{"id":7534,"date":"2016-03-30T01:00:17","date_gmt":"2016-03-29T14:00:17","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=7534"},"modified":"2016-03-30T01:00:17","modified_gmt":"2016-03-29T14:00:17","slug":"do-property-values-really-double-every-8-years","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/do-property-values-really-double-every-8-years\/","title":{"rendered":"Do property values really double every 8 years? – John Lindeman"},"content":{"rendered":"

 
\nHow true is it that property doubles in value every 8 years? You have no doubt heard that and\u00a0John Lindeman<\/strong>,\u00a0from PropertyPowerPartners.com.au,\u00a0says it is a load of rubbish. Hear what he has to say.
\n <\/p>\n

Transcript:<\/strong><\/h4>\n

Kevin:<\/b>\u00a0 We\u2019ve spoken many times about the growth in the Sydney market, and there are signs and a lot of people saying that it could just slow down. I wonder what\u2019s going to happen to regional areas. That\u2019s the topic I want to pick up on firstly with John Lindeman who joins me from PropertyPowerPartners.com.au.
\nJohn, thanks for your time this morning.
\nJohn:<\/b>\u00a0 It\u2019s a pleasure. Hello, everybody.
\nKevin:<\/b>\u00a0 John, what do you see for the regional areas if there is a bit of a slowdown in some of those cap city markets, particularly around Sydney?
\nJohn:<\/b>\u00a0 When we look at the stats, what we discover is that the more growth there is in a capital city, the more likelihood there is that it will ripple out to the regional areas and, in particular, in Sydney where prices have gone up by about 50% in the last three years.
\nThere is a huge amount of largess coming to the state government through stamp duty. What the government is doing is building infrastructure into the regional areas. That may well be for political purposes, but what it does for us is it ensures that there will be growth in the corridors.
\nWhat I mean by that is the Princess Highway going south, the Pacific Highway going north, and the Great Western Highway going west, all of which are being duplicated at huge expense. A lot of the people who were working in the mining boom areas are now working on duplication of the Pacific Highway.
\nKevin:<\/b>\u00a0 Taking you in another direction quickly now, there are a lot of generalizations about the property market \u2013 one is that there is only one property market in Australia. But there is the other one I want to pick up on, and that is that property doubles in value every eight years. I know you don\u2019t hold to that, but can we talk about that for a moment? Where did it come from anyway?
\nJohn:<\/b>\u00a0 I think it came from the \u201970s and \u201980s when property prices actually did do that. But I\u2019ve studied the movement of housing prices from 1901 all the way through to the present time, and it just doesn\u2019t do that. It moves very regularly. Sometimes there are periods of high growth and sometimes very low growth.
\nKevin:<\/b>\u00a0 What sort of annual growth rate would you need to achieve for it to double every eight years, say?
\nJohn:<\/b>\u00a0 You\u2019d need about 9% growth annually. We don\u2019t get that. In fact, when I looked at the stats, what I discovered was that the average rate of growth is doubling in price in about every 12 years, but it doesn\u2019t occur every 12 years. There have been periods where it\u2019s taken 30 years, other times when it\u2019s taken 5 years. The problem with the exponents of the property market cycle is you don\u2019t know what\u2019s about to come; all you can see is where you\u2019ve come from.
\nKevin:<\/b>\u00a0 Some of these generalizations really do make it complicated for people who want to invest in the market \u2013 like I said, there is only one market \u2013 and that\u2019s highlighted by the fact that there are different growth rates all around Australia really with property, aren\u2019t there?
\nJohn:<\/b>\u00a0 There are. Within capital cities, each suburb can perform very differently, and certainly, in regional areas, some will go up and others won\u2019t. But as a general rule, if you\u2019re looking at growth opportunities as we have in Sydney, there have been huge growth, <\/b>and that\u2019s likely to flow into the regional areas around Sydney.
\nKevin:<\/b>\u00a0 Housing growth doesn\u2019t necessarily depend on past performance, does it? What are some of the indicators that you look for? I guess it would be true to say, too, that there are some markets that will never, ever improve again.
\nJohn:<\/b>\u00a0 There are, unfortunately, quite a few of them. The main indicators are what the demand for housing is. If you can measure the demand, that is the number of people who want to move into an area, then you can estimate how it\u2019s going to affect housing prices.
\nLet\u2019s look, say, at the infrastructure boom that\u2019s appearing in New South Wales and the Pacific Highway. What that\u2019s doing, the duplication of that highway, which is over 1000 kilometers long, is generating thousands of jobs. These people are now renting in areas like Taree, Kempsey, Port Macquarie, Ballina, and so on.
\nThe number of people who are doing that is enough to increase the asking rents dramatically. Then what happens, of course, is investors move in and say, \u201cWe\u2019ll get some of the largess.\u201d After that \u2013 and this is what happened in towns like Moranbah \u2013 there was no residual demand. Once the mining boom was over, it was finished.
\nBut what we have here is that these areas will then become more attractive to tourists or retirees because they\u2019re easier to access. I can see long-term growth in areas north, west, and south of Sydney as a result of this huge expenditure of the highways duplications.
\nKevin:<\/b>\u00a0 Would it be fair to say that there are some areas where growth will always be dominant? That is, if you can identify those areas where there is that very strong balance between supply and demand, is that one of the key indicators for you?
\nJohn:<\/b>\u00a0 It is. As long as the demand keeps rising, then, of course, prices or rents will rise accordingly.
\nKevin:<\/b>\u00a0 In closing, what lessons have you learned recently from looking at the cycles?
\nJohn:<\/b>\u00a0 What it\u2019s taught me is that it\u2019s easy to see where you\u2019ve come from but it\u2019s really hard to know where you\u2019re going. An example of that is the mining towns in Queensland \u2013 Moranbah, Dysart, and Emerald \u2013 which were at the start of the decline when people were predicting that they were at the bottom and about to recover. A lot of investors hung on expecting the rising market to start occurring, but in fact, that was just the start of the huge, enormous, horrible slide.
\nI think that\u2019s the lesson about the cycle: you don\u2019t really know what\u2019s around the corner.
\nKevin:<\/b>\u00a0 Which makes commentary from people like John Lindeman so valuable and so, too, is his website. It\u2019s called PropertyPowerPartners.com.au. My guest has been John Lindeman.
\nJohn, thank you so much for your time and your insight, as usual.
\nJohn:<\/b>\u00a0 It\u2019s been a pleasure. Thank you.<\/p>\n","protected":false},"excerpt":{"rendered":"

  How true is it that property doubles in value every 8 years? You have no doubt heard that and\u00a0John Lindeman,\u00a0from PropertyPowerPartners.com.au,\u00a0says it is a load of rubbish. Hear what he has to say.   Transcript: Kevin:\u00a0 We\u2019ve spoken many times about the growth in…<\/p>\n","protected":false},"author":176692471,"featured_media":4723,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[10,11,13,17,22,25,27],"tags":[101],"class_list":["post-7534","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-kevin-turner-sponsored-channels","category-kevin-update","category-latest-story","category-property-investment","category-research-topic","category-sponsored-channels","category-trends-topic","tag-podcast"],"yoast_head":"\nDo property values really double every 8 years? - John Lindeman - Realty Talk<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/channels.realty.com.au\/realtytalk\/do-property-values-really-double-every-8-years\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Do property values really double every 8 years? - John Lindeman - Realty Talk\" \/>\n<meta property=\"og:description\" content=\"  How true is it that property doubles in value every 8 years? You have no doubt heard that and\u00a0John Lindeman,\u00a0from PropertyPowerPartners.com.au,\u00a0says it is a load of rubbish. 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