Property prices always go up?
- Thread starter peastman
- Start date
The averaged straight line has been historically 7-10 years to double in value.
When propertry goes down - a particular property - it is a result of operator error; bought too high, and had to sell too low.
Perhaps the question should have been does the real value of property rise over the long term (put simply the rate of price growth minus the rate of general inflation). The answer to that, based on history, would be a yes - though it would be foolish to predict what the property market would be doing in 20 years time. The baby boomers will by then be dying out, possibly meaning a glut of IPs on the market, the societal changes of working two income families have already been priced into the market and the era of quantitative easing and cheap credit will eventually come to an end.
Just ask anyone who has bought in a mining town or an OTP purchase if prices always go up.
If prices have dropped and you aren't trying to release equity or sell do you really know what prices are doing?
If prices have dropped and you aren't trying to release equity or sell do you really know what prices are doing?
and too bad if you purchased in the decline, so you lost money you got it wrong. Lets get real, you need to get the timing right otherwise you lose money in the real world.
Don't you love it when people want to throw in 20-30 years that helps big time and mitigates the risk and helps you sleep at night, yep you will eventually make money of course, just sit back and wait, lets not worry about today.
Property works in cycles, it never continually rises if it did then we would all be very clever and just continually making buckets of money.
I have bought and sold a few joints in my lifetime,
All the buys were not timed, and all the sells were not by nice choice.
The shortest period of time for any buy then sell was approx 18 months.
A few were around the 2 year mark, but most were more, of course.
So far, I haven't had to sell a property for less than what it cost to buy including all costs.
And, I'm pretty hopeless at this caper as it turns out.
So, anyone with half a clue can do better without any worries.
The trick is not to have to sell too soon, and/or in a hurry.
I have seen folks sell for a loss though - our last PPoR was one example. We sold it for $850k (it is right across the court from where we live now) and the people who bought it from us sold it about a year later for $800k. They didn't time the market as it turns out, but had they kept it for another year or so they would have got their money back, methinks.
Timing the markets will maximise the returns more than someone like me who flubbs along stuffing things up, of course.
Only the flippers and developers need to worry a bit about timing.
We have not been given a timeline for the original query of 'will property will keep increasing'. As you had in my original post the last part did say 'If you were looking year on year then no not always.'
It wasn't a question of timing the market but a question will property keep increasing which without a doubt I believe it will as again there is no timeline so it is up to interruption.
If the question was do you think that city x or suburb x will keep increasing over the next 12 months then we have less variables and would likely provide a different result to the OP's query.
Good post Chooke - difficult to say.
I think Australian's may have a mindset that property prices always go up, just based on historical data and recent trends (population explosion worldwide through 1900s, debt explosion in late 1900s, etc).
Property prices can fall. Its probably hard for Aussies that have been in the market for years and years to fully appreciate this, given their experience has been largely positive (even on their bad investments!). But there's enough proof all around the world to show that over a ten year period prices in property assets don't always increase. Japan's a good example of a mature economy where asset values didn't rise for a decade. Its not impossible for this to happen to Australia at some point in the future...or an extended period where income growth 'catches up' to price growth.
IMO, anyone that assumes property prices will double every 7-10 years in the future based on historical data is being well and truly overly optimistic.
Taking UK figures from Nationwide price index, outer London, there was a price peak Q3 1988 of GBP94,013, then prices fell to a low 69,042 in Q4 1992, and only got back to their previous peak at the end of 1997. During those nine years consumer prices increased by 47%, incomes by 62%. I can remember the early 1990s when thousands of people lost their homes because they were underwater and couldn't keep up their repayments.
I am not spending to much time researching this but the average price is now about 300,000 for outer Metro
Region Average Price Annual %
change
London ?400,404 25.8%
Outer Metropolitan ?295,543 16.4%
Outer South East ?230,409 14.0%
South West ?207,420 9.8%
East Anglia ?188,960 9.5%
Wales ?145,812 9.3%
Northern Ireland ?117,150 8.4%
East Midlands ?154,145 8.3%
West Midlands ?160,383 8.2%
North ?125,106 8.1%
North West ?144,851 7.1%
Yorks & Humberside ?142,661 7.0%
Scotland ?141,872 5.4%
UK ?186,544 11.5%
http://www.nationwide.co.uk/~/media/MainSite/documents/about/house-price-index/Q2_2014.pdf
Again the answer to the OP question without a defined timeline is yes property will continue to grow. No it is not straight yes it may go backwards but even if you bought in 1987 for 100,000 in 2012 the property had grown in value (although slightly).
However if you bought in 1992 for 70,000 your property is worth more than what you paid for it each year after you bought it (including the decline in 2002).
If I bought a 25 acre property in the CBD of Melbourne in 1800s for 1,000,000 pounds I would of looked rather stupid and could of made better purchases but it would be worth more today than what I paid for it.
Your right we did not get a timeframe..but asked whether property always goes up? It goes up, it goes sideways, it goes down...
Buy and hold investor also need to mitigate risk, and timing is key regardless of asset class or strategy
For example those who jumped into syd cycle 2 years ago are winners, those who jump in at peak perhaps in 6 months time.? Will pay too much and then stuck for the next perhaps 7 years, with -ve returns, dont believe me?
Do we recall Syd market was flat from 2004 and started to rise in 2012/13, that is 8 years no growth, prices falling back, imagine holding for this period, no growth and negative cash flow, what if a buy and hold investor holding 2 or maybe 3 of these, its a killer.
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No it'll be coming down within maybe 12 months.
One thing for sure, it will come
I voted no and agree with above.
I'd say Perth, Sydney and Melbourne (in that order) will experience a correction sometime this year or the next. The market has peaked... but with these rate cuts creating an "artificial boom" who knows how much overtime we have. In a market like that you'd want to buy and flip before they rise and clarify the true value of property.
I believe house prices are currently artificial, now even pricier as a result of rate cuts... which are indefinitely below average, therefore the house is now technically overpriced. Buying after the natural boom on top of paying even more (due to current unrealistic low rates) is a double whammy for financial disaster!
I'm currently looking into major towns like Ballarat, or smaller scenic towns with lifestyle amenities. I'm fairly certain these places would dodge a correction, but as far as growth during that phase, I'm not to sure!
http://www.propertyobserver.com.au/...ane-where-they-are-on-the-property-clock.html
I believe house prices are currently artificial, now even pricier as a result of rate cuts... which are indefinitely below average, therefore the house is now technically overpriced. Buying after the natural boom on top of paying even more (due to current unrealistic low rates) is a double whammy for financial disaster!
I'm currently looking into major towns like Ballarat, or smaller scenic towns with lifestyle amenities. I'm fairly certain these places would dodge a correction, but as far as growth during that phase, I'm not to sure!
http://www.propertyobserver.com.au/...ane-where-they-are-on-the-property-clock.html
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