Ep 364: Can annual property growth persist at 7% perpetually

Jul 8, 2025

Can Australian property values really sustain 7% growth each year? The discussion dives into the power of compounding and the importance of adjusting for inflation. Insights reveal that high-income earners are driving demand for prime properties near CBDs. The conversation challenges perceptions of overvaluation by highlighting geographic scarcity and infrastructure limits. Upcoming changes like lower interest rates and inheritance wealth could further influence property demand, providing valuable context for long-term investors.

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INSIGHT

Understanding 7% Property Growth

Property values doubling every 10 years seems unbelievable because humans struggle to understand exponential compounding.
Adjusting for inflation makes a $8 million home worth about $3.8 million today, making growth more relatable.

INSIGHT

Top 20% Drive Property Demand

The top 20% of Australians earn nearly half of all disposable income and enjoy faster income growth.
These high-income earners push demand for investment-grade properties near major CBDs, driving price growth.

INSIGHT

Scarcity Supports Urban Property Prices

Australia's geography concentrates half the population in just 0.5% of the land with limited infrastructure in regional areas.
This scarcity and population concentration support higher property values in key urban locations.

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In this insightful episode, Stuart Wemyss addresses a common investor question: Can Australian property values continue growing at 7% per year? He explains how compounding works over time and why adjusting future property values for inflation and income growth makes projections, like an $8 million home in 30 years, more relatable.

Stuart dives into the impact of income distribution, noting that the top 20% of Australians earn nearly half of all disposable income and experience faster wage growth. These high-income earners drive demand for blue-chip, investment-grade property, often located within 2 to 20 km of major CBDs, making such properties more likely to achieve strong long-term growth.

He challenges the idea that Australian property is broadly overvalued by focusing on geographic scarcity, population concentration, and the limitations of regional infrastructure investment. He also outlines several tailwinds that could boost property demand in the coming decade, including lower interest rates, superannuation tax changes, inheritance wealth, and reduced future equity returns.

Whether you're a long-term investor or simply seeking clarity on the sustainability of property price growth, Stuart offers a well-reasoned, practical perspective grounded in evidence and experience. Tune in to gain confidence in your investment decisions and understand the forces shaping Australia’s real estate landscape.

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