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A long History of Capital Growth
Houses have been fantastic investments throughout Australia's history.All Australian cities have a long and successful track record of steady capital growth, with low risk. And best of all, the Australian property system is easy to understand, easy to follow, and accurate records are kept. The capital growth charts below for houses and apartments in all the major cities, clearly show one thing: Australian property, through all the economic cycles, through recessions and downturns, through high interest rates and high unemployment periods, has consistently returned excellent growth to investors, putting Australian property on the top shelf of good return, low risk investments. So, what are house prices going to do? The short answer is that nobody knows for sure. It's the future. Anything can happen. However, some things are more likely to happen than others and with a lot of data and a little analysis we can provide some insight into the probable future of the housing market. The Charts providid in this website provide all the information you need to see where to invest and when...and whether it should be apartments or houses you move into. Compare the long term trends, with the short term results, to see if there is a “catch up” due. “The historical capital growth figures in your Chart above are different from those provided by other sources. Why is this?” We have used the Residex figures, as we believe them to be the most accurate on the market today. In addition they are updated monthly. Residex uses the strategy of examining pairs of sales on the same property and calculating the rate of growth between the two sales. The rate of growth isn't then influenced by factors such as new building activity or renovations. Here is how Residex themselves answer the above question: “Firstly, it is very important in statistics to make sure you are comparing the same things. Residex uses ‘the repeat sales method' to calculate capital growth. Normally, people will quote ‘the change in median sale price' as the capital growth for an area. However, the change in median sale price is not reflecting the change in the value of property, but really the changing in buying patterns. So if in one quarter, there were many property sales at the lower end of the market and in the next quarter, there were more sales at the high end, this would show a large increase in capital growth. Calculating capital growth in this way can mean that some sources come up with capital growth figures of 100%! This is not necessarily an incorrect figure, but it cannot be applied to calculate the current value of properties in an area!” A word on “median prices” There is a statistic used in Australia called the “median price,” which is published regularly by several different sources. The median price is an excellent way of seeing the different price levels between cities, but should never be used by overseas investors as to a guide as to the actual price in that city. Here's why. The median price takes into account all the properties for a city, both those in prime locations, and way out in the suburbs, and also includes many very old properties. Therefore the median prices will be a very low figure relative to new properties, and also relative to those properties in prime locations preferred by (and recommended to) overseas investors. As a simple example that should clearly indicate what we mean, in November 2008, Sydney's “median house price” was A$565,000. But individual suburb median house prices as quoted in selected Sydney suburbs shows Campbelltown (a long way from the city centre) was just $255,000, but other areas such as Double Bay (a prestige Harbour suburb) had a median price of $2,300,000. (Source: RP Data) In all the Australian cities that are spread over a large land area, there are far lesser areas with lower priced properties than there are prime areas, hence the “low” overall median price for that city. This extract taken from the E-Book "The Foreign Investor's complete guide to Buying and Profiting from Australian Real Estate" published in 2009, by Michael Bentley www.foreigninvestorsguide.com) |