When we look back at history, property values have not risen continuously – they don’t go up in a straight line. There will be times of flat or no growth, and times of extreme growth. We can expect this trend to continue. However, for investors, the important thing is that over long term the market will continue to rise.
Source: Residex Historic figures shows property growth peaked during 1981, 1987, 1994 and 2003. Data from Australia’s leading research house Residex shows property values have increased consistently at about 10% per annum over the past 100 years in Australia – meaning that a well located property doubles in value about every 7 to 10 years. There is a positive outlook about property as an investment vehicle. However there will always be someone telling you not to invest because “property values will never rise again”! Here are some simple examples:
There is a positive outlook about property as an investment vehicle. However there will always be someone telling you not to invest because “property values will never rise again”! Here are some simple examples:
The property market as with any other market is driven by 2 fundamental forces – greed and fear. To understand the market one must be able to be rational in your thinking and look at the actual return and true statistics. Warren Buffet (perhaps the World’s greatest investor) is famous for his rational mind when it comes to making investment decisions.
We do not have a crystal ball to predict the future but one thing we are certain about is that history repeats itself. To gain a greater insight into the future of the property market one needs to understand its 2 key components:
There are a number of demographic trends that will change the very nature of Australia’s property markets over the next three decades. One of the most obvious demographic trends is our aging population driven by the baby boomer generation turning 60 years of age. Another trend is the growth of childless households. To stablise the economy, Australia is going to have to “import” more people and with increased immigration will come an increased requirement for housing.
To stablise the economy, Australia is going to have to “import” more people and with increased immigration will come an increased requirement for housing.
Estimated Population Growth
2006
2016
Increase
4,308,598
4,698,960
390,362
3,684,029
4,025,219
341,190
2,571,251
3,089,914
518,663
Interstate migration is also a trend over the last few years. It is driven by housing affordability and the relative strength of different state economies. Typically, Australians move from one state to another when they think that a particular state has better job prospects, better living standards and cheaper housing.
Overall there is no doubt that the long-term future for property investors is very bright. Population forecasts suggest our cities will continue to grow and this will have a huge impact on housing demand and property prices