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The general rule of thumb is seven to ten years… but how long is it really?<br />
An email from an RP Data subscriber questioning the accuracy of this rule of thumb has inspired the following analysis: A quick study of several capital cities reveals the old adage that ‘a property doubles in value every five to ten years’ may be a fairly accurate rule of thumb. Sydney house values have doubled, on average since 1980, every 7.34 years. Brisbane house values have doubled every 7.7 years since 1980 and Perth house values have doubled every 10 years in the same time period.

Brisbane:<br />
• House values increased from $31,524 in January 1980 to reach $63,500 in September ‘87 – 7.6 years.
• Between September ‘87 and January ’93, a period of 5.1 years, house values doubled to reach $127,621.
• It only took 10.2 years for house values to double again, which occurred during June of the 2003 boom period. The median house value for Brisbane reached $259,550.
• The median price for Brisbane is now just below $450,000 and requires another $69,100 to have doubled from the June ‘03 figure. This is only another 15%, suggesting that Brisbane house values are likely have doubled during late 2008 – a period around five years.

Picking the cycles
The analysis conducted above is a simple one and does not take into account market cycles and timing – a critical step in the investment process. For example, a buyer purchasing in the Brisbane market during the early months of 2001 would have doubled their money in less than three years. Alternatively, a house purchased in 1990 would have taken around 12 years to double in value. Picking the market cycle is an important strategy for investors and can be a very difficult task. A few leading indicators that show the direction of the market are: how long it takes to sell a property (time on market) and the level of discounting in the marketplace (the difference between the original listing price of a property and the ultimate selling price).

SOURCE: RP DATA PROPERY PULSE