If we go way back in history to the year 1086, we can review the Doomsday Book, commissioned by William I, King of England - and it did not herald the end of the world, even though it sounded that way! It was a schedule of land values across Britain at that time. It has been calculated from that base, which values have increased in England over the last 900 or so years, strangely enough, at around 10% per annum.
It is that compounding effect of property value increases which is so powerful. As each year passes growth occurs on top of growth. If a property is worth $100,000 today, and next year it increases in value to $110,000, then the year after that it increases at 10% again, that is $100,000 plus 10% (or $11,000), taking its new value to $121,000, and on goes the escalation. Its exponential growth accelerating at a faster rate as each year passes.
Conservatively speaking residential property in Australian capital cities over the last 90 years has grown at 9%. That means your investment is doubling on average every 8 years. Remembering also that most investors only contribute 10 – 20% deposit in their properties but participate in 100% of the gains giving them over time a very attractive return on initial investment.
To use a well worn gardening analogy, it is a little like planting a tree. Early growth is slow, but as it establishes itself it grows faster, and starts to fruit. The fruit drops, and more trees grow and start bearing fruit. Before we know it, we have an orchard. It is a similar kind of compounding effect with property. Property wealth comes ever so slowly at first, but eventually arrives in abundance. But you have to make a start, no matter how small. With prudent property investment all you need is time, the right information, and patience.
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