Wednesday, 29 October 2025

Roasting Times & Temp settings for different Cultivars.

Coffee cultivars don’t come with fixed “roast settings,” 
They behave differently in the roaster because of variations in bean density, size, moisture, sugar content, and structure. Those differences influence how heat is absorbed and how quickly chemical reactions (like caramelization and Maillard reactions) occur.

Here’s how that plays out in practice:
🔥 1. Bean Size & Shape
💧 2. Moisture Content
🌱 3. Density & Bean Structure 
🌱 4. Processing Method
🍬 5. Sugar Content & Chemical Composition
⏱️ 6. Practical Roast Adjustments by Cultivar Type

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🔥 1. Bean Size & Shape

Size
Larger beans (e.g., Maragogipe):
+ this is arguably the most important consideration when Roasting.
+ Heat penetrates more slowly through to the centre of a larger bean
+ Thus there is a need for  longer roast times or more energy input (higher charge temps)
Smaller beans in comparison
+ Heat faster
+ Thus there is a risk of overdevelopment on the outside.

This runs contrary to many traditional roasting profiles that prioritize bean density over size.
Often, denser beans are smaller and one would think that more heat is required for such beans when the opposite is often the case. However, larger coffee beans are often associated with higher quality and some coffee-producing countries grade their beans by size. 
Eg: Colombian Supremo or the Kenyan AA grades fetch the highest prices.

Bean shape
Natural, round, single-seed peaberries tend to roll and move differently in a drum or fluid (air) roaster, 
often offering a more uniform heat transfer compared to traditional flat, twin beans.

So in conclusion, the size and shape of coffee beans depends on many factors such a level of ripeness, getting sufficient water during fruit expansion, the availability of nutrients, altitude, elevation above sea level, micro climates and growing temperatures.


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💧 2 . Moisture Content 

I think moisture is the second most impt consideration when deciding how to roast a bean.

Measuring water content in raw coffee beans is best achieved using specialized capacitance moisture meters (like DiFluid Omix, Roast Rite RM-800, or G-Won) for rapid, accurate, and non-destructive testing, targeting a moisture content of 10%–12%. Alternatively, the oven-drying method involves weighing beans, baking them at 105C for 24 hours, and calculating weight loss.
I use one of these testers:
https://www.youtube.com/watch?v=gOx6Eu_j8qI

Moisture content (ideally 10–12%) dictates the thermal energy needed during coffee roasting, impacting drying time, the rate of rise (RoR), and final flavor development. High moisture (>12%) requires more heat to evaporate water, delaying browning and increasing risk of grassy/uneven roasts, while low moisture (<10%) risks rapid, uneven roasting.

Key Effects of Moisture Content on Roasting:

Thermal Management & Energy: Beans with higher moisture require higher heat input (more gas/energy) in the initial drying phase to overcome the cooling effect of evaporating water.
Roast Timing & Rate (RoR): Drier beans reach higher temperatures more rapidly, often requiring lower charge temperatures to avoid burning. High-moisture beans require longer drying times to avoid underdevelopment.
Physical Changes: Moisture leaves the bean during roasting, causing shrinking and weight loss, which impacts flavor density.

Ideal Ranges & Risks:

10%–12% (Ideal): Provides balanced flavor development.
>12% (High Moisture): Can lead to uneven roasting, stalling (low ROR), and grassy or fermented flavors. If raw coffee was stored in a moist environment, mould can develop.
<10% (Low Moisture): Often found in old-crop coffee or coffee stored in a dry enviroment.
This can lead to brittleness and accelerated roasting, often leading to a "papery" or flat taste. 

Roaster Adjustments
Roasters typically increase charge temperature and heat application early for high-moisture coffees to ensure they transition through the yellowing/browning stage properly. Increased airflow is often necessary to remove the high humidity released in the early stages. 
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🌱 3. Density & Bean Structure 
High-density cultivars (often high-altitude Arabica coffee like Bourbon, Typica, Gesha):
+ Need higher charge temperatures
+ Can handle more heat early
+ Often require slightly longer roast times
+ Benefit from slower development to bring out complexity

Lower-density cultivars (including many Robusta coffee or low-altitude Arabicas):
+ Roast faster
+ Require lower starting temps
+ Can scorch if heat is too aggressive
+ Often shorter overall roast curves

👉 In short: 
denser beans = slower roast, hotter start; 
softer beans = quicker roast, "cooler" start.

General classification of bean density for different cultivars

A. Strictly High Grown (SHG): Above 1500m (5,000+ ft)
Strictly High Grown (SHG) or Strictly Hard Bean (SHB) coffee refers to (mainly) Arabica beans grown above 1,200–1,500 meters (4,000–5,000+ feet).
These denser, slower-developed beans have higher acidity and complex flavors. 
Besides SHG/SHB, look for terms like Altura (Mexico) or High Grown (Colombia)

Top examples include :
Ethiopia:
Yirgacheffe (1,700–2,200m): Known for, bright acidity, tea-like body, and floral or citrus notes.
Guji Wamena (over 2,300 MASL) 
Kenya AA (1,700–2,000m): Grown on high plateaus, known for intense, bright fruit acidity and rich body.
Guatemala SHB (Antigua/Coban) (1,400–1,700m+): Often grown in volcanic soil, producing rich, complex cups with hints of chocolate or smoke.
Costa Rica Tarrazú (1,500–2,000m): Highly sought after for its crisp, clean, and bright flavor profiles.
Tanzania Peaberry (Mt. Kilimanjaro): Known for its intense, wine-like acidity and bright flavors.
Colombia Supremo (up to 2,000m): Known for a well-balanced profile and high altitude acidity.
Papua New Guinea "Mile High" (1,500m+): Often features fruity, tea-like notes

B. High altitude (≈1200–1500 m):
Cooler climate - Slow maturation → tighter cell structure
Smaller, harder beans
Brighter acidity
High flavour complexity - Floral/fruit 

Eg: Ethiopia, Kenya, Central American, Guatemala, Peruvian, Colombian .

Examples of high-density cultivars (often high-altitude adapted) include
Typica
Bourbon
SL28 / SL34 (Kenya)
Geisha

C. Medium (900m–1200m [3,000–4,000 ft])
More acidic than lower elevation coffees.
More nuttiness.
Such beans offer a balanced, easy-drinking profile that acts as a bridge between low-altitude earthy flavors and high-altitude bright acidity. 
This elevation range is highly regarded for producing balanced, dense beans, particularly in South America and parts of Asia.

Regions:
India: mostly in the southern states of Karnataka, Kerala, and Tamil Nadu. High-density shade-grown methods often cause beans to mature slowly, mimicking higher elevation profiles.
Brazil (Alta Mogiana Region): Red Catuai varieties from this area are commonly grown at 900–1200 meters, known for natural fermentation processes that produce notes of chocolate, almonds, and hazelnut.
Vietnam (Son La Province): Arabica trees grown in this northwest region at 900m–1200m thrive due to cold, rainy conditions.
Jamacia: Authentic Jamaica Blue Mountain (JBM) coffee is grown at high altitudes between 3,000 and 5,500 feet (900 to 1,700 metres) above sea level in the Blue Mountains. This specific, misty, and steep environment creates a slow maturation process—up to 10 months—which results in a mild, sweet, and complex flavor profile.

Other Examples: Mexico (Altura), Costa Rica, Java, and Sumatra often produce coffee in this range, delivering nutty, creamy, or earthy profiles.

D. Low Altitude (below 900m - [3000ft]):
Warmer temperatures - faster-growing - less dense.
lower acidity, earthy flavors,
These coffees are often described as having  and a more simple, soft profile compared to high-altitude beans.
Robusta coffees grow abundantly at 600-2,500 feet elevation. 
Unlike Arabica plants, Robusta can handle higher temperatures and pests. 
However, the coffee tastes harsher and more bitter. 

Examples include: 
Brazil: Much of Brazil's high-volume, lower-altitude coffee is popular for its balanced and nutty profile.
(while most Brazilians may be soft beans, some are as dense as Ethiopians).
Santos : (Sao Paulo/Minas Gerais, Brazil). Often grown around 900m or slightly below, typically sweet and smooth.
Hawaiian (Kona): (Arabica), grown between 600-3,200 feet elevation has unique growing conditions, 
with coffee planted along volcanic slopes.
Liberica: A species that grows in hot and wet conditions, commonly found in low-altitude regions of Southeast Asia.
Vietnam: A major producer of Robusta, which often grows in warm, humid conditions below 900m.
Sumatra/Indonesia: Known for wet-hulled robusta that provides an earthy, intense, and low-acid experience.
Jamacia: (not to be confused with J Blue Mountain)
Jamaica High Mountain: 1,500 to 3,000 feet (460m–910m).
Jamaica Supreme/Low Mountain: Below 1,500 feet (460m).

Lower-density cultivars / hybrids
Catuaí
Caturra
Castillo
Catimor hybrids

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4. Processing Method


Even within the same cultivar:
Washed coffees → cleaner, more predictable → tolerate higher initial heat
Natural / honey processed → more sugars → need gentler heat ramps to avoid scorching
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Washed (or wet-processed) coffee is generally the easiest to roast for beginners because the beans are clean of fruit pulp, resulting in a more uniform, predictable, and less smoky roasting process. Their consistent density makes it easier to achieve an even color throughout the batch compared to natural or honey processed coffees, which can scorch easily. 

Why Washed Coffee is Easiest to Roast:
Lower Chaff/Sugar: With pulp removed, there is less sticky chaff and sugar to burn, reducing smoke and uneven development.
Consistency: The drying process is more uniform, which means heat is absorbed evenly by the beans.
Visual Control: Because of their uniformity, it is easier to see the color change and identify the first crack during the roast. 

Key Considerations for Beginners:
Air Roasters/Popcorn Poppers: These provide even heat and better consistency.
Natural Process: While often sweeter, natural processed beans are more porous and irregular, making them prone to faster, less uniform roasting and more smoke.
(I particularly like Costa Rician washed coffees... really uniform )
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🍬 5 . Sugar Content & Chemical Composition

Different cultivars have different sugar levels and precursor compounds, 
which affect how they develop flavor:

High-sugar cultivars (e.g., Gesha, Bourbon):
+ Need careful heat control to avoid burning sugars
+ Often benefit from longer Maillard phase
+ Lower end temps can preserve floral/fruit notes
Lower-sugar cultivars:
+ Reach desired roast level more quickly
+ May need slightly higher end temps to build body

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⏱️ 6. Practical Roast Adjustments by Cultivar Type

Here’s a simplified comparison:


| Cultivar Type                                    | Charge Temp  | Roast Time  | Heat Application            |
| ----------------------------------                | -----------         | ----------         | --------------------------- |
| High-density Arabica (e.g., Gesha)  | Higher            | Longer         | Strong early, gradual taper |
| Classic Arabica (Typica/Bourbon)   | Medium-high  | Medium        | Balanced curve              |
| Low-density / Robusta                     | Lower             | Shorter         | Gentle, careful heat        |

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🎯 Key Takeaways
There’s no universal temperature/time for a cultivar.
Roasters adjust based on how the bean responds, not just its name.
The biggest drivers are:
Density (altitude-related)
Sugar content
Processing method


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Below are example roast curves for three distinct profiles:
1. a high-density Gesha coffee, 
2. a classic Bourbon coffee, 
3. a lower-density Robusta coffee.

These assume a drum roaster (like a Probat or Diedrich), batch size ~70–80% capacity.

☕ 1. Gesha (High Density, High Sugar, Delicate)

Target: Light - medium roast (filter/espresso, highlight florals for filter)
+ Charge temp: ~205–210°C (commercial roaster)
   Charge temp: ~195–200°C (Home drum roaster)
+ Turning point: ~1:30 at ~95–100°C
+ Dry end (yellow): 4:30–5:30
+ First crack: 8:30–9:30 at ~196–200°C
+ Drop: 9:45–10:30
+ End temp: ~200–203°C
+ If you want to develop further drop @ 10.00-11.00 (202-205C)

How it behaves:
+ Dense → absorbs heat slowly at first
+ Needs strong early heat, then gentle decline
+ Long Maillard phase = better aromatics
  Gradually reduce heat → extend this phase for complexity.
+ Development phase:
  Very controlled, gentle → avoid muting florals

Key adjustments:
+ Avoid rushing post–first crack (can mute florals)
+ Keep development time short (~10–12%)

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☕ 2. Bourbon (Balanced, Medium Density)

Target: Medium roast (balanced sweetness + body)
+ Charge temp: ~200–205°C
+ Turning point: ~1:30–1:45
+ Dry end: 4:00–4:30
+ First crack: 8:00–9:00
+ Drop: 10:30–11:30
+ End temp: ~205–210°C

How it behaves:
+ More forgiving than Gesha
+ Even heat transfer
+ Sugars caramelize more easily

Key adjustments:
+ Balanced heat curve (not too aggressive early)
+ Development time ~15–18% for body + sweetness

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☕ 3. Robusta (Low Density, High Caffeine, Tougher Structure)

Target: Medium-dark to dark (reduce harshness)
+ Charge temp: ~190–195°C (Commercial roaster)
   Charge temp: ~185–195°C (Home Drum roaster)
+ Turning point: ~1:00–1:30
+ Dry end: 3:30–5:00
+ First crack: 7:00–8:30
+ Drop: 10:00–12:00
+ End temp: ~210–218°C

How it behaves:
+ Lower density → heats quickly
+ Can scorch easily if overheated early
+ Less sugar → needs deeper development

Key adjustments:
+ Gentler initial heat
+ Longer development phase (~20%+)
+ Often pushed closer to second crack for smoothness

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🧠 What’s Really Happening
Gesha: You’re protecting fragile aromatics → precision + restraint
Bourbon: You’re balancing sugar + body → classic curve
Robusta: You’re taming bitterness → deeper, slower finish

Cultivars mainly influence how quickly and evenly heat moves through the bean.

Saturday, 18 October 2025

Timing the Drying phase

 Drying time in coffee roasting—the phase from charge to the yellowing/browning point (typically 100–160°C / 212–320°F)—is determined by the need to evaporate 10–12% moisture from the green beans. This stage usually lasts 4–7 minutes. 

Key factors influencing this duration include:
1. Bean Physical Properties
Density: Denser beans (e.g., high-altitude, strictly hard bean) are harder for heat to penetrate and require more energy and longer drying times.
Moisture Content: Higher moisture content requires a longer drying phase to evaporate water without creating uneven moisture pockets, which can lead to burnt exteriors and raw interiors.
Processing Method: Natural process beans often have higher sugar content and can dry faster, sometimes needing lower initial heat to avoid scorching compared to washed beans. 

2. Roaster Technology and Control
Roaster Type: Fluid-bed (air) roasters often dry faster than drum roasters due to more efficient convective heat transfer.
Batch Size: Larger batches hold more total moisture and have higher thermal mass, requiring more energy and longer time to heat evenly.
Charge Temperature: The initial temperature of the roaster affects how fast the beans turn color. A higher charge temperature generally results in a shorter drying phase, while a lower charge temp extends it.
Airflow Settings: Higher airflow increases the rate of evaporation, speeding up the drying phase. 

3. Environmental and External Factors
Ambient Temperature: A colder roasting environment will increase heat loss from the machine, requiring more time to reach the yellowing point.
Humidity: Higher humidity in the air can slow down the roasting process by making it harder for the beans' moisture to escape. 

Optimal Drying Strategy
Avoid Rushing: Rushing the drying phase can lead to uneven, underdeveloped, or "baked" coffee.
The "Yellowing" Target: A common goal is to reach the yellow/tan color shift around the 5-minute mark.
Aroma Cues: The stage ends when the aroma changes from a grassy/hay-like smell to a sweeter, bread-like aroma.

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Typically I like to see a ROR of about 18-25
It will be higher at the beginning as you are introducing more heat very quickly

Typically the time from "charge" to "dry end" = 50% of the total roast time

Browning = 30%
Development = 20%

These ratios though not exact give you a good idea if your roast is progressing in a timely manner


Thursday, 9 October 2025

Investor Psychology

Market Psychology
Investment markets are driven by more than just fundamentals. 
Investor psychology plays a huge role and helps explain why asset prices go through periodic booms and busts and why share prices can react in extreme ways to events. The key for investors is to be aware of the role of this investor psychology and its influence on them. 

We don't have perfect information. We're making buy, sell, hold decisions around imperfect information about the future. And because there is uncertainty in that, we sometimes get those decisions wrong. 
We as a species are predictably irrational. 

The study of that, of course, is called behavioral finance. 
Investor psychology plays a huge role, but it's often triggered by something positive or negative. 
If you go back to the tech boom of the late 1990s, there was lots of reasons to be optimistic back then. That optimism propelled markets to excessive valuations particularly for tech stocks.

The market got ahead of itself as a result of investors piling in & pushing share markets higher.
Then we went through a severe correction in the early part of the 2000s as investors got in a rush to get out. 

There's a combination of investor psychology traits that drive this. 
One of the big ones is this tendency for investors to project recent strong gains or recent
sell offs into the future. If the current environment has been very positive, with lots of good news, people will assume that will continue. Then they pile into the share market pushing it to extremes. It it starts to feed on itself  and then that eventually sets up a bust. 

So how do we counter this behaviour?
This requires operating in a manner which is contrary to the crowd around you. 
"buy when others are cautious, and sell when others are greedy" to paraphrase Warren b

Warren Buffett is perfectly happy to be contrarian. 
He's got a long-term time horizon. I guess his mental makeup was such that he can resist the crowd, so to speak. 
But for most of us we listen to and act on what those around us are talking about at dinner parties. 
If everyone else is getting in, you want to get in, too.  And likewise, at the bottom, it works in reverse.

You could aim to be a contrarian, but you may not get the timing right.
It's kind of hard to time the top and the bottom.

So what are the theories of investor psychology ? 

These are my favourite papers all of which won Nobels for behavioral finance.

1. Herbert A Simon's 1978 Nobel win for his pioneering research 
    into "the decision-making process within economic organizations”. 

Classical and neoclassical economic theories assume that people are perfectly rational and strive to optimize economic outcomes. Simon argued that human rationality is constrained, not perfect, and that people seek satisfactory rather than ideal outcomes. 

Eg:  you can argue with your kids to clean their the room. 
In theory, the room should be perfectly clean,  but they stop as soon as it looks
less messy and mom won't shout anymore? That's a concept of satisficing.

In theory we should be scouring the stock market for the very best places. But most of us being human don't. We look around until we find the very first thing that looks good enough and then that's what we buy or sell. 

2. Allais Paradox
    French economist Maurice Allais was awarded the Nobel Memorial Prize in 
    Economic Sciences in 1988 for his pioneering contributions to the theory of markets 
    and efficient resource allocation. 
    While he received the prize for his general equilibrium work, he is most famous 
    for the "Allais Paradox," a decision-making puzzle that challenges expected utility theory.

In the case on one of the shares I own (ASX JIN)  which is a software gambling stock
the number of people buying lotto tickets is determined not by the outcome of likely win, but by simply the prize money on offer. Those that offer bigger prize money with worse odds have more participants than those with a greater expected value but have smaller winnings. 
This is completely irrational.

3. Daniel Kahneman 2002 Nobel prize
   Daniel Kahneman was awarded the 2002 Nobel Memorial Prize in Economic Sciences
   for pioneering the field of behavioral economics, specifically for his groundbreaking 
   work on decision-making under uncertainty. 
   He developed this research in deep, decades-long collaboration with 
   cognitive psychologist Amos Tversky.

They talked about an S-shaped preference curve. 
The idea here is that we treat wins and losses asymmetrically.
It explains phenomena like "loss aversion," where the psychological pain of a loss feels roughly twice as strong as the joy of an equivalent gain.

This partly explains bubble behavior.
As the market goes up, we become less and less risk averse about the fact that it
could crash, which is exactly the wrong thing to do.

Kahneman & Tverky showed, what matters is not did we win $10. It's how much did we think we had before we made that gamble. 
The more wins we have, the less we value future wins. 


4. Fallacies & Bias
    Keep at the back of your mind the concept of 
    a) narrative fallacy, 
    b) confirmation bias 
    c) endowment bias.

  a) Narrative Fallacy
      This is the idea that we as humans really want to assign a story and 
      a reason to things that happen even if they're random. 
      Want to assign stories to random events which then can have the risk of 
      becoming self-fulfilling. So a great example is a company may have no 
      news on it. Its share price rises two or three days in a row. Now that's just 
      standard probability. You know, flip a coin three times, 
      you can get three heads in a row. And yet very quickly within the market, there
     will be article after article writing about why the share price has risen and 
     why that is an indicator that this company is actually really good, 
      which feeds further share price rises because more buyers come 
      in the market. And the story takes on a life of its own. 
     We get caught up in that that sort of behavior of crowds, but it's one you can 
     really easily solve. All you ever need to do to avoid falling into the narrative 
     fallacy go and look at the underlying data and ask, is it true? 
    Is there any evidence from the company itself that that's occurred?
     A simple sense check will often save you. 

b) Confirmation Bias 
     That's that idea that if we hear a piece of information that confirms what 
     we already believe, we treat it as true. And if it disagrees with us, we think 
    it's wrong. 
    You see this in politics all the time. 
    Trump can say something and people who are on Donald Trump's 
    side hear it as confirmation and those of us with perhaps a slightly more 
     cynical view of Trump here it is negative .
    Again you can stop yourself falling into that trap by just being aware of it 
    & looking up the facts.

c) Endowment Bias (existing ownership).
    We as humans immediately value something more just because we own it.
    So once you've made a decision to own something, whether it's a stock, 
    a house, a car, a managed fund, be conscious of the fact that you will 
    prescribe more value to that asset than you ever did before you owned it. 


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So how do we acknowledge this irrationally and rationally evaluate the market?

Puts vs Calls are one method.
What's the ratio of puts versus call options looking at? 
Because if you've got a a low level of puts but lots of calls then maybe um that 
could be a sign of uh excessive optimism and so on.

Use the principles of value investors... ROE, PE ratios, earnings growth, chart analysis, .....the methods available are endless.

I think important to go beyond just understanding market psychology. 
& to understand your own psychology.
At the end of the day you are managing your own money

Tuesday, 7 October 2025

ROIC vs WACC - Return on capital vs Cost of capital

 A good Return on Invested Capital (ROIC) generally exceeds a company's Weighted Average Cost of Capital (WACC), meaning it generates more wealth than it costs to fund the business. As a rule of thumb, an ROIC above 10% is considered solid, while anything 15% or higher usually signals a strong competitive advantage. 
Understanding what makes a "good" ROIC comes down to a few key factors:
1. The Golden Rule: ROIC > WACC
The absolute number matters less than the spread between your ROIC and your cost of capital (WACC). 
  • Value Creation: If your ROIC is 15% and your WACC is 8%, the business is highly efficient and creating value.
  • Value Destruction: If your ROIC is 5% and your funding costs are 7%, the business is destroying wealth.
2. Industry Norms
Capital requirements vary heavily by industry, altering the baseline for a good ROIC: [1, 2]
  • Asset-Light Industries (e.g., Software, Consulting): These require little physical capital. Investors typically expect an ROIC of 20% to 30%+. [1, 2]
  • Capital-Intensive Industries (e.g., Manufacturing, Utilities): These require heavy upfront investments in equipment and plants. A solid ROIC here is typically 7% to 12%. [1, 2]
3. Consistency Over Time
A single year of high ROIC doesn't reveal much. Look for companies that have sustained a strong ROIC over a 5 to 10-year period. A consistent or growing ROIC over time highlights strong management and durable business moats.

Wednesday, 1 October 2025

A brief history of Australian house prices

 Australian house prices have increased roughly 160% in real terms since 1980, growing at a 2.1% compound annual rate. Research by Macquarie University and Macquarie Bank highlights that growth wasn't continuous, but concentrated in two major surges: 
1981–2000: Flat Growth
Prices trended mostly sideways as high interest rates and stable market conditions balanced out the market. [1]
2000–2003: The First Boom
Real prices jumped approximately 45%, spurred by the introduction of the 50% Capital Gains Tax (CGT) discount in 1999. 
2004–2012: Stability and GFC
Following a tightening of credit and the 2008 Global Financial Crisis, prices once again moved mostly sideways with minor cyclical fluctuations. 
2012–2022: The Secular Stagnation Boom
Prices surged 55% during this decade due to historically low cash rates and high demand. A brief stalling period occurred around 2018 due to tighter lending standards from the Banking Royal Commission. 
Future Outlook
Macquarie strategists caution that if prices merely track long-term inflation, future capital growth may be much slower than in recent decades. 
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Take home :
For two-thirds of the last 40 years, prices trended sideways, with most of the gains occurring in two short bursts.”
Those bursts came between 2000 and 2003, following the introduction of the capital gains tax discount, and again from 2012 to 2022, driven partly by historically low interest rates.