Property Investment Strategies: Capital Growth
Why is Capital Growth important?
When investing in property, it’s important to understand why capital growth is so important. Even a small difference in capital growth rates can make a big difference to your property’s long-term value.
For example, if you buy a property today for $800,000. This table below shows how much the property would be worth at the average Australian Capital Growth rate of around 6.4% (the average rate over the last 30 years) and then at 7.4% for the next 30 years.
As you can see, just getting a 1% above-average return would make a massive difference to the property’s value. Our clients typically are able to achieve much higher than the Average Australian Capital Growth Rate. We are able to achieve this by using and analysing leading research, data, and assessing key investing fundamentals as well as on the ground intelligence. The stark difference in your potential ROI means that not only buying but buying well can make a significant difference in the long term.
What about future price growth?
Like any market, prices in the property market are driven by demand and supply. When demand is strong, prices rise. When supply is limited, prices also rise.
The long-term demand for housing in Australia is likely to be strong due to our strong population growth. Our current population of 27 million is forecast to increase to 40 million over the next four decades. This will help to ensure ongoing strong demand for properties, especially in highly desirable locations.
According to experts, between 240,000 and 280,000 new homes need to be built in Australia each year for the foreseeable future just to keep up with the growing demand.
On the flip side, supply is likely to remain weak. Australia is currently in the middle of a housing crises that shows no signs of easing in the short to medium term,
Put simply, the demand for properties exceeds supply, especially in the rental market. Vacancy rates in many areas are at record lows as a result, which is driving both property price growth and rental income increases.
For more information on how our Buyers Agency team can help you with this strategy or other investment strategies, feel free to book in a consultation today.
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