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House prices in some suburbs on Sydney’s northern beaches and the Gold Coast have doubled every three to four years in the past decade, fuelled by low levels of stock and a growing number of affluent buyers, data from Suburbtrends shows.

The more expensive housing markets with the median price above $2 million also outperformed, gaining 13.3 per cent each year on average in the past 10 years. This is more than twice the capital growth of 4.8 per cent posted by the affordable end of the market with a median price under $500,000.

‘‘The premium end of the market performed strongly in the past decade, driven by scarcity, being located near the beach or the harbour,’’ said Kent Lardner, director of Suburbtrends.

‘‘Housing inventory levels in these suburbs remained very low, especially in recent years. The increasing levels of wealth and low interest rates have also created near perfect conditions.’’

The number of ultra-rich Australians with net worth of $US30 million ($40 million) or more surged by 124 per cent over the past five years, and they allocated nearly a third of their wealth to their homes or second dwellings last year, according to estate agency Knight Frank.

House prices in suburbs within the Manly area such as Balgowlah, Balgowlah Heights, Clontarf, Fairlight, Manly and Seaforth surged by 21 per cent each year on average during the past decade – essentially doubling every three years and five months.

House values in the Broadbeach area on the Gold Coast have also doubled within four years, after surging 19 per cent each year on average in the past decade.

House prices in Broadbeach Waters, Burleigh Heads, Burleigh Waters, Mermaid Beach, Miami and Broadbeach jumped by 42 per cent to $1.6 million in the past year.

‘‘Many of the commutable coastal locations boomed in the past 10 years, and in the case of those near Sydney, we did see the ripple effect shifting demand from the eastern suburbs, spreading over to the north shore and up to the Central Coast,’’ Mr Lardner said.

‘‘It is normal to see price gaps start to close between markets when this happens, but the premium markets kept on growing at phenomenal rates as well.’’

A separate analysis by CoreLogic found the top-performing market segments were generally skewed towards houses over units.

‘‘The stronger long-term performance for houses is a trend we have seen historically and is likely a reflection of the underlying land value being driven higher by scarcity factors,’’ said Tim Lawless, CoreLogic’s research director.

‘‘House values will probably continue to appreciate faster than unit values due to the scarcity of supply and what is likely to be persistently strong demand for lower density housing options.’’

Hobart outperformed other cities, with dwelling values surging 101.8 per cent across the greater capital city region over the 10 years to March. Sydney was the only city to record a higher 10-year growth rate, with housing values increasing by 109.5 per cent, according to CoreLogic.

Perth and Darwin were the weakest housing markets over the past decade, as values moved through a long-running downturn, Mr Lawless said.

But Mr Lardner said worsening affordability and higher interest rates could slash capital growth by more than half in the next 10 years as buyers grapple with bigger household debt and lower borrowing capacity.

‘‘Australia’s property market bull run may end this year as the two decades of falling interest rates are about to end,’’ he said.

Shane Oliver, AMP Capital chief economist, said falling demand due to lower immigration could also weigh on house price growth in the coming decade.

While immigration was starting to pick up, he said, ‘‘it may not get back to the highs we saw pre-pandemic, so the underlying level of demand for housing may not be as strong as it has been’’.

Foreign investors who fail to report their investments in Australian assets have been put on notice by the Australian Taxation Office and face significant cash fines after a landmark legal win in which the judge said his intention was to ‘‘wipe out’’ the profits of a serial property buyer.

Between July 2016 and April 2018, Vijay Balasubramaniyan spent more than $1.4 million on three residential properties and a block of residential land in Melbourne’s west.

Justice Barry Beach agreed with the ATO that Mr Balasubramaniyan, who had a temporary visa, breached foreign investor rules six times – four times for the purchases, which occurred without permission, and also for owning two established properties.

Justice Beach, following the first prosecution of such a case, ordered penalties of $250,000, broken down into four $30,000 penalties and two $65,000 penalties. The amount was well above the $162,839 that Mr Balasubramaniyan argued was his net gain.

‘‘The judgment provides a strong base from which we will progress our penalty litigation work as part of the ATO’s overall compliance approach,’’ ATO assistant commissioner Keir Cornish told The Australian Financial Review.

The judgment sets a precedent for how the law treats foreign investors in Australia who do not alert authorities to their acquisition. It is the first such ruling since the Foreign Investment Review Board Act was rewritten in 2015 to introduce civil penalties.

Previously, penalties for international residents acquiring Australian assets without alerting authorities were largely a slap on the wrist. They were forced to divest but could keep any profits gained.

In the three years to June 30, 2020, there were more than 1100 penalty notices for contraventions of the FIRB Act in residential property alone.

‘‘This serves as a clear deterrent to other foreign investors who believe they can operate outside of the law,’’ Mr Cornish said.

‘‘The ATO promotes voluntary compliance of the rules by foreign persons, but where foreign investors resist compliance action, stronger enforcement action is taken.’’

In his judgment, Justice Beach said Mr Balasubramaniyan had made gross capital gains of $710,300.

‘‘This is a significant fact for penalty purposes. General deterrence will only be achieved by a penalty that puts a price on any contravention sufficient to deter others who might be tempted to contravene the Act,’’ he said.

The ATO argued the net gain was $425,000. Justice Beach accepted some of the ATO’s calculations, but cut the number further.

‘‘I do not propose to linger on the arithmetic, save to say that I am satisfied that a figure of around $250,000 represents no less than the respondent’s net gain,’’ Justice Beach said in his judgment.

‘‘I propose to wipe this out by the total penalty that I will impose . . . Indeed, the sum of $250,000 is considerably more than the respondent’s own calculation of the net gain.’’

Lachlan Molesworth, a barrister and specialist in taxation and foreign investment, who represented Mr Balasubramaniyan, said he expected it to become routine for the Commonwealth to seek penalties for people who breach the act.

‘‘There is no doubt this will very much embolden the regulator, and I think it will send a clear message that if you hold assets in Australia without relevant federal clearances, those assets are very much at risk,’’ Mr Molesworth said.

‘‘The Commonwealth were probably waiting for a clear-cut case. The next frontier may well be into other assets classes, commercial investments where there have not been contraventions, and there will be a new level of confidence, we know what considerations will apply.’’

Investing As US prices rise, home equity helps boost owner portfolios.

The US housing boom is creating a new class of real estate tycoons with an easy source of financing: their own homes.

Soaring prices have showered property owners with record equity windfalls, sending cash-out refinancings to levels not seen since the peak of mid-2000s housing frenzy. For some people, that means cash for a remodel or vacation. But others are putting that money to work by buying second, third or even 10th houses.

‘‘With the pandemic, everything is skyrocketing,’’ said Keshav Agrawal, a 33-year-old Californian who extracted $US300,000 ($403,000) from his family’s Orange County home in late 2019 and put the money towards five rental properties in lower-priced Atlanta.

Those houses have doubled in value. And Agrawal, who started his cash-out foray with $US150,000 in credit card debt and little savings, is peeling off their equity to buy more.

‘‘I’m growing exponentially off of one refinance,’’ he said.

Across the US, newbie investors are trying to harness the power of home-price inflation to grow fast and get rich by becoming landlords. They’re contributing to soaring values, especially for starter homes that are in short supply. But even that can work in these buyers’ favour – as long as they’re willing to pay up – because Americans getting priced out of homeownership are in turn fuelling demand for rentals.

Cash-out refinancings let investors tap into their home equity to fund more purchases. For US landlords and second-home owners, these loans more than doubled in the fourth quarter from a year earlier to $US8 billion, the highest level since 2006, says data provider Black Knight.

Wall Street has also jumped in to finance investor deals with flexible underwriting and higher rates than conventional mortgages.

While the number of investors is hard to pinpoint, the make-it-big strategy is everywhere, touted at meet-up groups, by get-rich gurus and on media such as the BiggerPockets podcast, which gave it a name: Buy, rehab, rent, refinance, repeat, or BRRRR for short. Surging prices provide even greater support to grow faster, stacking one mortgage on top of the last. That creates risks should the red-hot housing market sputter.

‘‘While leverage can turbocharge your returns when prices are on the way up, it accelerates losses when prices go down,’’ said Greg McBride, chief financial analyst at Bankrate.com.

‘‘If there is a downturn in the economy and all of a sudden the tenants are not paying their rent, that creates a cash-flow issue.’’

Investors have had a growing influence on the US housing market, as tech-fuelled home flippers like Opendoor Technologies and publicly traded rental companies such as Invitation Homes compete for properties. But even in areas where prices have increased the most, such as Phoenix, Atlanta and Tampa, Florida, mum-and-pop landlords far outnumber the institutional ones.

In Phoenix, 32 per cent of single-family purchases in January were by investors with fewer than 10 properties, up from 28 per cent a year earlier, data from John Burns Real Estate Consulting shows. By comparison, large investor purchases accounted for 12 per cent of transactions.

‘‘Young investors are doubling down, refinancing their first investment to get a down payment for their second,’’ said John Burns, founder of the Irvine, California-based company. ‘‘It’s like they don’t know there was a downturn in the late 2000s.’’ The boom in real estate investment may not end with a crash – at least not on the scale of the one that led to the financial crisis.

For one thing, the almost $US10 trillion in tappable US home equity provides a cushion for homeowners and their lenders. Underwriting standards for investment purchases are also far stricter than in the 2000s, typically requiring down payments of 20 per cent or more.

And even as rising interest rates and Russia’s war in Ukraine bring uncertainty to the global economy, there’s little to indicate the American housing market will slow down soon. The same dynamics sending property prices higher for years have only strengthened as the Millennial generation reaches peak home-buying age and inventories just get tighter.

‘‘I’m always thinking about what happens if there is a downturn,’’ said Grace Gudenkauf, who quit her job as a mechanical engineer in Cedar Rapids, Iowa, to focus on real estate investing. ‘‘But the housing shortage is so extreme that I don’t think it will be soon.’’

Last year, Gudenkauf, 24, bought a fixer-upper with her boyfriend for $US82,000 and invested another $US36,000 to renovate it. It appraised for $US185,000, allowing her to pull out $US129,500 with a cash-out refinance to buy more. The couple now owns 11 properties with 20 units.

Gudenkauf essentially extracts cash from one home to use for another, also tapping private loans designed for investors. Small landlords can finance as many as 10 properties using conventional financing, but they face tough underwriting standards that factor in a borrower’s ability to repay. For those willing to pay a higher rate, companies such as Finance of America, which counts Blackstone as its largest shareholder, and Deephaven Mortgage, owned by investment company Pretium, have loans with more flexible terms.

These loans are often packaged and sold into the secondary market. Alternative financing for rental and vacation homes ballooned last year to almost $US12 billion, roughly quadrupling since 2018, data on residential mortgage-backed securities from Kroll Bond Rating Agency shows.

David Greene, a police officer turned investor who co-hosts the BiggerPockets real estate podcast and author of the book Buy, Rehab, Rent, Refinance, Repeat: The BRRRR Rental Property Investment Strategy Made Simple, said the method works, but only if investors educate themselves. ‘‘Leverage always helps the wise and hurts the foolish,’’ said Greene, who also has his own mortgage company and sales team. ‘‘Give a nail gun to a good contractor and they’ll build faster. Give a nail gun to a little kid, they’ll hurt themselves.’’

After a stint of unemployment during the pandemic, Jordan Pavao, a Massachusetts construction labourer, began to follow the BRRRR strategy, which he learnt from real estate personalities on Instagram. He was four payments behind on his pickup truck and the bank kept calling, he said.

He had dabbled in real estate before, buying a three-family home eight years ago and then moving into his own house in 2019. But in 2021, he decided to sell that home and buy a second multifamily property. A couple of rehabs and refinances later and he now has three three-family homes and is getting ready to buy a fourth.

Pavao, 31, said he already makes as much on the homes as he does in his construction job. Last month, he got his licence to sell real estate so he could help Boston investors buy in his town of Fall River, a blue-collar area near the Rhode Island border that is slated next year to get its first commuter rail stop.

Now the ‘‘Working Class’’ tattoo on his right arm – illustrated with a zombie with a flat cap and a cigarette dangling from its mouth – may no longer apply.

‘‘My idea of it is it’s blue-collared until death and even then you’re still working,’’ Pavao said of the tattoo. ‘‘Real estate will hopefully prevent this from being my fate.’’

In California, Agrawal is thinking big.

He pulled out $US200,000 from two of his West Atlanta townhouses and bought another one and a nearby office building.

‘‘I want to be a 100-millionaire and I am thinking about how I can get there in a short amount of time,’’ Agrawal said.

‘‘At the end of the day, the only thing that made me real money is real estate. This is the one true fact.’’

House prices in some suburbs on Sydney’s northern beaches and the Gold Coast have doubled every three to four years in the past decade, fuelled by low levels of stock and a growing number of affluent buyers, data from Suburbtrends shows.

The more expensive housing markets with the median price above $2 million also outperformed, gaining 13.3 per cent each year on average in the past 10 years. This is more than twice the capital growth of 4.8 per cent posted by the affordable end of the market with a median price under $500,000.

‘‘The premium end of the market performed strongly in the past decade, driven by scarcity, being located near the beach or the harbour,’’ said Kent Lardner, director of Suburbtrends.

‘‘Housing inventory levels in these suburbs remained very low, especially in recent years. The increasing levels of wealth and low interest rates have also created near perfect conditions.’’

The number of ultra-rich Australians with net worth of $US30 million ($40 million) or more surged by 124 per cent over the past five years, and they allocated nearly a third of their wealth to their homes or second dwellings last year, according to estate agency Knight Frank.

House prices in suburbs within the Manly area such as Balgowlah, Balgowlah Heights, Clontarf, Fairlight, Manly and Seaforth surged by 21 per cent each year on average during the past decade – essentially doubling every three years and five months.

House values in the Broadbeach area on the Gold Coast have also doubled within four years, after surging 19 per cent each year on average in the past decade.

House prices in Broadbeach Waters, Burleigh Heads, Burleigh Waters, Mermaid Beach, Miami and Broadbeach jumped by 42 per cent to $1.6 million in the past year.

‘‘Many of the commutable coastal locations boomed in the past 10 years, and in the case of those near Sydney, we did see the ripple effect shifting demand from the eastern suburbs, spreading over to the north shore and up to the Central Coast,’’ Mr Lardner said.

‘‘It is normal to see price gaps start to close between markets when this happens, but the premium markets kept on growing at phenomenal rates as well.’’

A separate analysis by CoreLogic found the top-performing market segments were generally skewed towards houses over units.

‘‘The stronger long-term performance for houses is a trend we have seen historically and is likely a reflection of the underlying land value being driven higher by scarcity factors,’’ said Tim Lawless, CoreLogic’s research director.

‘‘House values will probably continue to appreciate faster than unit values due to the scarcity of supply and what is likely to be persistently strong demand for lower density housing options.’’

Hobart outperformed other cities, with dwelling values surging 101.8 per cent across the greater capital city region over the 10 years to March. Sydney was the only city to record a higher 10-year growth rate, with housing values increasing by 109.5 per cent, according to CoreLogic.

Perth and Darwin were the weakest housing markets over the past decade, as values moved through a long-running downturn, Mr Lawless said.

But Mr Lardner said worsening affordability and higher interest rates could slash capital growth by more than half in the next 10 years as buyers grapple with bigger household debt and lower borrowing capacity.

‘‘Australia’s property market bull run may end this year as the two decades of falling interest rates are about to end,’’ he said.

Shane Oliver, AMP Capital chief economist, said falling demand due to lower immigration could also weigh on house price growth in the coming decade.

While immigration was starting to pick up, he said, ‘‘it may not get back to the highs we saw pre-pandemic, so the underlying level of demand for housing may not be as strong as it has been’’.