This data proves the saying 'you'll double your money on property in 7 years' is a myth

Photo: Patrick Riviere/Getty Images.

Property prices double every seven years.

You have probably heard that saying in Australia before. Some think it’s a myth while others think that it understates just how fast property prices have been rising. Here’s looking at you Sydney.

According to new research provided by CoreLogic, while the vast majority of properties in Australia continue to sell above their original purchase price, buying a property does not automatically imply that you should expect it to double within seven years.

Not by a long shot.

In the group’s latest pain and gain report, a quarterly update on the resale value of Australian property, it found that 9.2% of all properties sold at a loss in the March quarter, a level higher than both the 8.3% level of the previous quarter and the 8.8% figure of a year earlier.

According to CoreLogic, 6.9% of capital city properties resold at a loss during the quarter, near half the 13.1% level recorded for regional properties.

Unsurprisingly, the capitals that have recorded the largest percentage gains in property prices in recent years — Sydney and Melbourne — saw the smallest proportion of properties selling at a loss.

“(The) proportion of loss-making resales.. was recorded at 2.1% in Sydney, 5.5% in Melbourne, 7.7% in Brisbane, 9.3% in Adelaide, 16.3% in Perth, 10.2% in Hobart, 21.1% in Darwin and 9.8% in Canberra,” said CoreLogic.

By type or dwelling, a clear trend is emerging, whether it be in capital cities or regional centres: the percentage of units selling at a loss is significantly higher than for houses.

In capital cities, 9.4% of units resold at a loss, significantly higher than that for houses which came in at 5.8%. That performance was mirrored in regional sales with 19.2% of units selling at a loss, near double the 11.2% rate for houses.

The table below, supplied by CoreLogic, shows the percentage of both loss and profitable sales over the quarter, breaking the results down by capital city and regional areas.

Clearly there were some significant divergences across the country, particularly between mining and non-mining states and territories.

“The trends in regional areas are shifting with the proportion of loss-making resales trending lower in areas linked to tourism and lifestyle,” said Cameron Kusher, research analyst at CoreLogic.

“On the other hand, housing markets linked to the resources sector are generally seeing an elevated level of loss-making resales after housing market conditions in many of these locations have posted a sharp correction.”

As for the question as to whether property doubles in value every seven years, CoreLogic’s figures, nationally, suggest that’s a tad optimistic.

Capital city homes that doubled from their original purchase price were held on average for 17.2 years, with that period extending to 18.1 years for properties in regional areas.

CoreLogic notes that those capital city properties that sold at a loss were held, on average, for 5.4 years, and 6.8 years for regional areas.

Those properties that sold at a profit were held for 10.1 years in capitals, and 10.2 years in regional areas — significantly longer in other words.

Given the cyclical nature of house price movements, Kusher has some sage advice for homeowners and home buyers alike.

‚ÄúProperty ownership, whether for investment or owner occupier purposes, should be seen as a long-term investment,” he says.

Clearly something to consider, particularly given some of the enormous house price gains seen in Australia’s largest housing markets over the past four years.

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