Transform $100k into $1.5m

Transform $100k into $1.5m

If you bought a home over the past 24 years, you have participated in the best-performing investment available anywhere in Australia.

That’s the verdict from a recent study by ANZ Bank, which found that residential property was the highest-returning asset over the past 24 years. Owner-occupied homes beat shares, commercial property, equities, government bonds and term deposits to generate the highest annual returns, even after factoring in costs and taxes.

According to the study, an investment of $100,000 into an owner-occupied house in 1987 would be worth $1,428,000 today – generating the highest average annual return of any investment, at 12 percent. Investor property was the second best-performing asset with an average annual return of 9.6 percent and equities came in third with 8.9 percent.

A number of factors contributed to owner-occupied housing’s number one ranking, the study claimed, “the most significant being exemption from capital gains tax”. For example, the same investment of $100,000 into an investment property in 1987 would return $810,000 today.

However, before you pool all your money into property, consider this: the study also predicts that over the next 10 years, equities will emerge as the strongest investment with forecasted 8 percent average annual returns. Commercial property will come in second with 5.8 percent returns, and owner-occupied housing is expected to finish third with forecasted 5.3 percent annual returns. So property will continue to be a sound investment, but don’t expect the same returns of the past 20-plus years.

But how much will your home investment be worth in 10, 20 years? It depends on where you live.

In the short term, the mining-boom town of Perth seems poised to experience the highest growth. Another recent report by BIS Shrapnel forecasts the Perth median house price to lift by 20 percent in the next three years, with Sydney expected to follow closely with a 19 percent rise in the median price. This compares with 16 percent in Brisbane, 8 percent in Canberra and 6 percent in Melbourne.

Pamela Bennett, president of the Real Estate Institute of Australia, said bricks and mortar remain a solid long-term investment despite a recent drop in prices in parts of Australia.

“We’ve certainly seen a correction in prices, but I am confident we’ve seen the bottom of it and prices are improving,” she said.

“The housing market in Australia remains undersupplied and market forces determine how quickly prices increase.

“The data shows that median property prices across Australia have generally doubled every 10 years. You could conservatively say that in the next 10 to 15 years, prices will double,” Bennett added.

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Learn more about home loans

What is bridging finance?

A loan of shorter duration taken to buy a new property before a borrower sells an existing property, usually taken to cover the financial gap that occurs while buying a new property without first selling an older one.

Usually, these loans have higher interest rates and a shorter repayment duration.

How can I get a home loan with no deposit?

Following the Global Financial Crisis, no-deposit loans, as they once used to be known, have largely been removed from the market. Now, if you wish to enter the market with no deposit, you will require a property of your own to secure a loan against or the assistance of a guarantor.

Mortgage Calculator, Loan Purpose

This is what you will use the loan for – i.e. investment. 

Interest Rate

Your current home loan interest rate. To accurately calculate how much you could save, an accurate interest figure is required. If you are not certain, check your bank statement or log into your mortgage account.

What is appreciation or depreciation of property?

The increase or decrease in the value of a property due to factors including inflation, demand and political stability.

Mortgage Calculator, Loan Term

How long you wish to take to pay off your loan. 

How often is your data updated?

We work closely with lenders to get updates as quick as possible, with updates made the same day wherever possible.

Why should you trust Real Time Ratings?

Real Time Ratings™ was conceived by a team of data experts who have been analysing trends and behaviour in the home loan market for more than a decade. It was designed purely to meet the evolving needs of home loan customers who wish to merge low cost with flexible features quickly. We believe it fills a glaring gap in the market by frequently re-rating loan products based on the changes lenders make daily.

Real Time Ratings™ is a new idea and will change over time to match the frequently-evolving demands of the market. Some things won’t change though – it will always rate all relevent products in our database and will not be influenced by advertising.

If you have any feedback about Real Time Ratings™, please get in touch.

What is the amortisation period?

Popularly known as the loan term, the amortisation period is the time over which the borrower must pay back both the loan’s principal and interest. It is usually determined during the application approval process.

How much information is required to get a rating?

You don’t need to input any information to see the default ratings. But the more you tell us, the more relevant the ratings will become to you. We take your personal privacy seriously. If you are concerned about inputting your information, please read our privacy policy.

Mortgage Calculator, Repayments

The money you pay back to your lender at regular intervals. 

What is an ombudsman?

An complaints officer – previously referred to as an ombudsman -looks at formal complaints from customers about their credit providers, and helps to find a fair and independent solution to these problems.

These services are handled by the Australian Financial Complaints Authority, a non-profit government organisation that addresses and resolves financial disputes between customers and financial service providers.

How will Real Time Ratings help me find a new home loan?

The home loan market is complex. With almost 4,000 different loans on offer, it’s becoming increasingly difficult to work out which loans work for you.

That’s where Real Time RatingsTM can help. Our system automatically filters out loans that don’t fit your requirements and ranks the remaining loans based on your individual loan requirements and preferences.

Best of all, the ratings are calculated in real time so you know you’re getting the most current information.

How much are repayments on a $250K mortgage?

The exact repayment amount for a $250,000 mortgage will be determined by several factors including your deposit size, interest rate and the type of loan. It is best to use a mortgage calculator to determine your actual repayment size.

For example, the monthly repayments on a $250,000 loan with a 5 per cent interest rate over 30 years will be $1342. For a loan of $300,000 on the same rate and loan term, the monthly repayments will be $1610 and for a $500,000 loan, the monthly repayments will be $2684.