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  1. #1

    Question Property value double in 15 years..?

    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

  2. #2
    Join Date
    Jul 2012
    Location
    Tavua, Fiji
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    3,347

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    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.

  3. #3
    Join Date
    Apr 2004
    Location
    Auckland
    Posts
    1,896

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    $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??
    The three most harmful addictions are heroin, carbohydrates and a monthly salary - Fred Wilson.

  4. #4
    Join Date
    May 2015
    Posts
    214

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    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

  5. #5
    Join Date
    Feb 2004
    Location
    Wellington
    Posts
    2,776

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    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
    Delightfully in need of some Tender Loving Care
    Blessed are those who can give without remembering and take without forgetting
    Some things are not as they seem, nor are they otherwise

  6. #6
    Join Date
    May 2015
    Posts
    214

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    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.
    Last edited by HouseWorks; 06-11-2015 at 03:43 PM.

  7. #7
    Join Date
    Jun 2004
    Posts
    10,314

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    Quote Originally Posted by HouseWorks View Post
    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.

  8. #8
    Join Date
    May 2015
    Posts
    214

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    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.

  9. #9
    Join Date
    Sep 2013
    Location
    Auckland
    Posts
    3,885

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    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!

  10. #10
    Join Date
    Mar 2012
    Posts
    129

    Default

    Think this guy disagrees
    https://m.youtube.com/watch?v=F-QA2rkpBSY

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


 

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