Business
https://www.youtube.com/watch?v=YveECmSbbNY In order to get the best return on investment we are told to invest in the right suburb so over the long term they will outperform other suburbs over the long term. But what I'm starting to see is that a lot of suburbs tend to perform extremely similar over the long term. Read this article: https://selectresidentialproperty.com.au/busting/apples-oranges/ Select Residential Property DSR Data 0:00 - Introduction0:58 - How comparing apples to oranges applies to property investing2:08 - Why doesn't extreme growth disparity happen?4:40 - Chance of better than average capital growth over the long term8:35 - The positives and the negatives of above average growth being hard to achieve9:25 - How can we get above average returns as an investor13:00 - Differences between 1 year, 5 years, 10 years and 25 years growth14:43 - What are the chances of picking a high performing market over 15 years vs 5 years16:40 - Can you determine high performers over the long term (30 years)19:10 - Radical vs marginal difference in price Recommended Videos: Property Data Dive Series Does Past Growth Predict Future Growth? (Property Data Dive) Good Schools and Amenities DON'T Create Capital Growth! SHOCKING RESULT! Transcription Ryan 0:00In order to get the best return on investment and achieve our property investment goals, we're told to invest in the right suburbs so that over the long term, they're going to outperform other suburbs. And you're going to end up you know, so much richer than if you purchased in the wrong suburb. But what I'm saying to say what image Jamie Shepard from select residential property is that a lot of suburbs in general, tend to perform very similar over the long term that yes, in the short term, there can be big disparities between suburbs. And there can be value in you know, picking your suburbs for the short term. But when you start stretching it out to 20 3040 years, a lot of these suburbs especially the choosing suburbs, with good fundamentals tend to perform extremely similar. So I guess this is kind of looking at short term versus long term investing. And Jeremy has got a great metaphor and analogy that can help us understand this, which is the concept of purchasing apples and oranges. So do you want to lead us into that, Jeremy? Sure. Jeremy 1:03Thanks. Thanks, Ryan. Thanks for having me on your show. No, all right, let's say you walk into a fruit shop 100 years ago, and there's a crate of apples, and there's a crate of oranges. Now assume that the apples were one cent each and the oranges were two cents each. If the apples grew at a rate of 4% per annum, whilst the oranges grew at a rate of 8% per annum, then after 100 years, an apple would cost you 50 cents. And an orange would cost you $44. Ryan 1:36Okay, imagine the beginning. Did I just start out at two cents? Did you say Jeremy 1:40yes, oranges for two cents. Ryan 1:43So in the beginning, oranges were worth twice as much as apples. And then in the end the end after 100 years, if they continue to have this disparity, and they grow the 4% apples versus 8% oranges in 100 years time, the owners are now worth 88 times more than apples. But why? Why doesn't this happen? Jeremy 2:05Okay, well imagine walking into a fruit shop right now and you've got a hankering for some fruit. You're looking at apples 50 cents each, or oranges $44 each. You just you'd have to be mad keen on oranges to spend 44 bucks on one. Right? So Ryan 2:23that week, most people wouldn't spend $44 on oranges. I don't know if you remember years ago, when there was the banana shortage $3 for a banana? I remember going months without a banana and then going in and just buying one banana. Jeremy 2:40Again, well, I guess yeah, it all comes down to supply and demand. Ryan 2:43I guess during that time period, I bought way less bananas than I would buy now when they're really cheap.