With the current state of the market in some areas of Australia it is hard to imagine your property growing in value in the next three months, let alone doubling. But for those investors willing to buy property in other areas of Australia that are experiencing jobs and population growth, it is not unlikely they will see their property double in value over the next 7 to 10 years.
If you bought a property in Newman just outside Karratha, WA in 2001 for instance, your property would have grown by 30% per annum over the 10 years to 2011. That’s 1,280% growth! Newman has had this astounding growth because of its proximity to the engine room of Australia’s mining industry. The country’s two biggest iron ore producers, BHP Billiton and Rio Tinto, have mines within a few minutes from the town. But Newman’s story isn’t of course a normal scenario. The town has found itself in the center of Australia’s mining boom and those investors fortunate enough to benefit from that growth are part of a very lucky few.
Most property analysts prefer a more conservative estimate for properties to double in value every 7-10 years. This equates to an average of 7-10% growth per annum. To find out how many years it takes for your property to be worth twice as much, divide 72 by the average annual growth rate. For instance, if your suburb has seen a growth rate of 10% per annum, it would take 7.2 years to double at that rate.
It is worth remembering that property grows in value over time but not all properties grow by the same value or at the same time. This is where it is important to look at the fundamentals of an area before investing to give your properties the best chance of growth as early as possible. Having capital growth sooner rather than later allows you to leverage that equity into more properties and grow your property portfolio faster.