Does property double every 7 years? Most savvy property investors know this is not the case in Australia. But is there some grain of truth behind this idea?
According to real estate commentator Michael Yardley, capital growth is the key reason people choose to invest in residential property. After all, every investor plays the game for some kind of return.
But what kind of return can we really expect from property?
On average, properties in prime locations near capital cities experience a long-term growth rate of around 7% per annum. Based on this figure, properties like this should end up doubling in value every 10-years.
Of course, this means that properties that are not well located or don’t ‘fit the bill’, won’t double in price. It also means we’re looking at a 7 to 10-year cycle, rather than a 7-year one.
Within Australia it’s clear that each state goes through it’s own property market cycle. If you look closer you’ll notice different cycles within each state, operating at any one time.
What does a cycle look like?
Research conducted by The Australian Housing and Urban Research Institute discovered that in the long term, suburbs with specific characteristics experienced higher capital growth than others.
Prime capital growth suburbs were found to be:
If you’re unsure of whether you can afford to buy property in an area close to the CBD, please contact our mortgage brokers. We will help you find a home loan that matches your budget and your circumstances.
Contact Capita Finance Solutions to find out more.