I’ve recently wrote out a plan from July this year till 2029 (when i’m 45!) where I’ve mapped out as best I can an accumulation of properties and based growth pa on each investment property at 5%. I’m interested in hearing opinions on what they believe is to be the most realistic growth per annum figure that I could use. Is 5% too high an expectation? too low? average? As for the type of property – i’m talking about residential properties. Your thoughts would be appreciated.
Thanks
Hi :)
It’s pretty hard to tell because every year is different and so is every suburb. Look at Sydney a few years ago – it went side ways for about 5 years. And then had bumper years.
Here in Adelaide the growth is generally slower but steadier but no one has a crystal ball on future might bring – it could half or double tomorrow.
You could probably use 5% for the purpose of modelling as long as you know the limitations of modelling.
D.T. | DT Property Management
http://www.dtproperty.com.au
Email Me | Phone MeAdelaide Property Management - whole Adelaide metro
Hi Chat,
Seems to me they would have just doubled by 2029 in your spreadsheet (the Rule of 72 tells me that). That sounds a bit conservative, but then, I recall that from the late 80’s to 2000 there was very little growth in Brisbane (so, about 11 or 12 flat years).But then it took off with a hiss and a roar, and DOUBLED house prices in about 3 years, then another 50% about 3 years after that. Thus, they went up about 150% in about 17 years – so that is more like 7% p.a. I think. No bets that it will do the same from 2006 to 2023 – but perhaps similar ???? The GFC gave us a definite flat spot, but already climbing now after just 9 years rather than 11 or 12.
To me, Real Estate seems to appreciate like stairs – a long flat bit, then a huge jump, then another flat bit, then a jump…. the time between each step can be markedly different though – so, the best we can do is guess. And of course, stairs go down too – but with Govts madly printing money to devalue currencies, I don’t see any likelihood of property value dropping in the near future (except perhaps some inner-city apartments in over-supply).
Lets see what others have to say – it is an interesting muse…..
Benny
All I can add is Property investing is a long term investment of 20YRS +. The best locations, you pay big but get a small return, but in turn will give you the very best capital growth. Buy in the country and you will pay a lot less and get a good return but next to no capital growth. The big 3 rules for me are : Location, Location, Location will give you the best investment.
As discussed above there are lots of variable, however in general terms I agree with @dtraeger that 5% is a fairly safe number to model with. If you timeframe is long and your properties are spread around the nation in decent urban areas should be ok. In short bursts individual properties can do much better or much worse. It all depends on where in the cycle and what specifically you are buying.
If you are writing that plan at 32 and stick to it well done not many do this. Start with the best affordable properties you can get with value add potential and once you get some equity spread it around into several markets for safety. If you have evergy and learn skills like renovation/development you can accelerate your returns. Best of luck!
BuyersAgent | Precium
http://www.precium.com.au
Email Me | Phone MeSouth Coast NSW Independent Buyers Agent - Wollongong to Batemans Bay and Regional NSW. DOWNLOAD OUR FREE 14 POINT PROPERTY BUYER'S CHEATSHEET to avoid painful mistakes at precium.com.au
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