Warren says, if properties doubled every 10 years that the property should increase by 7% per annum to adhere to the performance over 10 years.
So, is this true and will it apply to all property moving forward?
Past performance of residential property
The main reason most people invest in property is to achieve as much capital growth as possible, which allows compounding value to do its thing.
Historically around 50% of residential property in Australia has doubled in value every 10 years, whilst the other half have not.
Over the past 25 years, research house CoreLogic states that on a national basis, median house values have achieved an annual growth rate of around 6.8%, whilst apartments have returned an annual growth rate of around 5.9%.
What does the data mean?
The commentary and the collection of data speak in terms of medians, which does not show which markets, suburbs, or properties produced stronger results, and which have underperformed.
There are overachievers and underachievers, particularly when you compare regional areas with well-researched areas closest to major CBD’s.
In the years and decades ahead of us, it will be tougher to achieve the growth we have seen historically. We currently are living through some tricky times and irrespective of that, inflation is low, wage growth is slow, interest rates are at an all-time low, immigration has slowed and the economy has a lot of ground to make up.
In summary, doubling a property’s value over 10 years is going to be more difficult than it used to , so it’s more important than ever, to be working with people who can significantly improve your chances by applying a well trusted and successful methodology.
*Disclaimer: When considering purchasing property, it is always prudent to seek the advice of an appropriately qualified professional to determine which strategy is most appropriate for your circumstance.