Property Prices to increase by 30% over the next 10 years.

Having a chat with a Property Investor today he commented about property prices are predicted to increase by 30% in the next ten years and to find him another one.

The last property I found for him he purchased for $325,000 18 months ago and is now worth $410,000 so he was a little taken back when I said, not going to happen John.

Sure there are some good investments out there but generally speaking it is not going to happen for the simple reason, it wouldn’t be affordable. Will wages increase by that much? If so we will be paying $20 for a cup of coffee, and we had just finished our third.

Even if by chance property did increase by 30%, will anyone be better off?

It may look good on paper but will you have any more money in your pocket than you have now?
As I said to John, hey allot can happen in ten years but if people take heed of what is behind us, and what I said in my pervious Blog Cap your rate at 5.5% now! i.e. learn from the past, debt reduction opposed to debt accumulation, if I am wrong, worst case scenario,  you will have more equity in the property.

Don’t take out an interest only mortgage and rely on capital gain alone as if I am right, you may have just wasted 10 years. After all, you and the tenants could have repaid the mortgage in full over that period of time.

Comments

[Rene McLean]

Who is predicting a 30% increase over the next 10 years? Seems very pessimistic considering most 10 year gains have been close to 100% since NZ was settled(factering in infaltion will give a ddiferent result) A 30% incr in a cup of coffee would be $5 , not $20?

[Brian Dalley]

Hi Rene,

My point was and still is, people are, and it is scary that people from within the industry are included, moving forward with their faces glued to the rear vision mirror and not learning from the carnage left behind, regardless of the percentage of increase, it was and will hopefully now always be, about [affordability]

Secondly there were areas prior to the boom of the century that saw very little if any capital gain at all over a ten year period.

The cup of coffee, sure I was generalising rather than using a mathematical equation but hey, it was a cup of coffee.

Sure it is expected that property prices in a good percentage of areas throughout New Zealand will increase in value over the next 10 years but let’s hope that something has been learnt from the fire sales as of late.

Thank You for taking the time to comment as it is good to get feedback on my views.

Brian Dalley

[getting started in rental property investment]

I myself have a little doubt about this 30% increase on property prices for the next ten years. I'm sure every state or country will have different price increase percentage over the next years.

-James