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Is it true that property value doubles every decade?

The idea that property values typically double every ten years is unlikely to be a new concept to anyone who has even a passing interest in real estate. 

However, Matusik Insights analyst Michael Matusik has indicated that this could simply be a myth - and not necessarily something on which to base property purchases.

Speaking to Perth Now, Mr Matusik said this may have had a kernel of truth in the past, but is unlikely to be the case today. 

Using nominal annual growth rates, he worked out how median prices in capital city markets have fared in the past decade. 

Only two locations could be said to fit the profile of doubling in value over this period - Sydney and Melbourne. 

Between 2006 and 2016 it would have taken 10.4 years for properties on the house market to double in either city - but this was much longer when applied to other cities. 

Some places would have taken around twice as long, with a Hobart property taking 21.4 years to double in value and a Brisbane home 19.7 years. 

Darwin, Canberra and Adelaide were somewhere in the middle, with median house prices taking 17.9 year, 17.6 years and 16.3 years to double respectively. 

Based on how the market performed in the past ten years, Perth would have taken 171.4 years to double the value of a property. 

While this is significantly longer than other cities, Mr Matusik said it is simply because prices were extremely high between 2006 and 2013 and dropped between 25 and 30 per cent afterwards. 

"The important point with Perth is - and all those markets - that they will get to a stage where they correct themselves and that's going to happen," he commented. 

As a result of these trends, Mr Matusik said the future of property investment is more likely to be shaped by rental returns on investment, rather than capital gains. 

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