No Capital Gains for 10 Years?

[molif]

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

 

[Propertunity]

I would not be too concerned. Its just more media 'noise'.......and from another 'economist'.

 

[marg4000]

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, become scarcer and people panic and think that it is now or never. After time when the economy slows and sales start to become hard to complete, discounting starts and people hold off in the belief things will be cheaper in the coming months/years.

A long period of little or no capital gain has happened before and will happen again. It is not unusual for a property to gain little or nothing (or even go backwards) over 7 years or so, nor is it unusual for a property to double in value in as little as 2 years or less.

Get rich slowly.
Marg

 

[Ed Barton]

I would not be too concerned. Its just more media 'noise'.......and from another 'economist'.

Eslake is not 'just another economist'.

 

[Ed Barton]

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, become scarcer and people panic and think that it is now or never. After time when the economy slows and sales start to become hard to complete, discounting starts and people hold off in the belief things will be cheaper in the coming months/years.

A long period of little or no capital gain has happened before and will happen again. It is not unusual for a property to gain little or nothing (or even go backwards) over 7 years or so, nor is it unusual for a property to double in value in as little as 2 years or less.

Get rich slowly.
Marg

wise words. you are obviously not 25!!

 

[Propertunity]

Eslake is not 'just another economist'.

It wasn't Eslake I was referring to. (he's not down on property) It was Shane Oliver.

I take economistes with a grain of salt these days.
How many predicted the GFC?
How many predicted the housing boom we had in the middle of a GCF?

Then you get economists from BIS saying all sorts of stuff - both boom and bust and everything in between, and looking back you see they got it wrong.

 

[BayView]

Property doubles in value ON AVERAGE every 7-10 years.

So we can have a number of flat years and then and boom, then flat, then a boom, then flat, then a boom, then flat, then a boom...........

You get the idea.

 

[Graingrower]

Property doubles in value ON AVERAGE every 7-10 years.

So we can have a number of flat years and then and boom, then flat, then a boom, then flat, then a boom, then flat, then a boom...........

You get the idea.

Sounds like a tyre

 

[Property Meister]

EEEXACTLY, all these economic experts, some claiming to be gurus, some claiming to be specialists, they can't get anything right,

if they were so bloody good at their job with their fancy qualifications (or lack of) then they would be milking the market and having canapes with Bill Gates.

And you see within 5 minutes of eachother, 1 article saying doom and gloom while the other is saying brace yourselves for a boom,

we've got experts still predicting a few more rate rises while others are at the other extreme predicting rate cuts,

If I owned/ran a newspaper, i would be so ashamed of writing so much contradictory crap, it seems in todays society, reputation/credibility means absolutely zilch

 

[BV]

Not too fussed to be honest if this prediction turns out to be true

Oh it will come true.
Property prices (fuelled by easy credit and speculation) have quadrupled in a short period of time so for this abnormality to go away, prices will have to fall by 50% or will be going sideways for the next 10 years.
Ask Steve and he'll tell you
http://www.debtdeflation.com/blogs/

 

[SENIOR]

So Last year at this time the journalists were telling us all about the booming suburbs of Melbourne and the suburbs that are now average medium price of a million dollers
Now we have no property increase in ten years
When I do happen to read a newspaper which is very rare and wouldnt pay for one It takes me 5 minutes to read as the content is crap

 

[Amadio]

We sat in a flat market in California which lasted for 9-10 years from 1990 or so. You just got used to prices which stayed the same year in year out.

Of course then it shot up again so that our $400K house in 1998 was a $1 mill house in 2006.

Then it went down again.

Now it's going up again.

That's life in real estate.

 

[devo76]

Exactly. 10 years of no growth is not good. Its what happens in year 11,12 and 13 that makes it worth while.

 

[Aaron Sice]

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.

 

[JamesGG]

More important than the question of whether there will be any capital gains for the next ten years, is how your investment strategy will hold up if the theory proves to be correct?

The general market movements are, of course, well and truly beyond our control and so there is no point in worrying about whether the market will be flat for ten years. IMO, it is more important to look at ways of making a profit beyond simply waiting for the market to deliver it to you.

 

[Deltaberry]

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

 

[molif]

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

Yes, thanks Ju....LIAR

 

[MathBoy]

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, become scarcer and people panic and think that it is now or never. After time when the economy slows and sales start to become hard to complete, discounting starts and people hold off in the belief things will be cheaper in the coming months/years.

A long period of little or no capital gain has happened before and will happen again. It is not unusual for a property to gain little or nothing (or even go backwards) over 7 years or so, nor is it unusual for a property to double in value in as little as 2 years or less.

Get rich slowly.
Marg

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.

 

[devo76]

Nice of you to sign up. When are you going to post your first graph ???. Actually you are right and compounded growth gives suprising results over a relatively short time. You actually show that house price growth has exellerated in recent history. Maybe this is the new black and doubling will happen in shorter time in the future . Say 4 to 5 years ......... It could happen !!!!!!

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.

 

[Deltaberry]

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.

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.