Capital growth is a crucial factor in real estate investing,

In Australia, historical data suggests an average annual capital growth rate of around 7%.

Let’s look at the growth of a $600,000 property over 10 years, highlighting its compounding effects.

Additionally, we will compare this growth to saving $20,000 per year at a 3% interest rate over the same period.

To better illustrate see this a table showcasing the growth of the property and the savings over a 10-year period.

As seen in the table, the property value compounds over time with an annual growth rate of 7%.

Starting with an initial value of $600,000, the property appreciates consistently, resulting in substantial growth. After 10 years, the property value reaches an impressive $1,255,379.

This compounding effect demonstrates how real estate investment can generate significant wealth 

On the other hand, saving $20,000 per year at a 3% interest rate provides a different perspective.

Although savings accumulate over time, the growth is not as substantial as the compounding capital growth in real estate. After 10 years, the savings amount to $241,978, which is significantly lower than the growth experienced by the property.

This comparison highlights the potential advantages of investing in real estate.

While saving money is essential for financial security, capital growth in real estate has the potential to outpace savings growth and generate wealth more rapidly.

 investors can potentially achieve substantial wealth accumulation.

While saving money is important, real estate investment offers the opportunity for accelerated growth and long-term financial success.

A discussion with your mortgage broker can help you understand how you can utilize your equity and cash flow to uncover your personal capability to make property investments