Quote Originally Posted by absolut-advance
Actually neither of you are correct, ENP you have failed to account for the cost of your mortgage and Te Whetu you have failed to account for the gearing.
AA. Please re-read my post.

I know exactly how gearing works, you'll note I didn't state what the actual return was. The reason I didn't state the exact return is that it depends on the exact circumstances and I couldn't be bothered running further NPV examples.

The point I was making was: With leverage, assuming 3% increase in prices, ENP's return on investment may be negative and defiantly will be less than 15%.

Quote Originally Posted by absolut-advance
House prices have exceeded growth of 15% pa many times through out history with interest rates well below 15%
The geometric mean of house price increases has not exceeded 15% pa over any sustained period of time since we left behind inflation >10%. Yes prices may spike in a year, and if they do you'll be lucky in that year. They may also have very good runs like we got pre-GFC, but 15% yoy growth is a pipe dream today.

Are you saying your forecast is for 15% yoy growth in house prices over the next three years?

If you want I'll happily put a high level forecast out there... 1% growth yoy in nominal terms over the next three years. Feel free to revise your estimate, but lets see who's closer?

Seriously.

Te Whetu