Will House Prices Keep Going Up?
Do you remember when we were kids, we used to have those activity books where one of the activities was spot the difference? You’d have two images side by side and we’d be trying to work what the differences were. Let’s play that game right now.
Here’s Australia in 1960. The population was 10 million. Here’s Australia at the end of 2010. The population was 22.5 million. So, what’s the difference between those two maps?
That’s right, there is no difference!
Australia isn’t getting any bigger. In each picture, we have the exact same amount of land, only more people. In fact, the amount of useable land is decreasing, as we have the same number of capital cities, and more people competing for the space. Everybody wants to live within a certain proximity to something, whether that’s family, jobs, or lifestyle related factors.
So, what does this have to do with property investing and house prices?
With more people competing for the same land, house prices have to go up! It’s the basic rules of supply and demand. As the population continues to grow (and it will keep growing – we have no choice there), so will property prices.
If you’re afraid of the market dropping, don’t be. Each property market goes through cycles (we’ve talked about this in other posts), but at the end of each cycle of flat, boom, peak, and correction, we still end up at a higher price than the last cycle.
If you hold onto your property long-term, you are guaranteed to make money. And if you buy in the right locations, you’ll make that money much sooner.
Daimien Patterson is the CEO of Integrity Investment Properties, a property investment company based in Australia. He regularly produces books, blogs, and videos on the topic of property investing. Head to [integrityinvestmentproperties.com.au] for your free copy of Daimien’s book, Safe as Houses.