Rule of 72

Rule of 72

This rule allows you to calculate how long it will take your property to double in value based on average annual capital growth predictions. To calculate you divide the predicted future average annual growth rate (as a %), into 72.

ie 72/(predicted average annual capital growth %) = number of years it will take for your property to double in value.

Eg if the average annual capital growth is 7% then 72/7 means it will take 10.3 years for your property to double in value

If you choose an area with a 8% average annual capital growth then you double the value in 9 years (ie 72/8=9).

Obviously the underlying capital growth predictions are important when using this simple rule. The most important thing to note is that the higher the capital growth rate of your property, the faster you are creating equity and growing your personal wealth. RPData and Residex are the two most common sources for growth predictions for the Australian property market.