A lot can happen in 20 years!

There have been a lot of changes since the eighties and, looking back, most of us would make very different investment decisions if only we could travel back in time.

How many of us can remember a block of land, a holiday shack or a house we wish we'd bought 10 or 20 years ago? In any case, property in the Lucky Country has been good to us and we still boast the highest rate of home ownership in the world, according to the Real Estate Institute of Australia (REIA).

The face of property is changing

People in the know claim that something of a socioeconomic revolution has already begun. The old quarter acre block the last generation aspired to has given way to the realities of urban living where space is a commodity we pay for. Prices too have changed dramatically and, in hindsight, real estate has offered significant returns in the last 20 years.

Since 1981 the three bedroom Australian home has achieved an average annual return of between 13.0% and 16.2%, according to the REIA residential investment property index. An outstanding performance that significantly beats the stock market over the same period.

But what of the next 20 years?

Of course we can't predict the future. If we could, we'd all be wealthy! But we thought it an interesting exercise to review how median house prices in our major capital cities have changed in 20 years. We then applied the same factor of increase to speculate on how those prices would look if the next 20 years mirrors the last 20. See our chart. The exercise can be enlightening. 

The economic forces that will shape our future are unknown and there are many variables, so please seek professional advice from your financial planner, accountant or solicitor before proceeding with any investment. If the property train continues along its current track, find the right station, it's time for all aboard!

Check the Mortgage Choice website at www.mortgagechoice.com.au

Reprinted from My Choice Newsletter from Mortgage Choice Winter 2002.