I recently undertook an analysis of historical NZ and Auckland house prices going back to 1992 to answer an age-old question at to whether property prices double every 10 years? I've heard the anecdote used widely and often as a forward looking statement as to the prospect for the next 10 years. A well understood fact that I have always applied when hearing such a statement, is that the past is not always the best indicator of the future, and so it can be with regard to property prices.
Anyway I was interested to put this question to the test and wrote an article on my Properazzi site to demonstrate the results. What was interesting, was that no sooner had I posted that article, a comment was made to ask if the same form of analysis had been undertaken to test the question that property prices quadruple every 20 year period?
A brief mathematics lesson if school and university were many years ago - when compound interest is applied to a sum of money that growth can have a significant multiplier effect. A 7.2% annual rate of growth applied to the sum of $100 will see that sum rise to $200 in 10 years with that steady 7.2% annual rate of growth. Continue that rate of growth consistently for another 10 years and that original $100 will be worth $400, a 300% increase in 20 years - a quadrupling.
So back to the title of the post - Have Devonport houses doubled in each of the past 10 year periods and quadrupled in 20 year periods? I have chosen to use data for Devonport houses and deliberately exclude all units, apartments and townhouses as these market segments are small and may impact the data. I have also used 12 month moving sales data rather than median price in a single month as a small market can experience month-on-month volatility. That said the answer is a resounding YES, in the case of 20 year quadrupling a resounding yes, and in the case of 10 year doubling, pretty much yes. Here are the visual demonstration with each red bar representing a period of data compared to the same period 10 or 20 years ago. The black horizontal line is the benchmark for doubling or quadrupling in each case.
So in regard to the quadrupling every 20 years - consistently every 20 year period starting in 2013 when comparing any month with the same month 20 years previously the growth has been well over 300% - a quadrupling. In fact the average 20 year growth is 367%. As an example the median house sales price in Devonport in January 1993 was $220,000 based on the total sales of houses in the 12 months to Jan 1993. That median sales price had rise to $1,030,000 by January 2013, a rise of 368%.
Turning to look at the 10 year chart, it shows that in the period between 2003 and 2013 house prices in Devonport had doubled during the preceding 10 year period, however subsequently that growth has hovered around the threshold of doubling. The latest data for the full 12 months to June 2018, house sales price have more than doubled when compared to June 2008.
By way of comparison below are the same 2 charts for the wider Auckland region showing the 20 year and 10 year growth in house prices. The data set is identical to the Devonport data - just house sales (excluding apartments, townhouses and units) and a 12 month rolling sale prices.
This comparison would seem to show that Devonport outperforms the wider Auckland region over the 10 year period and most certainly over the longer 20 year period, this latter by quite a significant margin.
North Shore City
Finally comparing Devonport to the whole of the North Shore showing below the 20 year and 10 year growth in house prices. The data set again is identical to the Devonport data - just house sales (excluding apartments, townhouses and units) and a 12 month rolling sale prices.
These charts which are similar to the Auckland region further demonstrating the appreciation of property prices in Devonport compared to the wider market.