10 year average annual growth rate

Discussion in 'Property Market Economics' started by Jamesaurus, 13th Jan, 2020.

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  1. Jamesaurus

    Jamesaurus Well-Known Member

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    I'd be interested to understand peoples thoughts on the data point of 10 year average annual growth rate, and predictor of future returns.

    I have heard some commentators suggest that signifies a consistently performing area and a good investment e.g. Houses in Bondi Junction NSW:
    10.18% according to BONDI JUNCTION NSW, AU SUBURB PROFILE - FREE REPORT

    Conversely, I've heard other commentators suggest that they deliberately seek a low 10 year average annual growth rate, and look for new infrastructure or capital growth drivers that could make the next 10 years flourish for the area.

    Whats YOUR experience?
     
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  2. albanga

    albanga Well-Known Member

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    They are not mutually exclusive.
    Prior growth is obviously a good indicator of a suburbs desirability. If a suburb has shown a consistent 10 year trend then they are probably a safer long term bet.

    Getting more proactive and looking for developments that change a locations desirability is ofcourse a great strategy.

    I however wouldn’t have one without the other because then your really just speculating.
    Say you have a suburb that has had an annual 10 year growth of 1% but they are now getting a hospital.
    Purchasing in this area based upon a hospital is really a gamble that it will make the suburb more desirable. Reality is your guessing.

    Likewise I wouldn’t purchase just on growth numbers as your risking catching the end of the growth before it becomes stagnate.

    I would prefer to look for a solid trend of growth with upcoming projects. That to me is the sweet spot.
     
  3. Jamesaurus

    Jamesaurus Well-Known Member

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    Solid response- cheers. I appreciate the prioritising future capital growth driving projects pipeline > than backwards facing indicators like the past 10 years.
     
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  4. marmot

    marmot Well-Known Member

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    Go back 10 years ago virtually every suburb in Perth had a 10 year growth rate at over 12%.
    But it was never sustainable.
     
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  5. See Change

    See Change Well-Known Member

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    I deliberately go for places that have underperformed for the last 10 years . It's worked for me . It's my first filter . Obviously I'd be ignoring mining towns with low rates of growth ....

    So far I've bought in capital cities ( Sydney , Brisbane & Hobart ) , Rockhampton , Townsville and Launceston. I'd probably be happy to buy in major Regionals in NSW , Vic and Q'Land ) , but if I'm buying in a regional I like somewhere that has a more diversified economy . Looking at a couple of other regionals at the moment .

    Cliff
     
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