There’s long been a rough rule of thumb that good property doubles in price every 10 years. And in good times every seven years. But the pandemic has thrown this somewhat out of sync.
Some resales are edging towards doubling as quickly as every five years.
Of course each suburb, capital city and state has its own price cycle and different price points, and different property types also have their own cycle. And it is difficult to appraise the extent of renovations helping boost this trend, but take society couple David and Skye Leckie who have sold for a reputed $17 million- plus in Woollahra.
They gutted the home, albeit not substantially enough for any development application to council, after they paid $9 million five years ago. A big gain no matter what is taken into consideration.
At Rose Bay, a 2005-built Kent Rd garden apartment that looked brighter than previously fitted out, fetched $4.9 million last month having sold in 2016 for $2.6 million. A Centennial Park house sold last November on Lang Rd for $6.5 million resold in May for more than $8.2 million with no change at all.
Much of the rapid gain has been seen in coastal and regional NSW. Magnolia House, the 1930 residence on the banks of the Brunswick River at Mullumbimby, fetched $3.3 million last month. Over the years the home has been lovingly maintained and had recently undergone renovations since its sale in 2016 at $1.39 million.
Avoca Beach’s recent $7 million record beachfront The Pines, was well up on the $4 million price it previously traded for in 2017.
Capital growth is the ultimate goal people keenly seek out when buying residential real estate. But the average gain in home values is not predictable.
Take the recent sale of the Pool House, an 2013 award-winning reworking by Luigi Rosselli of a grand 1910 Federation bungalow at Kensington. Over the past five years, it appears nothing was spent. It first sold after its rebuild for $5.525 million in 2016 and its recent sale for $5.775 million represents an increase of $250,000, or just $50,000 a year.
And there are properties that have sold for less than double after two decades. Last weekend Sydney’s cheapest auction result was 17/22 Nagle St, Liverpool, which fetched $285,000. It last sold at $148,000 in 2001. The one bedroom 76sqm apartment was bought by a first time investor who planned to renovate and then rent it out.
Prices can also go backwards as seen at the recent $3.03 million sale on the Appian Way, Burwood. it sold as a newly completed home in 2015 for $3.1 million.
So distinct differences can be seen in these recent sale examples at a time when overall median prices are rising at the fastest rate since the late 1980s.
Sydney is not alone as there has been a surge in the United States, with house prices rising there by about 13 per cent annually.
They are asking there, as we are here, whether this is just the first stage of the rocket on the nation’s property boom. But beware every boom sets us up for the next downturn.
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