4 Capital Growth Myths

Some statistics regularly quoted as important for predicting future capital growth actually indicate the opposite, writes Jeremy Sheppard. He points out four commonly held beliefs that, while making sense on paper, don’t always stack up in real-life figures.

Land appreciates, buildings depreciate.

Many investors have heard that land appreciates while buildings depreciate. The theory is that you should buy investment properties with a high land component, namely houses. And if you’re in the hunt for a house they say you should maximise the block size with respect to the dwelling size.

This can be misleading advice. I like to use extreme cases to prove a point, so imagine you have a block of land with no buildings on it that can depreciate. Is that a better investment than a block of land with a house on it?

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