DO PROPERTY VALUES DOUBLE EVERY 10 YEARS?
It's believed that residential property doubles in value every 10 years.
This would mean that the value of a given property should increase by 7% per annum to adhere to the performance over 10 years.
Is this true and will it apply to all property moving forward?
Past Performance Of Property
The main reason most people invest in property is to achieve as much capital growth as possible, which allows compounding value to do its thing.
Historically around 50% of residential property in Australia has doubled in value every 10 years, whilst the other half have not.
Over the past 25 years, leading research house CoreLogic reports that on a national basis, median house values have achieved an annual growth rate of around 6.8%, whilst apartments have returned an annual growth rate of around 5.9%.
What Does The Data Mean?
As we know, the commentary and the collection of data always speak in terms of medians, which does not show which markets, suburbs, or properties produced stronger results, and which have underperformed.
There are overachievers and underachievers, particularly when you compare regional areas with well-researched areas closest to major CBD’s.
In the years and decades ahead, it will be tougher to achieve the growth we have seen historically. We currently are living through some tricky times and irrespective of that, inflation is low, wage growth is slow, interest rates are at an all-time low, immigration has slowed and the economy has a lot of ground to make up.
In summary, doubling a properties value over 10 years is going to be more difficult than it used to , so it's more important than ever, to be working with people who can significantly improve your chances by applying a well trusted and successful methodology.
If you want to speak with the team at Meridian Australia about your property investment path simply book a call here.
To stay up-to-date make sure you join our Weekly Property Market Pulse Newsletter here.
Warren Jacobs - Senior Property Investment Consultant at Meridian Australia
P: (02) 9939 3249