Australian housing data from 2003-2018 shows that staying invested in major capitals beats rotating between cities. A 15-year rotation strategy had a $500k spread between best and worst outcomes, while simple buy-and-hold produced hundreds of thousands in gains across the board.
Questions this video answers
2003–2018
Approximately $386,000 (speaker: "they make $380,000... they start with 78, they make 386")
Approximately $150,000 (speaker: "they lose 150,000")
About $500,000 (speaker: "which is a $500,000 differential")
About 91% (speaker: "it had the biggest increase at 91% 2003 to 2008")
Chapters
Yeah. And I think the thing is, I mean when I think of Adelaide and Hobart, I think of them of like the island of Australia, you know, the biggest exports, their youth. And that's kind of been what it's been for years. Right. But now all of a sudden things have changed and we've got population growth to your point. And you know, what's that bring? People want to rent and then if the rents go there, renters go there and the rents go up and the yields go up, all these people who are losing out in the stock market are going like low. And then the property prices come up and then the immigrants go there and they can buy houses and the property prices go up. So even if there is this kind of lull, I really positive on Adelaide.
Yeah. Again, you know, I might be showing my personal bias, but I, I study the national market and I've studied, you know, property cycles. And the one great benefit Adelaide has is, doesn't have the big lows that like Sydney and Melbourne, their worst. The worst drop in property price in a calendar year was 10%. But in Adelaide it was less than half percent. This is over 35 years. We haven't had some of the big highs either. Like I remember one in one calendar year, I reckon it was 1988, Sydney property prices went up 50%. So you're talking about timing the market or timing the market.
Well, I actually have your spreadsheet you share with my mentoring client. I can bring that up because I love, you know how I love your data. This here. Now you looked at a whole period, can you see that? So you looked at this whole period here between 2003 and 2018. I've color coded it but you know, we've got these, these areas that have really gone up. So you know, Hobart and Melbourne over that 15 year period. And I did like an average here. But if you check a five year period, you know, Perth and Darwin, 2003, 2008, you know, followed by 8 to 13, we've got Sydney and then Melbourne and Darwin. So Darwin's like, who's been thinking about Darwin in the last 10 years? And then 2013 to 2018, we've got, you know, Hobart, Sydney and Melbourne. So and to your point, you know, Adelaide's just ticking along. Yeah.
Whereas compared to Darwin, it had the biggest increase at 91% 2003 to 2008. But then it also had the biggest decrease in 2013 to 28 and minus 15%. So very volatile.
Well, can I tell you because I've been studying it this week going, because you're always pulling up the data. Right. So what I loved about this and what you did here was you were looking, what if you buy and sell every five years? So we're talking about, you know, it'd be nice to time the market a little bit for Adelaide. But the bigger picture is if you're buying for the long term, right. We want to make sure that you've got the whole base protected. And what I loved about this, you did a best case scenario and a worst case scenario of if someone had purchased in Darwin, Sydney and Hobart over that 15 year period, every five years, they buy in, buy out, buy in. Now if they got it right and they started in Darwin and then they went to Sydney and then they went to Hobart, even with selling costs and capital gains tax, which I love the fact that you put all these in here, they make $380,000 on their money. You know, they start with 78, they make 386. But if they did the exact same cities and they started in Sydney, held it for five years, went this, did nothing, I'm going to Hobart because Hobart is doing so well, and then Hobart does nothing and then they go, okay, I'm off to Darwin because Darwin did so well, and then Darwin did its -15%, they lose 150,000, which is a $500,000 differential. Right.
So there are about 500 different iterations. You know, if you, if you know 8 times 8 times 8, it's almost 500. So the best you could have done was make 386. The worst you could have done was lose 150,000 and everything in between. But if you go back to that time in the market, so you could have just kept your money in Sydney and made 340 anyway, which was, which was almost as good as timing it perfectly. Melbourne, even better. Brisbane still in the three hundreds. Adelaide in the three hundreds. Perth in the four. Virtually all the capital cities. If all you had done was bought and held there, you would have either you would have beat most other people that were trying to time the market.
Yeah.
And no risk of losing any money.
So there we have it. Timing the market does not work. Oh. If we look at the past, who.
Knows the future, who knows what will happen in the future?
