How to Measure Capital Growth Accurately

PARRAMATTA, Australia - April 27, 2017 - PRLog -- Townhouse and unit prices in Bellbird Park, Brisbane have increased by 93% over the past year but it seems to be a bit questionable, don't you think? It is called "suburb growth" and people think it refers to the properties' actual capital growth. This is based on the median or average property prices between two time periods and does not measure capital gains or growth at all.

These figures measure the change in the property type sold between two time frames and are usually influenced by the property age including development sites, new stock versus older resales, renovation activity, location and the quality of housing, out of line sales like divorces and even sales which have not happened in the suburb at all. Anybody can access this information quickly and for free.

According to Matusik, to understand capital growth, one must investigate resales. As mentioned above, townhouses and units in Bellbird Park have 14 properties resold in 2016 with an annual average capital growth of only 1.5%. The median capital growth was only 1.1% per annum, not 93%.

Six of the 14 resales were sold for a loss. The highest annual capital growth of the resales was 9.4% and the lowest was -4.5% last year. The properties which were held for less than 10 years saw little capital growth.

There should be a standard industry measure to judge capital growth. Other investment types have checks and balances and the property industry should have that as well. Capital growth should be based on resale analysis that compare the same property excluding significant renovations.

PS.

Capital gain is the profit on the sale of the property, minus all expenses incurred. Capital growth, on the other hand, is the increase in value of the same property over time. For more information about property investments in Australia, contact a property investment Specialist (http://www.chan-naylor.com.au/contact-us/?utm_source=bran...) to discuss your particular circumstances.

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