PHOTO: Properazzi
It’s a fairly commonly held belief that house prices double every 10 years.
Is is correct? can it be guaranteed? and is there fact to back up the assertion? In researching this question, I found that asking the question on Google “Do house prices double every 10 years” provides a pretty comprehensive pedigree of search results, 339 million to be exact.
Among the top results I found that, an Australasian report by Core Logic which analysed the two 10 year periods from 1996 to 2006 and from 2006 to 2016. The earlier period did see consistent doubling (or more) of house prices across the major metros, whilst the later period only saw a doubling in Melbourne whilst Sydney managed a 78% rise.
The UK has similarly experienced doubling in house prices over 10 year periods with an excellent analysis by Alex King providing facts adjusted for inflation covering many decades.
Before diving into the NZ data, it is worth reminding ourselves of the mathematical fact that for a sum of money to double in 10 years requires an annual compound interest factor of just over 7%.
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