Spot on Prop! This is why rather than buying entire suburbs and cities like the armchair experts must (why else would they continue to comment?), I buy individual properties I believe will perform well.
Will resi really continue to double every 10 years?
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Spot on Prop! This is why rather than buying entire suburbs and cities like the armchair experts must (why else would they continue to comment?), I buy individual properties I believe will perform well.
The 'doubles every 10 years' applies to a long time frame. Maybe 50-100 years and is used endlessly by property industry self interest and spruikers to encourage investors to buy. Even at bad times of the cycle.
You can have looong time with no or little growth or times when you can double values in 2-3 years and anything in between.
To me, that is why timing the market is so important.
You can have looong time with no or little growth or times when you can double values in 2-3 years and anything in between.
To me, that is why timing the market is so important.
So, we all should have purchased in Tamarama in 1998 for $0.5M.....since then the suburb median has doubled every 3 years
Just one of the reasons we use to justify all the due dilligence we do when buying....and why being close to water is so attractive from a CG POV. Although that tsunami warning the other night made me rethink some of my decisions, as my mind was sharply focused for a coulpe of hours
Just one of the reasons we use to justify all the due dilligence we do when buying....and why being close to water is so attractive from a CG POV. Although that tsunami warning the other night made me rethink some of my decisions, as my mind was sharply focused for a coulpe of hours
this is true - but getting your timing right is the hard bit. before and throughout the last Perth boom all and sundry were saying sell not buy.
Very true.
So, we all should have purchased in Tamarama in 1998 for $0.5M.....since then the suburb median has doubled every 3 years
That'd be nice.
In regards to the 10yr doubling rule, people look at the stats and say it can't continue. Could be right I don't know - can seem hard to imagine one day 100yrs from now the median property being $5M and having to rise to $10M in the following 10yrs. But who knows what the world will look like then, I'll leave that for my great grand children to focus on. Mean time, I do think it's quite feasible for the $400k properties I have now to be $800k in 10yrs and $1.6M in 20yrs etc and that's what I base my investment decisions on.
We purchased an IP for $341,000 in 1999 and today it is valued at $850,000.
CG of 9.5% PA
The original rent was $280 per week and it is now $420 per week.
The house is in a desirable area of Melbourne and I believe the thing that has driven the price is...........continuing strong demand .
The yield today is not great , but it is not yield that enriches you , it is capital growth .
I think that the CG in the areas that are more sought after is always greater.
Land in Toorak and Bellevue Hill started off much closer in value to other areas than the values are today . The difference in the CG percentages of the areas has caused the massive divergence in values today .
Mur
CG of 9.5% PA
The original rent was $280 per week and it is now $420 per week.
The house is in a desirable area of Melbourne and I believe the thing that has driven the price is...........continuing strong demand .
The yield today is not great , but it is not yield that enriches you , it is capital growth .
I think that the CG in the areas that are more sought after is always greater.
Land in Toorak and Bellevue Hill started off much closer in value to other areas than the values are today . The difference in the CG percentages of the areas has caused the massive divergence in values today .
Mur
Broadly speaking the answer is yes....but in the future the price and location of the suburb will be a key factor.
I believe the more expensive suburbs will not do as well....an example of this is the mid North Shore - i.e. Roseville, Killara, Lindfield. These suburbs have an average price of around $1m....and will more likely underpeform.
Whereas cheaper value for money suburbs...i.e. Belmore, Campsie, Rockdale, Kogarah, Arncliffe are suburbs reasonably close to city and you can still buy under $500 in these suburbs.
In Melbourne the Wyndham shire offers houses well under $300k......some as low as 23o-250K.whereas a similar distance the other way - i.e. Dandenong..which in my eyes is not as nice the price starts at 310K and climbs.
I believe the more expensive suburbs will not do as well....an example of this is the mid North Shore - i.e. Roseville, Killara, Lindfield. These suburbs have an average price of around $1m....and will more likely underpeform.
Whereas cheaper value for money suburbs...i.e. Belmore, Campsie, Rockdale, Kogarah, Arncliffe are suburbs reasonably close to city and you can still buy under $500 in these suburbs.
In Melbourne the Wyndham shire offers houses well under $300k......some as low as 23o-250K.whereas a similar distance the other way - i.e. Dandenong..which in my eyes is not as nice the price starts at 310K and climbs.
I am so sorry but this saying gets my blood boiling, not personal to you Bludger, but when people say The rich just get richer, and the poor are too stupid to learn about money , thats how i see it sorry to offend?
There is a bit of a contradiction here though.
Say a cheap house, 350k that is so popular on this forum ...? Now, possibly most of it's value is in the bricks and mortar. Lets pretend the cost of a replacement for the building is 250k. So there's not much land content. I'd have to assume then that the capital gain could in theory be not much greater then inflation, because the measurement of inflation is a very big proportion of building materials and labour/construction.
Now, the $1 million plus places, they are probably 500k for the house, and same for the dirt, so there has to be a chance of greater capital gain.
The $2 million house is much more land content again, possibly two thirds land content.
What has happened in the last 12 months where expensive houses have dropped and cheaper stayed up or even risen, is a bit unusual wouldn't most say. A return to strong economic times would mean a return to the higher land content houses out performing again as is the historic norm, wouldn't it..?? Or maybe strong economic times won't happen for ages? Possibly.
How can low land content houses outperform inflation by much?
Isn't what's happened in the last 12 months a bit unusual..??
Maybe what I'm trying to say is that if the good times return, then expensive houses should really outperform, but if things stay crook, then hard to see how cheap house can double in 10 years..
See ya's.
As a generalisation TC, I'd say you have it the wrong way around.
The $350k place may well have a house that would cost $250k if you were to build it again, but that doesn't mean the land is only worth $100k. As the buildings get older the land becomes an increasingly larger part of the value.
ie. 50yo houses in my area selling for $330k. The land value is pretty much all of that and you get a house that would prob. cost about $150k on top of the land for free. (subdivisions of said land selling for around $170k+ each)
Simplistic example, but you get the idea. So in your example, it could well be that the cheaper house has much more land value in the price than the 50% of the big $1M property.
The $350k place may well have a house that would cost $250k if you were to build it again, but that doesn't mean the land is only worth $100k. As the buildings get older the land becomes an increasingly larger part of the value.
ie. 50yo houses in my area selling for $330k. The land value is pretty much all of that and you get a house that would prob. cost about $150k on top of the land for free. (subdivisions of said land selling for around $170k+ each)
Simplistic example, but you get the idea. So in your example, it could well be that the cheaper house has much more land value in the price than the 50% of the big $1M property.
I'll take some convincing that a cheap house can have more land content than a $ million house.
The example you used, I'd say that was a bit unusual. Wouldn't a 50 year old house be in an established suburb closer to the CBD, and then be more likely to be more expensive than 350k? I'd have thought the typical 350k house would be in an outer suburb, perhaps be 20 years old, a long way from the CBD, or be in a large rural town.
I suppose your talking Adelaide here. I'm thinking more along the lines of Sydney. A 350k house in Sydney is normally way out and has little land content. Or a 350k house in Tamworth could be anywhere in town, but also have little land content.
Dunno. Think I better stick to farming if cheap houses can have more land content than expensive, cause I know nothing then.
See ya's.
Getting back to the original question, over 900 years of immaculate statistics from the U.K. has demonstrated that property doubles in value roughly every seven years. This is of course an average. There are great variations in areas, time periods and fluctuation within the seven year periods. However it hasn't mattered if there have been depressions, wars, natural disasters, changes of government etc etc etc. This has been the inevitable path of property values over the centuries. It is a brave person to bet against 900 years of history.
financeuncut.com
financeuncut.com
deleated. Miss read.
Well if the Sydney median isn't $1m in a year or two, then the 'doubles every 10 years' gravy train has finally run out of gravy for that major property market. I reckon it's back to tracking with inflation or slightly lower from now on.
Think about it. Houses are only just affordable now because of low low interest rates and FHOG boost. Rents are high enough that the number of homeless are markedly increasing. Boost interest rates or drop the FHOG boost and wind goes out of the sails. Boost rents and the more high priced public housing the government will have to supply.
Approaching final destination in the next few years for this 40 year gravy train IMO. Compounding maths makes this inevitable.
Think about it. Houses are only just affordable now because of low low interest rates and FHOG boost. Rents are high enough that the number of homeless are markedly increasing. Boost interest rates or drop the FHOG boost and wind goes out of the sails. Boost rents and the more high priced public housing the government will have to supply.
Approaching final destination in the next few years for this 40 year gravy train IMO. Compounding maths makes this inevitable.
Can you post up this evidence? I'd like to see it.
I find it very hard to believe that property has doubled every 7 years for 900 years. The population of Great Britain 900 years ago was probably less than a million. I'd reckon land values in Great Britain until the population got to a certain critical mass would have been based on agricultural values, as is always the case until land has a worth for housing. Agricultural values would have been bugger all for centuries as productive growth was small which thus ment population growth was too.
As I said, where is the proof of this amazing fact?
See ya's.
it's the averages over 900 period
so land value went from 1 pence to 1m pounds over 900 years (for argument's sake)
there were probably periods when it was flat for 50-100 years and then big jumps
essentially all significant property raises happened in the last couple of centuries
I have no problems with that idea. And the biggest growth would have been in recent decades.
There is no way property grew at 10% compound 900 years ago when there was bugger all growth in anything else.
See ya's.
that statistic comes from the 'domesday book' and refers to land prices... if you think about it, it could be true - the land went from agrarian to industrial and then to resi.
towards the middle of that 900 year period there was the industrial revolution which lead to the height of britains influence as a superpower and the 'empire where the sun never sets'. this is where most of the real growth from improved productivity occured.
So on a square metre basis that might account for 3 or 4% per annum.
another 3 or 4% is probably from inflation (devaluation of the pound-sterling) which has probably lost around 95% of its value in the last 100 years alone.
mind you property prices in Rome also grew for hundreds of years before showing (real) declines for about 500 years as the roman empire collapsed!
england is also an empire in decline and I don't see anything like the equivalent of an industrial revolution in the pipeline!
