The capital growth history thread: 30+ years price comparisons

Though it would be interesting to start a thread devoted to long-term (30 years plus) capital growth based on comparing historical material to now. To set the ball rolling:

* THEN (December 1984)

At 30 sec in is an ad for Maroochydore apartments. $120k



* NOW

Penthouse apartment in building sold for $625k

http://www.domain.com.au/for-sale/17-camargue-52-alexandra-pde-maroochydore-qld-4558-2008553456

* OVERALL

30 years and <5 fold growth which would be considered poor compared to others. Eg $120k in 1984 could have bought 2 houses in most capital cities which could now be worth nearly $1m the pair.

 

Dundas Valley house circa 1996: 170k
Mid 2015: 1.32million.
About 12% growth per year...

 

We all no what its done in the past. The question is What about the next 30 years?

 

You have to think scarcity value. Eg. Properties with big land in high demand locations. Ditto well located waterfront homes, or houses close to the city, terraces. They aren't making more of them.

What I don't think will go up as much are new apartments with little land content as there will always be newer apartments. They aren't making (supplying) any more big land in high demand locations, but it's not so hard to keep churning out new apartments anywhere.

 

Agreed ppl buying apartments are buying air in the sky

 

* NOW

Penthouse apartment in building sold for $625k

http://www.domain.com.au/for-sale/17-camargue-52-alexandra-pde-maroochydore-qld-4558-2008553456


The actual figures for this apartment are not quite so rosy.
It may have been for sale for $625. But domain shows it as being sold for $605k in 2006 and then again for $515k in 2011
http://www.domain.com.au/property-profile/17-52-54-alexandra-parade-maroochydore-qld-4558

We are surely due for a boost here on the sunny coast

 

Yep houses. And every time someone buys a house, knocks it down and builds a few townhouses you have one less house on the supply curve and several more townhouses while the demand curve for houses continues to grow with population growth.

Fast forward 20-30 years and it won't be so much where you live that will determine peoples perception as to wealth but whether you live in a house or unit/townhouse.

Thus, as a long term buy and hold strategy, I don't really understand buying anything without a land component.

 

If you happen to own an apartment in HK you are rich.

If you own a house in HK you are MEGA MEGA MEGA rich. That's what happens when there is no land supply.
Ok, Australia is not HK but in my experience (having lived in Sydney my whole life) is well located land tends to be tightly held and hotly contested if/when it comes onto the market. Demand outstrips supply.

 

This is why investing in units / townhouses is a fools errand. Sure, building those for people who want them is a viable strategy, but buying end products with an ever increasing supply can't possibly have long term reward.

Land is the limited commodity here.

 

Not necessarily true.
This is the unit vs house argument...discussed many times in various publications... Sure the supply side might be in favour for houses, but what about demand...if the demand to supply ratio is higher for units than houses, they will likely show higher growth.

 

Your city has
10 houses
10 units /town houses
Demand and supply are at equilibrium
Knock down one house and put up three townhouses
You now have
13 units /town houses
9 houses
(that's more than a 40% difference in stock numbers)
demand for both units and town houses remains the same = Price goes up for house and down for town house

 

Doesn't scream 'penthouse' to me, looks like an old 2/2/2 similar to many old units on the Gold Coast....

 

Yeah... no scarcity factor here. All the apartments in the block are probably not too dissimilar. Which means you cant command the big bucks as there will be for example, 15 of them, the buyer gets the negotiating power. Plus now they are all becoming dated. And someone has to pay for maintenance too remember.
Not desirable.

 

Agreed. But appartments in Maroochydore have been overpriced for many years IMO. They are marketed for the "Coast lifestyle" to people who come here on holidays and love it and buy on impulse because it's comparatively cheap as compared to the same in say Bondi. Only to move here to realise that there's not a whole lot to do, and employment opportunities/wages are low. This is improving rapidly though! If you want CG on the Coast you need a house on at least 500sqm of land walking distance to a beach. My parents sold the family home in Warana Beach back in 92 for 90k. Same house now would be 550-600k in original condition. With Stocklands new blocks of land being released at 250sqm for 300k, it makes a 650sqm block with a house on it 100m to beach look cheap at 600k. I can't be the only one seeing this?

 

How the heck do they get away with such small new blocks? That size resembles the inner suburbs of Sydney. Wow.

Anyway, I think people these days are resigned to the fact that new blocks/new land releases are made up of smaller parcels of land.
Its funny how 450sqm of land out near Penrith is now about 350k.. not too long ago (2007/2008) you could get ~600sqm land in the Epping area of Sydney for about 600k.
But Penrith is so much further out than Epping.

 

So on a 'per square metre basis', the rise is actually astronomical.

 

Land supply shortage in that position. Covenant stipulates thou shalt have a 2 or 3 storey dwelling with up to 60% coverage allowed. 10m frontage and 25m deep doesn't leave much greenery. It's funny because the blocks they back onto from a previous release 6 or 7 years ago are 450-600sqm. But again they're selling them as "lifestyle blocks" because that's what you need to find with no yard to play in.