Property Prices Doubles in every 10 years rule

Hi Guys,

Indeed we had a good run in property prices in the last 20 years.
With many examples of properties prices doubling, or even x3, 4 or more over a course of 10 years+ period

Now the big question, do you believe that similar property cycle is going to follow for the next 20 years?

The average house in Melb today is half a mil, based on this model, the average home in Melb going to be 1M in 2024?
Yes, Some Melbourne homes are already the 1M mark, but to average it out across the board

If this cycle is applicable for the future, and that history will keep on repeating itself (hypothetically in a perfect world)

Then based on this model, today, it would not really matter where you buy or what you buy, whether you follow CF or CG, just buy anything and at anywhere

What are you predictions? Share your thoughts
 
I don't think we can use the figures presented by people on this site as the norm.

Everyone here looks for that unique place that shows promise in most cases.

I have many friends and family that purchased property as IPs 20 years ago and most have only made 50% growth, they put little research in only following the media and friends around them.

These properties were in Sydney / Adelaide / Brisbane.
 
So, what you guys are saying is that, your predictions are that some properties will still x2, x3, x 10 in 10 years times
 
So, what you guys are saying is that, your predictions are that some properties will still x2, x3, x 10 in 10 years times

or 0.2%, 0.5% -25%, 500%. Depends where you buy.

20 years from now there will be major infrastructure works around Badgerys Creek. Guess where my money will be.

My question right now is, where to put it between now and 10 years from now when I go hard in the new airport district.
 
or 0.2%, 0.5% -25%, 500%. Depends where you buy.

20 years from now there will be major infrastructure works around Badgerys Creek. Guess where my money will be.

My question right now is, where to put it between now and 10 years from now when I go hard in the new airport district.

Yes, I looked at this airport a while ago, but apparently there have been talks of this airport for the last 20 years? I could be wrong
 
Average Melb house price $1M by 2024? It wouldn't surprise me at all, although it will probably be hard to define what is and isn't Melbourne.

eg. By 2024 will Baccus Marsh be considered 'Melbourne'? I expect housing estates will extend unbroken well past there along the highway.

It may also not be fair to say prices double every 10 years. I don't believe they did in the 1990s but they certainly exceeded this rule in the following decade and made up for it. It might be more applicable over a 30 year period.

It can also be argued that the definition of a house has changed substantially and it may continue to change. Once it was a quarter acre block out in the burbs. Now you're doing well to get a house on 300sqm of land. When we've decided this we can talk about apartments.
 
Say the median is currently 500k, following the rule, we'd have:

2024: 1 million median
2034: 2 million median
2044: 4 million median
2054: 8 million median
2064: 16 million median
2074: 32 million median
2084: 64 million median
2094: 128 million median
2104: 256 million median
2114: 512 million median

I'm sure you can see where this is going.

So either we have some spectacular inflation ahead of us or, no, property does not double every 10 years.
 
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Say the median is currently 500k, following the rule, we'd have:

2024: 1 million median
2034: 2 million median
2044: 4 million median
2054: 8 million median
2064: 16 million median
2074: 32 million median
2084: 64 million median
2094: 128 million median
3004: 256 million median
3014: 512 million median


I'm sure you can see where this is going.

So either we have some spectacular inflation ahead of us or, no, property does not double every 10 years.

Whoopsie!


pinkboy :p
 
Keep in mind that in 100 years, $512,000,000 won't be worth that in todays money. If a months salary is $5M, then it's entirely plausible.

I went to an auction in 1999 in South Melbourne. A nice 4 bedroom house set some shocking records by selling for $450k. People at the auction were having trouble conceiving what the bidders were doing. 15 years later it's easily worth over $2M.

Keep in mind that houses have also gotten smaller over time. I don't see this trend stopping.
 
Nope, definitely smaller

The houses in the outer suburbs might be larger McMansions, but the blocks they're on are a lot smaller. When I started my business in 2004 it was extremely rare to see an apartment under 50sqm. Today it's reasonably frequent.
 
With many examples of properties prices doubling, or even x3, 4 or more over a course of 10 years+ period

Now the big question, do you believe that similar property cycle is going to follow for the next 20 years?

The average house in Melb today is half a mil, based on this model, the average home in Melb going to be 1M in 2024?
Yes, Some Melbourne homes are already the 1M mark, but to average it out across the board
You're mixing up two concepts here. Firstly you say examples of properties prices doubling, then you talk about medians.

They aren't the same thing. This is for a couple of reasons....
1) the number of houses of a city increases over time - the properties added are almost always on the outskirts ('cos that's the only place where there is room for them) and are usually cheaper than existing ones nearer the CBD. So as the population of properties becomes more biased towards cheaper outer properties, the specific property you bought 20 yrs ago will rise faster than the median.

2) The inner city 1/4 acre blocks get subdivided (or put to higher use). So the existing $2M block now has 8 x $500K units on it. The seller got their doubling every 10 yrs, and the doubling clock is reset back to $500K. And then in 20 yrs Harry Triguboffs son will knock 'em all down & put up 60 units & reset the doubling clock again. So an expensive block will disappear from the sample, and 8 cheaper properties will appear. And of course this exacerbates the sample change effect above.

So to answer your question.... Yes similar property cycles over the next 20 yrs - some props will increase fourfold, but the median probably won't for the reasons above.

[Edit]We had this thread in 2010 - see post #129
 
You're mixing up two concepts here. Firstly you say examples of properties prices doubling, then you talk about medians.
Is that 'price' the actual sale price or the unimproved land value? If it is the sale price then we don't really know how much money got injected into the existing properties.
 
As a general rule I say yes, especially as population keeps increasing at the rate it is. If population goes backwards, say a new disease outbreak and we lose 2 million head then property go backwards as all relates to supply and demand.

Even our farmland has doubled every ten years where we are. Old man bought our farm for $70 an acre in 1973. This means 140 in 83, 280 in 93, 560 in 03, 1120 in 13. This is probably 10% out as currently worth about $1000 an acre. We are currently doing the figures on a next door property at $1400 an acre (more productive land and better improvements).
 
Hmm interesting question. Personally I don't think it can continue to go at that rate (7% compounded p.a?). I think affordability will constrain growth and there will be periods where prices move backwards (What? prices moving backwards? I must be crazy!)

Agree with the point about the SS community doing better than most though.

Having said that, given that I didn't own anything in previous decades, I certainly hope the trend continues! :)
 
Over the last few decades property has been driven higher by:

- Looser lending standards
- Increase in dual income households
- Lower & lower interest rates
- Private debt expanding faster than the economy
- Strong income growth from a mining boom

We've probably taken prices about as far as they can go:

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So no I don't think property will perform as well over coming decades as it has over the last few.

1) the number of houses of a city increases over time - the properties added are almost always on the outskirts ('cos that's the only place where there is room for them) and are usually cheaper than existing ones nearer the CBD. So as the population of properties becomes more biased towards cheaper outer properties, the specific property you bought 20 yrs ago will rise faster than the median.
I was under the impression most of the published median prices were stratified to avoid the impact of compositional change... what medians are you watching that are affected in the way you describe?
 
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