Property growth rate in the past eight years to 2011

FIRST home buyers jumped on the state government stamp duty sweetener for property priced up to $600,000 when it was first offered in 2004.

But based on Sydney’s median price, the return on their investment might not have been as much as they expected.

The longest property boom on record – a decade of growth – was at an end, with median house prices peaking in March of 2004 at $568,700. Prices dropped after that and did not recover for five years.

Latest figures from Australian Property Monitors put today’s median house price at $637,102. That amounts to a growth rate of a paltry 12 per cent over the almost eight years, or 1.5 per cent annualized. Median apartment prices have jumped 20 per cent, or 2.5 per cent a year.

Some may suggest the median data is not a reliable indicator because first home buyers target entry-level property. But Andrew Wilson, a senior economist at APM, has done the numbers on the lowest-quartile properties and comes up with similar growth levels – 12 per cent or 13 per cent.

So is it really bad for that kind of growth rate? Well, if you are still holding the property or if you were a first home buyer when you bought the property in 2004, you are still making profit if you sell it today although the ROI on your cash investment (including Initial Cash Outlay and Holding Cost) might not look great Рsay perhaps only  30% or so. (SYED4MHHTYAS)

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