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Ben Kingsley Blog post by Ben Kingsley

2011 Valuer General Data Released For Victoria

Most commentators say that property investing should be a long term investment, and you have no debate on this point from me, but when commentators are asked what is short, medium and long term, that is when you start getting mix responses. My view has always been consistent and I’ll again share with you. Short term in property investing for me is 10 years, medium term is 25 years and long term, well for me this is holding the asset indefinitely for ongoing passive income.

So when the new valuer general data was released recently I was pleased to see that in the short term (last 10 years) the value of median house prices across the entire state rose by 127% from $180,000 in 2001 to $420,000 in 2011.

Pretty solid numbers if you ask me, as they occurred even during the Global Financial Crisis when other mainstream investments have tanked in the latter half of the decade.

What’s even more pleasing is that this data is the most reliable available for all sale prices, as it’s collected from the Land Titles office, where every sale must be registered.

If we look at the top 10 performers in house prices in the past 12 months, we again see an over weighting of inner city suburbs making the list, with Albert Park (18% increase in value from $1,185,000 to $1,402,500), Carlton (17% increase in value from $900,000 to $1,050,000) and West Melbourne (14% increase in value from $804,500 to $917,500).  So out of several hundred suburbs in Melbourne we see 3 within immediate contact of the city featuring in the top 10. This emphasizes the underlying demand and the premium people will pay to have a house that is conveniently and centrally located close to strong lifestyle and work infrastructure.

Across the Melbourne Metro area the Valuer General’s office recorded a 1% fall in median house prices for the past 12 months.  However country/regional areas saw a 2.9% increase in median house values for the same period, which in my analysis is due to the lag effect of regional areas catching up on Melbourne in the 2009 – 2010 periods.  And it’s a direct result of some of the population being priced out of the higher valued areas, choosing to live in regional centres to stretch the affordability factor a little further in bang for the buck terms.

So the sixty four thousand dollar question is: where to from here?

For me I am still extremely confident that values of quality properties in quality areas will continue to grow well over the next 10, 25 and even 50 years.  My argument is backed up by global cities around the world which have been in existence far longer than a couple of hundred years where the prime real estate, when incomes keep growing, stands up to any challenge over the long term.

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