House prices have not doubled every 10 years

Re: “House prices double every 10 years,” letter, Aug. 10. The letter-writer states that his houses have always doubled in value in 10 years. This is purely anecdotal, and a quick check on the Victoria Real Estate Board website of median single-family house prices looking back 10 years from now clearly shows that they have not doubled, not even close.

Furthermore, to imply that Victoria house prices will double every 10 years in the future just because he thinks they have done so in the past is ignoring reality. Victoria housing is most definitely subject to the forces of supply and demand.

Supply is currently artificially low due to such factors as short-term rentals and property-tax deferrals, while demand is artificially high due to investor speculation, historically low interest rates, loose lending practices, government incentives such as the First Time Home Buyers Plan and media hype. As these supply-and-demand factors change, so will the prices of housing in Victoria.

The future looks to hold a surprise for the letter-writer, because we are in a rising interest-rate environment, will likely see major-bank lending practices change by the end of this year and might well see governments take measures to curb shortterm rentals and speculation, all of which will tip the supply-and-demand balance toward a drop in house prices.

Regardless, one should never be blinded by recency bias. Just as with stock-market investments, past performance of house prices is no guarantee of future results. Kevin Ellis Victoria