It’s often claimed that house prices double every 10 years, which is a good thing for investors, but would pose a significant challenge when it comes to housing affordability over the next decade – particularly given how much prices have risen since the start of the pandemic.
But is it true?
According to Ray White Group Chief Economist Nerida Conisbee‘s latest economic statement, the answer is it depends on when you bought, as well as where your property is located.
Over the past decade, the only regions where prices have more than doubled are in Sydney, Hobart, Canberra and Regional Victoria, the report said.
Everywhere else, prices have increased but not doubled.
The area seeing the lowest level of growth has been regional Western Australia – 10 years ago, this area was in the midst of a mining boom and hence prices were very high.
During the past decade, prices dropped significantly, picking up again, before plateauing.
The timing of when you buy also matters, according to the report.
“Looking historically at the regions where prices most frequently double over a 10 year period surprisingly shows regional WA,” Ms Conisbee said via the statement.
“A closer look at the data shows that up until 2005, you were almost guaranteed to double your money over 10 years buying here but after then, there have been no months at which prices doubled compared to 10 years prior.”
Sydney shows much more consistency
“If you bought in this city between 2001 and 2007, your property’s value wouldn’t have doubled within 10 years but beyond that, it was much harder to find such time periods.”
Will house prices double over the next decade?
Ms Conisbee said taking today’s house prices into account, it is unlikely.
“Typically we find that pricing tends to surge, then stabilise,” she said.
“Occasionally prices also decline. If you bought at the start of the pandemic, it is likely that what you paid for the property will more than double.
“What is important however, is to acknowledge that it is very hard to predict property cycles over the long term.
“Which means that 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.”