Property Investment Philosophies

What is the affect of compound capital growth?

By holding your property long term you can enjoy the effects of compounded capital growth.

10% growth per annum for 10 years does not mean you will receive 10 x 10% = 100% growth over this time. But rather you'll recieve 10% ^ 10 (10% to the power 10) = 259% growth. As every year you are receiving 10% growth on the original property price plus the growth of the previous years too.

This effect becomes even more pronounced with higher growth rates, please download the spreadsheet for an example.

Hence over time the effects of compounding (ie achieve growth on the profits of the previous years) leads to gradually larger and larger returns over time. This is one of the many reasons why over the longer term property provides substantial returns and makes an excellent investment.