Property value double in 15 years..?

[theSamuraiNz]

Hi all. I'm still very new to property talk.

I have read in numerous places that property value seems to double every 15 years. Average property value in NZ especially in Auckland is already pretty high like $1 million... will the value continue to increase and double in next 15 years?

It's very hard to believe. A house which costed $200K in 1990 costs $400-600K in 2015.. will it reach $800-$1m in 2030? Who can afford purchasing these properties??

D

[Damap]

Actually house prices double historically every 7.8 years. The average number is typically 10 years to double. Auckland has done this for a hundred years there is no good reason to assume it won't continue. Obviously this is not a straight line increase it follows the cycles.

[PC]

$200K to $400K over 15yrs is a 4.73% compound annual growth.
Pretty unbelievable alright!
What kind of muppet would invest for such pitiful returns??

[HouseWorks]

double every 10 years on historic trends so no guarantee of future and if you buy right you can do much better. remember the raw numbers (double price) don't take account of renos/additions/improvements. In 1990 you could get a really good property in maybe remuera for 200K that might be worth 1 to 1.5 or more today. Our first home in waterview on a full site cost 130k in 1993. not sure what it's worth today

[spaceman]

For a rough guide the "rule of 72 " works pretty good.

The time to double can be divided into 72 to give interest rate required or interest rate to give time.

Example.

1. To double in price in 10 years ....72/10 = 7.2% per year.
2.Interest rate is 5%..... 72/5 = 14 years

Your example 72/15 = 4.8% per year for 15 years.....apparently the long term average is more like 6%. So 15 years to double is pretty conservative.

For those who say things can't keep doubling forever .....you need to understand maths a bit better ..... and find somebody who bought a house back a while

Cheers
Spaceman

[HouseWorks]

Without googling the answer - if it were possible to fold a sheet of paper in half (doubling it over) as many times as you like how many folds before the thickness reaches the moon from the earth? The distance of earth to moon, 384000 km, sheet of paper .1 mm thick. Hint, it's not one million folds, it's a lot less than that.

[Wayne]

Without googling the answer - if it were possible to fold a sheet of paper in half (doubling it over) as many times as you like how many folds before the thickness reaches the moon from the earth? The distance of earth to moon, 384000 km, sheet of paper .1 mm thick. Hint, it's not one million folds, it's a lot less than that.

About 42
Thickness doubles each time so
2^41 = 219902km
2^42 = 439804km
so 41 wouldn't get you there, 42 gets you past.

[HouseWorks]

Overlay that to property prices and you get the point. Mind you none of us will still be here but our great great great grandkids probably will. Investing for the future.

[PTILoveYou]

average house prices in auckland was $10k in 1968 according to Barfoot and Thompson.

Now its like almost 800k if not more (im in sydney airport waiting for my flight back so i cant check the exact numbers).

So, yeah, unbelievable right?

in 2010 i was buying 2 beddy units in central auckland for low 200k.

now they are mostly 500k+, unreal!

[HattrickNZ]

Think this guy disagrees

https://m.youtube.com/watch?v=F-QA2rkpBSY

Think he goes on to say something like, something has to give...

[PTILoveYou]

Think this guy disagrees

https://m.youtube.com/watch?v=F-QA2rkpBSY

Think he goes on to say something like, something has to give...

And i couldnt care less what an uni professor/academic thinks

[Lissica]

It's very hard to believe. A house which costed $200K in 1990 costs $400-600K in 2015.. will it reach $800-$1m in 2030? Who can afford purchasing these properties??

D

That would be 25 years, not 15.

[Damap]

A house costing 200K in 1990 will be 1.6 mil by 2020 Samurai.

[Damap]

For example I just jumped into RPNZ and found a property in Borrowdace Ave Auckland that sold in 1990 for 197,000. (Sold in 1984 for $103,000)
Current CMA is 1.13 mil. And it might sell for closer to 1.2. It has 5 years to get to 1.6 and it is likely to be well over that by then.

[cube]

Be aware of the new normal theory in First World economics, where GDP growth rates of 2% will be good.

Through the 50s, 60s and 70s, 2% would have been seen as a disaster.

The implication for housing is that it won't go up as fast in those economies.

However, there are still supply and demand laws to obey, and given the paltry rate of house building in Auckland and the relative attractiveness of NZ as a place to live, I think the picture is generally positive.

I'd expect some re-balancing in the coming years, as Auckland takes a breath allowing the provinces to catch up, but Auckland will remain NZ's premier city for our life times.

After years of bemoaning the demise of manufacturing in NZ, it turns out that being a primary producer is quite a good position to be in at the moment. It is harder to produce milk or timber much more efficiently than we do - although new technologies may put paid to that. If lab-grown meat, why not lab-produced milk.