years on average since 1086 AD.
In Australia, I arrived in Feb 1987, bought a house for $90k, within 2 years it was worth 140k, now worth a million, so 1996 180k, 2005 360K, 2014 720k
nope! let's try every 8 years, 1995 180k, 2003 360k 2011 720k 2014 980k
close......
Second house bought 1989 @ 180K, 1997@ 360k, 2005@720K, 1014 @1,440k that is spot on.