I thought this might be interesting to some of you.
We often hear that property values double about every 7 to 10 years. But what does that correspond to in interest rate terms? OK here is the brake down:
A property will double in value every 10 years if the compounded yearly interest rate is equal to 7%.
10 Years –> 7% (Approx)
9 Years –> 8%
8 Years –> 9% (Approx)
7 Years –> 10% (Approx)Hope this makes things a bit clearer.
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APIM coming very soon …
APDM coming soon …*************
Another way to work out how often your property will double (roughly) is divide the yearly growth percentage into 72.
If a property grows at 8% per year then…
72 / 8 = 9 years to doubleAlways set your goals further than you can reach
– Then stretch that little bit furtherHi,
I’ve been doing some research into this statistic when writing my book and thought I’d share it here:
Col1: Average 1/4ly growth over 20 years
Col2: Average 1/4ly growth extrapolated yearly
Col3: Years taken for property prices to double (approx)Adelaide, 1.82%, 7.28%, 9.89 years
Brisbane, 2.21%, 8.83%, 8.15 years
Canberra, 2.07%, 8.29%, 8.10 years
Darwin, 1.49%, 5.94%, 12.12 years
Hobart, 1.11%, 4.43%, 16.25 years
Melbourne, 2.5%, 10.01%, 7.19 years
Perth, 1.78%, 7.11%, 10.13 years
Sydney, 2.14%, 8.57%, 8.40 yearsNow, allowing for inflation:
Col1: Average 1/4ly growth over 20 years
Col2: Average 1/4ly growth extrapolated yearly
Col3: Average Inflation Over Recorded Period
Col4: Years taken for property prices to double (approx) in after inflation value.Adelaide, 7.28%, 4.90%, 2.38%, 30.25 Years
Brisbane, 8.83%, 4.90%, 3.93%, 18.32 Years
Canberra, 8.29%, 4.90%, 3.39%, 21.24 Years
Darwin, 5.94%*, 3.8%*, 2.14%, 33.64 Years
Hobart, 4.43%*, 2.4%*, 2.03%, 35.47 Years
Melbourne, 10.01%, 4.90%, 5.20%, 13.85 Years
Perth, 7.11%, 4.90%, 2.21%, 35.58 Years
Sydney, 8.57%, 4.90%, 3.67%, 19.62 YearsOK – anyone want to hazard a guess as to what all this means?
Bye,
Steve McKnight
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Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
What it means to me Steve is that they are nice numbers but if deal makes money then I don’t care how long it takes to double. It means money is in my pocket and I can do more deals. Numbers are great but I think some times we get to carried away with them. The bottom line is if a deal makes sense whether the market is going up or down it still makes sense……
Enjoy
AD [:0)]“Carpe diem, quam minimum credula postero.”
Lat., “Seize the day, put no trust in tomorrow.”
-Horace, OdesHi Steve,
I would hazard a guess that from the numbers that you have presented that:
1) Inflation is a significant portion of the increase in property prices over the last 20 years.
2) If you bought and held a property in the last 20 years you would be most happy with its performance if it was located in a) Melbourne b) Canberra and c) Brisbane. Or a) Melbourne b) Brisbane c) Sydney when inflation is considered.
3) If you are relying on capital gains as a method of wealth creation, you would want a lot of patience; and would be better off sticking to the share market over a 20 yr period.
4) There is a substantial difference between the rate of growth between the capital cities. It would be interesting to model which factors have contributed to the increase in property prices over the last 20 years, and why Melbourne has outperformed the rest of the country. Also whether these factors can assist with property investment decisions in the future (positive cash flow buy and holds etc).
5) Positive cashflow is a much better way to build wealth than relying only on capital gains.
Cheers,
Nathan.
“Wrapping is a investment joy not a musical one”
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