Residential property is still one of the most popular investments made by Australians. Outside the home you own, residential real estate provides an excellent platform for creating a diversified investment portfolio for long term financial security.
Most Australians like property because, unlike other asset types, it is familiar and perceived as safe. They can touch it, feel it, move into it, rent it, sell it, and or borrow against it if need be. Most people, at some time in their life, have bought (or know somebody that has bought) a property, and over time that property has passively grown in value.
The time it takes for property to double in value
You may have heard about the “property cycle” which, in simple terms, is the time period in which property growth rates peak, then slow down to a flat period, then peak again.
Many investors and institutions suggest the property cycle is the period in which properties double in value. Factors driving this cycle are many but generally in the past 30 years a typical house and land may double in value every 7-10 years.
For a property to double in value in just ten years it needs to achieve an average of 7.18% growth per annum during that cycle.
While this is a fairly conservative growth rate for many high growth diversified communities (capital and coastal regions) it gives an indication of the type of wealth creation that is possible by combining sound property investing with gearing.