Let’s understand the Power of Compounding
When investing in property, achieving capital growth is one of the main objectives for property investors. But have you ever wondered how long it takes for a property's value to double or even triple?
With the help of some simple calculations, you can discover the power of compounding and how holding onto a property over a longer period can lead to remarkable results.
Check out these rules to find out when you might see a significant return on your investment.
💰𝗥𝘂𝗹𝗲 𝗼𝗳 𝟳𝟮
To discover how many years are required for your property to double in value, divide 72 by the annual growth rate.
Example: If you buy a property where the average annual growth rate is 6%, it will take 12 years for your property value to double, i.e., 72/6=12.
At 9% average annual growth, it will take eight years for the value to double, i.e., 72/9=8
💰𝗥𝘂𝗹𝗲 𝗼𝗳 𝟭𝟭𝟰
Want to know how long your property will take to triple in value? Simply divide 114 by the annual growth rate.
Example: If your property grows 6% a year, it will take 19 years for your investment to triple, i.e., 114/6=19
Isn't it interesting? The Melbourne property market has demonstrated a consistent performance over the last three decades, with an average annual increase in value exceeding 8%. Given this rate of growth, property values have effectively doubled every nine years.