How long does it take
for property to double?

When I sit with someone about to make their first investment, I talk about doubling. A $700,000 property that doubles has made $700,000. A $1.2 million property that doubles has made $1.2 million. The only thing nobody can tell you is when. So how long does it take for property to double in value? I can only go on history, and history is clear on the pattern.

What history shows

Between December 1991 and December 2021, Australian dwelling values rose about 381 per cent by CoreLogic’s figures. They more than doubled, then doubled again, in thirty years: about thirteen years for each doubling, on average. Sometimes it happens sooner, when inflation runs high, and sometimes later, when it runs low. Based on that history, I think it is reasonable to expect that, sooner or later, real estate will double again, and again after that.

Two investors, twenty years apart

Take two people who each invest in a $1 million property of the same type and hold it until 65. One starts at 25. The other starts at 45. The table uses round numbers for ease of maths: a doubling every ten years, and a slower case of every fifteen. These are assumptions to show the arithmetic, not a forecast for any property.

Look at the gap, not the totals. In the ten-year case, the person who started twenty years earlier ends four times larger; in the fifteen-year case, about two and a half times. Time does the work.

Where the deposit comes from

The other half of the story is what each doubling was bought with. A deposit of 20 per cent controls the whole property, and the whole property is what doubles. Often the deposit itself is borrowed against equity in a home or another property, so the investor carries interest, not cash, while the value does its work. That cuts both ways: the loan stays whatever the market does, and the rent and the investor’s income have to carry it. I explain how that works in Using the equity you hold.

Why the 45-year-old is not too late

The person who starts at 45 still sees two doublings by 65, and two doublings of the right property can change a retirement. What they cannot get back is the first twenty years. I meet people every year who get in touch at about 55 and say they really need to do something now. They have fewer doublings ahead of them, so the plan has to fit the years they have.

Doubling only works for the investor who can hold through the years in between, including the ones when values fall. That is why the weekly cost of holding matters as much as the price.

Nicholas Lockhart

General information only. No advice is given.

Source: Aussie, 30 years of property trends, 21 March 2022 (CoreLogic Home Value Index).

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