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An old rule of thumb says that property prices double every 10 years. But does that still hold with the property market so hot?
According to Nerida Conisbee, chief economist at Ray White Group, it’s unlikely that homes bought today will see growth of that level in 10 years’ time.
“Typically we find that pricing tends to surge, then stabilise,” she noted.
With a spike like the country has recently experienced, a doubling of today’s prices might seem like good news for current buyers, but it would spell danger for access to the housing market overall.
“If [today’s prices double,] affordability challenges are going to escalate over the next decade, particularly given how much prices have gone up since the start of the pandemic,” Ms Conisbee said.
And even in more stable times, the growth of your property really comes down to when and where you buy, according to the economist.
“Over the past decade, the only regions where prices have more than doubled are in Sydney, Hobart, Canberra and regional Victoria,” Ms Conisbee said.
“Everywhere else, prices have increased but not doubled.”
She pointed to regional Western Australia as an example of how context is everything.
“Ten years ago, this area was in the midst of a mining boom and hence prices were very high. During the past decade, prices dropped a lot and then picked up again with an end result where they haven’t changed much since then,” she said.
Regional West Australian homes have recorded the lowest level of growth over the past decade, according to Ray White’s data.
Price growth like the country’s experienced over the last year is far from ordinary, so according to Ms Conisbee, the country is likely heading into a period of stabilisation, when considered over the course of a 10-year period.
But if you got in just before the recent boom, it’s a different story.
“If you bought at the start of the pandemic, it is likely that what you paid for the property will more than double,” she said.
And in the face of such a turbulent two-year period, Ms Conisbee is quick to acknowledge that it’s hard to predict property cycles over any length of time, so buyers are best focused on the cold hard facts of the present.
“You should always stick to a budget and aim to hold the property long term. This will minimise the risk of being caught out in a falling market,” Ms Conisbee advised.
ABOUT THE AUTHOR
Juliet Helmke
Based in Sydney, Juliet Helmke has a broad range of reporting and editorial experience across the areas of business, technology, entertainment and the arts. She was formerly Senior Editor at The New York Observer.
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