History Suggest Property is On The Move June 2007 RETURN
According to REIV data, from 2003—2006 Melbourne property in general has just plodded along with modest gains of just 2.9% p.a. Steady yet nothing to rave about. (This is Melbourne as a whole, not our preferred city edge hot spots.)
Yet from 1967-2007 we had average growth of some 9.6%, fairly impressive numbers over booms & busts. The median price in March 1967 was $9700 and rose to %380,000 in March 2007. A more specific snap shot of 10 years will cover most property cycles. Studying several 10 periods between 1980-2006 the growth ranged from 7-10% per annum. Even during the recession we had to have, in 1985-1995 the growth was 7%.
After below average growth from 2003 to 2006, historical figures suggest gains of 11%-17% per year over the next six years is required to meet the average performance of the past. This means that property should be a very solid sector up to 2012 and the Melbourne median will top $1m by 2017. One can only wonder how strong the higher performing city edge & bay side tracts will be.
More conservative forecasters will cite a low inflation environment yet still expect a rise of 6-7% or 3.5% above inflation. Even these lower increases may see average property increasing per year at the rate of an average wage. This has dire consequences for the first home buyer and may consign people to the rental market indefinitely.
This brings forward a natural discussion of home affordability. Currently 75% of Australians enjoy some form of property ownership, a rate which is seldom matched internationally. However the first home buyer affordability scale is seen to be on the attractive side when under 30% of average costs and we are currently sitting at around 35%. These statistics make it quite clear that people without property or intending investors are going to have to have some sound strategies to expediate their intended purchases, before their budget’s spending power will be seriously eroded. Over all it is a double edged market that is clearly in favour for those who have, against those who do not have!
Affordability issues aside, there is so much of our potential buyer market that delay their purchasers by choice. They may have a fear of borrowing commitment, procrastinate or simply haven’t got organised yet. The majority would be unaware of the potential downsides of not buying and how severely a moving market can erode their opportunities. Most city edged properties have jumped $60k-$100k this year already & look to keep rising, one can’t save to keep pace at these levels.
Congratulations to all our property owners and continuing investors, it appears you’re in for the ride of your life.
According to REIV data, from 2003—2006 Melbourne property in general has just plodded along with modest gains of just 2.9% p.a. Steady yet nothing to rave about. (This is Melbourne as a whole, not our preferred city edge hot spots.)
Yet from 1967-2007 we had average growth of some 9.6%, fairly impressive numbers over booms & busts. The median price in March 1967 was $9700 and rose to %380,000 in March 2007. A more specific snap shot of 10 years will cover most property cycles. Studying several 10 periods between 1980-2006 the growth ranged from 7-10% per annum. Even during the recession we had to have, in 1985-1995 the growth was 7%.
After below average growth from 2003 to 2006, historical figures suggest gains of 11%-17% per year over the next six years is required to meet the average performance of the past. This means that property should be a very solid sector up to 2012 and the Melbourne median will top $1m by 2017. One can only wonder how strong the higher performing city edge & bay side tracts will be.
More conservative forecasters will cite a low inflation environment yet still expect a rise of 6-7% or 3.5% above inflation. Even these lower increases may see average property increasing per year at the rate of an average wage. This has dire consequences for the first home buyer and may consign people to the rental market indefinitely.
This brings forward a natural discussion of home affordability. Currently 75% of Australians enjoy some form of property ownership, a rate which is seldom matched internationally. However the first home buyer affordability scale is seen to be on the attractive side when under 30% of average costs and we are currently sitting at around 35%. These statistics make it quite clear that people without property or intending investors are going to have to have some sound strategies to expediate their intended purchases, before their budget’s spending power will be seriously eroded. Over all it is a double edged market that is clearly in favour for those who have, against those who do not have!
Affordability issues aside, there is so much of our potential buyer market that delay their purchasers by choice. They may have a fear of borrowing commitment, procrastinate or simply haven’t got organised yet. The majority would be unaware of the potential downsides of not buying and how severely a moving market can erode their opportunities. Most city edged properties have jumped $60k-$100k this year already & look to keep rising, one can’t save to keep pace at these levels.
Congratulations to all our property owners and continuing investors, it appears you’re in for the ride of your life.