Do property values double each decade?

There is a common saying that property values double every 10 years. Is this actually the case?

While we may have experienced our first recession in three decades, post the pandemic, the property market has pleasantly surprised us by still managing to soar by over 10% in 12 months1 even after an initial decline. This demonstrates how challenging it can be to predict property prices, but it doesn’t stop many of us from trying!

The property market moves in cycles Data shows us that property values have progressively increased over the long-term – however this growth fluctuates greatly from year to year.

For property prices to double every ten years, the market needs to experience a 7.2% annual increase year on year.

Over the 25 years to 2018, the national median house price experienced an annual growth rate of 6.8% falling slightly short of doubling every 10 years. However values still delivered a significant increase of 412% and resulted in a typical house rising in value by $459,900. Over the same period units delivered an annual growth rate of 5.9% with a 316% increase over the 25 year period2.

While national property prices increased significantly over this period, they do not tend to increase at the same rate year on year, nor month on month. After a ‘boom’, markets tend to fall or stabilise before starting to rise again into the next boom. Accordingly, it is unrealistic to think that you will always achieve capital growth over the short term.

There is more than one property market

While the media often reports on national property data, there is more than one property market. Indeed there are many property markets within and across the different states.

Traditionally, capital city property values have tended to achieve stronger capital growth than those in regional areas despite lower rental yields. However recently we’ve seen regional property values generally perform better than capital cities, but that’s not to say that some suburbs within markets, even some streets within a suburb, have performed better than others.

The recent pandemic has brought about a lifestyle and working from home shift, prompting many Aussies to think differently about their housing options. As a result, regional housing values have increased at double the rate of those in capital cities within the last 12 months3.

Remember that while history may be a good leading indicator of the future, it does in no way guarantee that similar results will be achieved in the future. The pandemic is a prime example of how things can change very quickly.

It is likely that the saying ‘Time in the market is more important than timing the market’ will continue to hold true. It is likely movements in market value will continue to assist home owners grow the equity within their home.

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