I think you just boggled my mind!
Never considered debt to be part of my 'riches', I suppose reducing it makes me less poor.
Property Prices Doubles in every 10 years rule
- Thread starter LoneWolf
- Start date
I think you just boggled my mind!
Never considered debt to be part of my 'riches', I suppose reducing it makes me less poor.
My 2 cents worth.
"Property doubles every 10 year"
No. Property doubles on average, in 10 ten years. Some decades it does better, some worse. Over the long term, property outperforms inflation by 2%. Inflation has averaged 5.2% over the last 100 years and property has averaged 7.2%. Inflation has been lower than average over the past few years, so at some stage property will slow down too. This may or may not be in the next decade.
Try looking at newspapers from 100 years ago and compare prices with the same property now. It's amazing how consistent it all works out to be.
"Property doubles every 10 year"
No. Property doubles on average, in 10 ten years. Some decades it does better, some worse. Over the long term, property outperforms inflation by 2%. Inflation has averaged 5.2% over the last 100 years and property has averaged 7.2%. Inflation has been lower than average over the past few years, so at some stage property will slow down too. This may or may not be in the next decade.
Try looking at newspapers from 100 years ago and compare prices with the same property now. It's amazing how consistent it all works out to be.
and yet you could have walked/gone to the nearest woolworths/coles, and paid $1.20 per litre for it
Yes.
I've never seen house prices go backwards over the longer term in my lifetime.
It's amazing how often we hear "it'll never happen again" and "It's too expensive" and so on.
I remember as a kid we (my mother was) were renting in Glen Iris.
The LL offered to sell my mum the house, but she couldn't afford it. I think it was $18k from memory (could have been $8k?
) I was about 6 or 7 at the time, so this makes it circa 1967. Glen Iris is one of the "leafy suburbs" these days and in high demand. That same property (has since been rebuilt with a period reproduction) would be easily $1m or more today.
https://www.google.com.au/maps/plac...2!3m1!1s0x6ad641e88b41dae7:0x829a95731c16bfa9
$8K to $1m in 47 years is 8.5% per year or doubling every 8.5 years on average. So, as others have noted, doubling every ten years in the long term has been a reasonable benchmark in the past but I don't see it in the future - interest rates have nowhere to go but up and the big boost of allowing two incomes when considering mortgage capacity won't happen again. That said, a lot of people who die off in the next decade or two will be leaving previously unimaginable sums to younger generations and these may flow back into the housing market.
Nobody can see the future. All we have is the past history. It is up to us to make the educated guess about the future.
Saying we are somewhat different is bit arrogant. In the absence of a crystal ball I would rather put more weight on the past patterns.
G,day Tony,
It was only about 7 years ago when interest rates were a lot higher, in another 7 years they could be higher or lower. But over the long term, say 100 years, I believe the average will remain fairly constant, as will inflation and capitol growth.
ITs a new fad, using debt to create wealth, you should look into it
Depends where and what you buy
I bought a house in reasonable condition for 170 1 year ago, already comparables are at 230, when I stood out on the porch I looked across the park and down the hill And all I could see is a hundred houses that are worth on average 400 each
There is no way in my mind that this house will not double in less than 5 years
Lots of things to look at to achieve maximum return
Correct just as people think it is different now and we will never have major wars again, US has invaded the Middle East and Russia the Ukranians. History always repeats. So does house price growth.
Property prices have doubled (on average) every ten years for the past seven decades. Whether or not that keeps happening in the future is unknown, but it's not impossible. We're just taking nominal figures here. A $512m median might sound crazy, but it's no more crazy than a $1m median would have sounded 100 years ago. Obviously a $512m median wouldn't be possible with current incomes, but if incomes also doubled every 10 years then it would be no less affordable than prices are today. There is no 'maximum' value that nominal house prices can reach. At the end of the day these numbers are just digits on a computer. There is no theoretical limit.
Personally I expect house prices to keep tracking income growth over the medium-long term as they have done for the past decade, which would mean doubling every 15 years approximately.
Agreed... I feel the only future driver will be population growth. I really wish our governments would sort out proper mass-transit, instead of more roads
Minus demolishing/rebuild cost somewhere in equation
Hi Shadow
Do you have a chart for the last 7 decades to post
Stapledon's data goes back to the 1800s, and some of it has been charted here...http://www.stubbornmule.net/2009/06/property-prices/
There's also some data here going back to 1960... http://www.retireonproperty.com/propertyinvesting/research/australian-property-prices-since-1960/
Not a doubling every single decade obviously, but roughly a doubling every 10 years on average.
And projected into the future...
Over the most recent decade, prices have not doubled. They are only up about 70% since 2004. Perhaps that means we're due for a catch up?
I agree shadow. Sometimes the numbers in norminal terms sound so outlandish you question them - but over several decades it can make sense. I guess the question is can incomes keep pace and it not, how much can the real price rise before its not sustainable?
yes but once again that's only half the equation, the question is how much will the real debt deflate by even in a zero growth environment?