While the downturn in house prices (0.9% for Melbourne in the month of September) is all over the news, you only need look at the bigger picture to see you don’t have to worry too much. Unless you are geared up to the eyeballs and in danger of losing your job that is. Even then, the gains you will have made are historically high.
As always, you are better buying a house than an apartment because the fundamental driver of value is the land. As an accountant of mine, who now owns many properties once put it “a house is only a decaying asset sitting on an increasing asset (land)”
While the exact figures vary. depending on the source, all of the following are taken from Domain end of fin year reports. For consistency, the percentage calculations are ours.
The chart below shows the phenomenal upward drive of prices in the past 20 years. What’s interesting is that the post GFC slump was not the biggest or most prolonged on record.
The good news, is that in the last 20 years property prices have never taken that long to recover, so if the tradies have to keep the jet-ski for another year, c’est la vie and we can all be reassured the world will keep on turning.What’s ahead? The short answer is no one knows. However, even with higher interest rates and tighter lending policies, our population growth of 1.7% per annum (when the European Union is .28% and China is .59%) means the demand for housing is likely to remain strong.
So, chin up! There’s plenty of time to book a great holiday with Britz, BIG4 or the NT (or what the hell? All three at once) or lay down the deniros for that nice DSLR at Ted’s.
Till next time… Captain Know It All