I am going to reveal a truth in this article that will change how you think about property investing. Also, it could be eye-opening for many investors who only seek long-term property capital growth by following a basic buy and hold strategy.
Many so-called property experts always tell us that property investing is a long-term game and that real property capital growth can be achieved by holding a property for a long time, and it is all about ‘time in the market.’ But is this the truth?
I am going to show you that it is not always the case. I know it sounds crazy, but let me show you what I mean.
Property Capital Growth
By analysing the below chart, we can see that house prices remained the same from 2003 to 2009 in the Sydney market. Then there is a very small property capital growth of approximately $100k from 2009 to 2010. Then again, no price increase from 2010 to 2013.

Source: Real Estate Institute of Australia (REIA)
The median price in 2003 is $550k, so if property prices double every 10 years, in 2013 the median price should be $1.1m, but it is not! It is only $650k! So basically in 10 years, we can only see a price increase of $100k. Then, if it is all about ‘time in the market,’ why is there no significant property capital growth in this period?
On the other hand, from 2012 to 2017, property prices have almost doubled, and the median price increased from $650k to $1.2m, which is $550k in 5 years!
So, we have a $100k price increase in 10 years (between 2003 and 2013) and a $550k price increase in 5 years (between 2012 and 2017)! Therefore, if it is only about ‘time in the market,’ how can we justify having a $550k price increase in 5 years compared to only a $100k price increase in 10 years?
You might say, 2003-2013 was a long time ago and the property market is growing at a higher pace nowadays. That is okay. Let’s have a look at some recent data.
The Melbourne median price chart shows the same fact. From 2010 to 2020, the median price of houses has increased from $500k in 2010 to $750k in 2020, which is only $250k in 10 years. However, house prices increased from $500k in 2014 to $750k in 2017, which is $250k in 3 years. Again, $250k price increase in 3 years compared to $250k price increase in 10 years!

Source: Real Estate Institute of Australia (REIA)
So, if someone decides to hold a property for longer, it necessarily won’t guarantee higher property capital growth.
We have also heard from these so-called property experts that prices are always going up. Is it really the case? The answer is simply no. As you can see, property prices dropped from 2017 to 2019 in Sydney and then started rising again from 2019. In 2020, the prices are exactly the same as 2017 prices. So, no price increase between 2017 and 2021. A similar scenario is also evident in Melbourne between 2017 and 2020.
So as an investor, what can we learn from these charts? Is this really all about ‘time in the market’? Is a buy and hold strategy always a good strategy for maximising our profit in the shortest time?
To simply answer the above questions, I can say that if you are really interested in maximising your profit in the shortest time, you need to understand the property market and know when to buy and sell (during a market crash or market peak?).
In addition, you need to remember that holding a property for longer means higher holding costs, and you have to include these costs in your profit calculation.
Summary
It is true that owning property for the long term reduces the risk of losing money and could be a way of making some money. But making a little profit is not the same as maximising your wealth.
For instance, ‘investor A,’ who bought a property in 2014 (median price $500k) and sold it in 2017 (median price $750k), was more successful in maximising their profit in the shortest time compared to ‘investor B,’ who bought in 2010 (median price $500k) and sold in 2020 (median price $750k).
It is worth mentioning that it is impossible to predict market peaks and bottoms correctly all the time. However, sophisticated investors have equipped themselves with a set of indicators that enable them to predict market trends more accurately rather than only guessing the market.
So, it is a priority to understand the market and market indicators before buying or selling in the property market.
How well-equipped are you?
Please share your thoughts in the comment section and let us know how you predict the market.
Amir Sehat