All Topics / Help Needed! / What has been the average capital gains?

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  • Profile photo of Paterson00Paterson00
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    @paterson00
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    I'm fully aware that this is a very broad subject and hard to nail as simply as I have asked but what is the average capital gain over time?  Would it be fair to expect 1% per year without any changes in the area regarding company lay offs or infrastructure etc.  I have added this into my spreadsheet for calculations with the CG as a variable.

    Profile photo of Jamie MooreJamie Moore
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    @jamie-m
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    Hiya Paterson

    You would want more than 1% CG per annum for any IP. Check out the back of the property investing mags like YIP and API for an indication of past growth (note – obviously it doesn't mean that these areas will continue to grow/decline at the same rates).

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
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    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of Paterson00Paterson00
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    @paterson00
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    Thanks for that I have also found on http://www.realestate.com.au that you can see that average house price for the last ten years or so.

    I'm struggling at the moment to see reports of any plans in the town where I live too to anticipate CG.  I know that there are more places to invest than just where I live but it seems sensible to do it where I live based on the fact that looking at what is, and has been going on in the area I think it will grow in size and stature and also the fact that I can readily access the property to improve it.  I wouldn't be able to do that in a hot to trot town so easily.  I'm planning on not spending much on my first IP just while I am "learning the ropes" but off the back of that too, I am told that it can also be a mistake doing it in your own town as you are tempted to meddle too much.

    Profile photo of Jamie MooreJamie Moore
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    @jamie-m
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    Where are you looking to buy?

    What drivers in the area make it a good investment choice?

    Nothing wrong with investing close to home – but if it's a dud area then you really need to consider venturing out.

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
    Email Me | Phone Me

    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of Paterson00Paterson00
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    @paterson00
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    Mandurah in WA.  I just read an article on API that said that while the entire country had experienced growth of an average 2.2%, Perth (and so presumably its surrounding areas) saw a drop of 3.8%.crying  Mandurah is just 70kms south of Perth, situated right on the coast and has a great lifestyle.  They recently invested in a new train line to link it to Perth which was completed about four years ago and upgraded the local freeway too so now we are in easy reach of Perth.  I am reading that they expect the area to grow significantly in the next ten years and I do see that a lot of local work is going on with plans to seriously upgrade the shopping centers and upgrade of the road systems around the foreshore area.  There is a lot of tourism in the area too.

    I am new to all of this but these seem like good drivers to me or have I missed the boat since the train line and freeway have been completed for a few years now.  Would that not stimulate further growth as people realize they don't have to live in the city to work in the city.  An area in between Mandurah and Perth is also being heavily developed and they are putting in a new station too with talk of others along the line.  Like I said, I am inexperienced but these things give me the confidence to say that the place is on the up. Oh there was a brand new Marina built not so long ago too and the area is still under development there too.

    Profile photo of BennyBenny
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    @benny
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    Hi Paterson,

      You might be new to this, but you certainly appear to have your thinking cap on…..  great questions.   Property moves in cycles (I often refer to it as like "stairs").

    Quote:
    Would it be fair to expect 1% per year without any changes in the area regarding company lay offs or infrastructure etc. – See more at: https://www.propertyinvesting.com/forums/help-needed/4349348#sthash.FHiOQvZr.dpuf

      As an average over time, I would say that 1% is quite low.   And yet, I have seen years when values fall 20%, fall 5%, stay stagnant, move up 1%, or move up 20%+   As an example, my own home (Brisbane) doubled in value from 1984 to 1990, then fell back in value 20% over 2 years (during the recession we had to have??), stayed stagnant or moved a little upward over 8 more years.  From 2000 to 2006 it shot up to 6 x original price (or 3 times its 1990 value).

    Since then, I have seen approx 8 years more "stagnation" in values while rents continue to climb, and I suspect another "stair-step" might be just around the corner. 

    In summary then, it has risen 600% in 30 years.  You won't do that with 1% per annum.   Of course, I am using "inflated prices" as I am not taking inflation of the dollar into account (that's just too hard for me – and very few people talk that language anyway).  

    Benny

    PS  Keep in mind that any "median growth rates" you might get from ABS or similar DOESN'T highlight the fact that particular areas will ALWAYS grow more than others. the median of any number is simply the "middle number" of a huge string of numbers.   And the converse is true too (some areas will NEVER grow as quickly as others).  Get to know YOUR areas and their strengths/weaknesses and chart your own course (sounds like you are planning to do just that !!  Onya !!)

    Profile photo of Paterson00Paterson00
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    @paterson00
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    Thanks for the information and back story Benny.  It's nice to know I am barking up the right tree even if the tree is falling…or is it?

    Profile photo of luke86luke86
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    Hi Paterson,

    I have to say I disagree and do not think Mandurah will out perform.

    The train line has been in place for a while and so any gains made because of that new infrastructure has already occurred. However the main reason why I do not think Mandurah will outperform is the supply- there are lots of new estates around Mandurah and so there is no restrictions on supply. No matter where you are there will be a brand new estate with brand new houses only 10-15 minutes drive away, and I think this will put a cap on prices.

    My opinion is the best areas for residential property in WA are areas close to the city- Mount Lawley, North Perth, any of the western suburbs, Victoria Park, South Perth etc. These are areas where there is lots of demand (very popular with < 30 yrs) and limits on supply.

    Cheers,

    Luke

    Profile photo of Paterson00Paterson00
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    @paterson00
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    Thanks for your point of view Luke.  I'll look into those area's too.  I hadn't thought about the amount of new stock being built and although there looks to be a lot of development in the area, your right there is also a lot of new housing.  The places you mention are still close enough to be able to tweak myself.

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