Asking the right questions

Posted by Jack Guthrie

The below headlines have come from a short internet search on ‘Australian property market’. They’re exactly the kind of thing that, having come from an infinite number of ‘experts’, cause confusion and promote negative sentiment, especially for potential first-time investors.

Good	Bad	What?
‘Melbourne’s Southwest is the best for home price growth’ – new.com.au	‘Melbourne Property Prices could drop 3 per cent’ – new.com.au	‘Are Melbourne’s outer suburbs destined to become ghettos?’- Queensland Country Life
‘The future is mostly bright for Melbourne’s Property Market’ – Herald sun	‘From boom to gloom: how rising house prices have become a worry’ – The Sydney Morning Herald	‘No highway leads to boom’- Coffs Coast Advocate

Many first-time buyers come to us with a huge range of questions prompted by conflicting and often confusing opinions. Understandably, they believe they are doing the right thing by trying to inform themselves. Instead this experience, which should have been exciting and fulfilling, has left a sour taste in their mouth.

Entering the property market can feel like a hazardous experience without the right guidance. After years of helping hundreds of property investors, we have found that the two main questions people tend to have are:

What type of asset should I buy?

Different people have different opinions, but we love all property asset types, from apartments to house and land packages, high density or boutique projects. There is no short answer as different asset classes offer different strengths:

Costs: body corporate fees represent high ongoing costs when it comes to the upkeep of an apartment

Tax benefits: tax shelters and benefits are higher for an apartment compared to a house and land package.

Purchase price: houses are generally more expensive, which can occasionally ruin the feasibility of a project for an investor that can’t afford a substantial capital outlay

Yields: yields represent the rental income of a property as a ratio of its overall value. This is on average higher for apartments, although they tend to vary depending on the market.

Price Growth: Long term growth of both classes represents high correlation. With growth in both apartment and house and land dwellings being closely linked. Houses tend to have more aggressive extremes in troughs and peaks of growth.

Where is the best place to invest?

In short, the view that there is a succinct amount of locations worthy of your investment is narrow one that could limit future opportunity. Capital city markets move in their own reactive, cyclical booms and corrections. This means that there are regularly new prospective markets to capitalise on. For more information on how these markets have performed over the last four decades click here.

It’s important to have all the information you need before making an investment decision, and asking questions is never a bad thing. That’s why Blue Wealth is here, to help you wade through all the noise and make a decision that will give you more choice, now and in the future.

Posted by Jack Guthrie, on 14th Nov 2017