Have you wondered how many years it takes for house prices to double?

You will often hear it said that property values double every 7 to 10 years, but that’s not actually correct.

There are markets within markets, and some outperform others.

Then, there are periods in all various housing markets when property values remain flat for many years, even up to a decade.

But to get an idea of what’s likely to be ahead for house prices, let’s first have a look at what’s happened in the past.

Property analyst John Lindeman tracked the performance of housing prices right back to 1901, and his table below shows how erratic housing performance has been, with prices sometimes doubling in six years, while at other times taking several decades to double.

Sure, Australian house prices doubled in just six years from 1968 to 1973, 1974 to 1979, and 1998 to 2003, but they also have taken much longer to double at other times.

Digging deeper, the main factors causing strong house price growth were economic booms, strong population growth or high inflation.

In contrast, periods of low house price growth occurred during economic downturns or recessions or when housing finance was difficult to obtain.

Just look at the following chart from property commentator Michael Matusik which shows the many challenges our housing markets have had to endure over the last decade alone, yet while property values go up and down in the short term, over the long-term the trend is always up.

But there’s more…

So far, we’ve been looking at the performance of the “Australian property market”, but in reality, there isn’t one “Australian property market”; each state runs its own property cycle, and within each state, property price growth varies depending upon location, type of property and property price.

The following chart from financial advisor Stuart Wemyss of Prosolution Private Clients shows how, over the last 40 years, each state has experienced prolonged periods of minimal capital growth, but eventually reverts to its mean rate of growth.

So what’s ahead for property values?

If the rate of house price growth for the next five years is the same as it was during the last five years, house prices will likely double in the ten years from 2020 to 2029.

But as I said, there are cycles within cycles and each of our capital cities will perform differently over the next decade, with prices growing more strongly in some locations than others.

And within each city, some suburbs will experience stronger price growth than other locations and some properties will outperform others.

Are we entering a property supercycle?

A supercycle in property markets refers to an extended period of sustained price growth, driven by a combination of economic and demographic factors.

While it’s too early to declare that we’re in a full-blown supercycle, several key indicators suggest we’re heading in that direction, according to Ray White’s Chief Economist, Nerida Conisbee, who  explains:

“The biggest driver of this price growth continues to be a lack of stock available for sale.”

Here’s why Conisbee believes we’re likely to have a number of years of strong capital growth in our housing markets:

• Stock Shortages – There just aren’t enough properties on the market to meet demand. This is a structural issue, not a short-term trend with no end in sight.
• Population Growth – Australia’s migration boom is adding hundreds of thousands of new residents each year, increasing the need for housing.
• Interest Rate Stability – We’ve now moved into the next phase of our interest rate cycle, rates will slowly fall over the next year which will help improve buyer confidence.
• Rental Crisis – With vacancy rates at record lows and rents skyrocketing, more investors are entering the market, further fuelling demand.
• Construction Bottlenecks – The high cost of building and supply chain delays mean that new housing supply isn’t keeping up with demand, and any dwellings coming out of the ground will be more expensive than before.

All of these factors combined create the perfect storm for continued price growth.

What could derail this growth?

While the signs are pointing towards a prolonged growth phase, as you’ve seen in the charts above, no market moves in a straight line.

Potential risks include:

• Further interest rate increases – If inflation proves stubborn, the RBA may be forced to hike rates again, which could dampen demand and will definitely buyer and seller confidence.
• Government intervention – Policies such as tax changes for investors could impact market dynamics.
• Global economic shocks – Events such as a recession in major economies could filter through to Australia and weaken buyer sentiment.

What’s ahead?

Having said that, we’re seeing strong signals that we could be at the beginning of a new property supercycle.

As Ms Conisbee explains:

“The combination of low supply, strong demand, and economic resilience is pushing prices higher, and there’s little relief in sight for buyers hoping for a market correction.”

So, if you’ve been sitting on the sidelines waiting for a better time to enter the market, you might want to reconsider your strategy.

While short-term fluctuations are always possible, the broader trend suggests property values are set to keep rising.

Of course, not all markets will perform equally.

That’s why, as I always say, it’s more important than ever to take a strategic approach, focusing on high-growth locations, strong fundamentals, and properties with long-term potential.

A window of opportunity

I see the market moving to the next phase of the property cycle over the next year as interest rates continue to fall.

In general, when interest rates decline, the market tends to experience a surge in activity.

More buyers can afford larger loans, and as demand escalates, property prices usually rise’

Buyers who were previously priced out of the market start to re-enter, and those on the sidelines rush to buy before prices climb too high.

This creates a snowball effect that can rapidly drive up property values.

However, here’s the key takeaway: waiting for rates to drop further might mean missing out.

I see the current market offering a window of opportunity for property investors with a long-term focus.

Not that I suggest you try and time the market- this is just too difficult, and in truth, you’ve missed the bottom which occurred two years ago in early 2023.

But if the market hands you an opportunity like this – to get started at the beginning of the next stage of the cycle – why not take advantage of it?

Taking advantage of the upturn stage of a property cycle has created significant wealth for investors in the past.

Moving forward, demand is going to continue to outstrip supply for some time to come as we experience strong levels of immigration at a time when we’re just not building anywhere as many properties as we require.

At the same time, the cost of construction of delivering new dwellings will keep increasing, not only because of supply chain issues and the lack of sufficient skilled labour but also because builders and developers will only commence new projects if they are financially viable and currently new projects will need to come on line at considerably higher prices than the current market prices.

So it is likely that the price you pay for a well-located property today will look very cheap in 10 years’ time.

About Michael Yardney
Michael is the founder of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He’s once again been voted Australia’s leading property investment adviser and one of Australia’s 50 most influential Thought Leaders. His opinions are regularly featured in the media.