Past performance of Residential Property

A study of Australian property prices over the last 100 years shows prices have risen an average of nine per cent a year.

The average price of a residential house in a capital city in Australia has risen 7.4 per cent a year since 2003 (when the Australian Bureau of Statistics started collecting data). (Financial Review Smart Investor magazine November 2009)

According to a report issued by the ASX and Russell Investment Management Limited in June 2010, residential property achieved a return of 10.4% p.a. in the 10 years to 31 December 2009 and a 9.8% p.a. return in the 20 yrs to 31 December 2009 (rent plus capital growth less all expenses).

The report was based on a population weighted average return across major capital cities. Increases in value were based on median house prices obtained from the Real Estate Institute of Australia. Data from the Australian Bureau of Statistics was used to make adjustments for capital improvements. Net rental income allowed for vacancy rates, maintenance expenses, management fees, government charges, land tax and insurance. Acquisition and disposal costs included conveyancing, stamp duty and agents` fees.

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