Play The Long Game

A wonderful reminder of the wisdom of holding quality property assets for the long run popped up in my data feed this week.

Dwelling Price Changes over 20 years till August 2019

The tide of growth flows one way for residential real estate in Australia if you have a long enough time frame, there are definitely exceptions and we are painting with a broad brush but the wisdom remains that you are betting on prices appreciating rather than falling longer term.

Looking at this table there are a few interesting points I noted:

1) If you are holding residential property for longer than 10 years it is a challenge not to make money. 

2) These are 'index' prices and well chosen and well purchased investment properties could be out performing these numbers, some times significantly. 

3) Leverage can be applied to real estate in a way that's is not easy to copy for other asset classes. There are rarely margin calls in residential compared with investing in the stock market.

4) Timing is a great way to add value, however it's also fine to buy when you can afford to buy and steadily accumulate buy and hold property as a core strategy.

5) It's possible that property can remain steady or decline in nominal and inflation adjusted terms for long periods also, just have a look at Perth and Western Australia in this table as a painful example over the previous decade.