Real estate cannot be lost or stolen, nor can it be carried away….it is about the safest investment in the world.” – Franklin D. Roosevelt
As one of the oldest forms of investment, it is safe to say that property investing has a long history. Although a misconception of risk and unaffordability has potential investors uncertain about why they should invest in the property market. Let me take you through statistics and give you an insight into why you should start or continue to invest in property.
According to CoreLogic, between the years 1993 and 2018, house and unit values grew 412% and 316% respectively. Since then, property in Australia has grown a further 67.28%. Where to from here? An analysis of the property cycle exposed in Gavin Chau’s “The most important lesson to learn as a property investor”, reveals that the property market is reasonably consistent and predictable. Developing an understanding of this cycle provides some insight into the price movements of the market and gives purchasers a sense of comfort as to where their investment is going.
History has proven that the property market is less susceptible to crashes when compared to other investments such as shares. According to Tradingeconomics.com, in March 2020, the ASX crashed by 37% due to coronavirus fears before recovering. In contrast, the property market really didn’t dip much at all and went on to make all-time highs.
The consistent growth of Australian property and its repetitive cycle is what makes it one of the safest and most superlative investments for any investor, but what about the price?
Owning your own property investment may seem unattainable in the current market conditions. With median housing prices reaching all-time highs, a misconception of unaffordability has sparked fears amongst investors, drawing them away from the property market. With the average mortgage size increasing at 6.4% per year, compared to the average salary increase recorded q2 of 2021 only being 1.5% according to Money Quest, now may be the best time to break into the property market.
As borders reopen, demand for high-density housing in capital cities is set to increase due to the return of international students. In October 2019, the number of international student enrolments was 917,793 in Australia. Across some of Australia’s major capital cities such as Melbourne and Brisbane, 1–2-bedroom apartments can be purchased between $400,000 and $600,000.
The tax benefits of owning an investment property (negative gearing), can allow you to hold property and have the rent and deductions cover your expenses. This allows investors to be able to afford an investment property, without having to compromise their lifestyle.
Australia’s projected population growth remains robust compared to other industrialised Western nations which will underpin property demand. Whether you’re looking to expand your property portfolio or take the first step into buying your own investment property, there may never be a better time than now.