Property investment – Is investing a gamble?
For many investors, starting the journey of money making is a nerve-wracking process. The global market has an endless supply of new projects, markets and shares that can be invested in but how do you know whether it is going to stay stable and return finances to you? Is investing a gamble? Would property be the safest way to invest?
By looking at the history of a market you will see patterns and properties that show whether or not it will be worth it for you in the long run.
So, Is investing a gamble? How do I know if my chosen investment is a good investment?
Good investments will typically have two features.
1. A high capital growth.
2. A secure income, indexed for inflation.
While these properties are hard to control or predict when first buying an investment, it should be noted that over decades, property has maintained both these attributes.
Property in Australia has maintained a capital growth of 10% or higher per year consistently. It has also managed to stay 2-3 percent above inflation.
If one wants to invest wisely, property investing is a good place to start!
Buying in an area that is currently increasing in population, has adequate public transport and isn’t isolated from central business districts will ensure capital growth is consistent.
Capital growth has been maintained in property for many reasons. Supply and demand has ensured that over the time the Australian property market’s capital growth has maintained well above inflation as our growing population increases housing demand.
While the ‘Great Australian dream’ to own your own detatched home on a fenced block of land is still alive, for many reasons, the rental market is growing fast, giving a great opportunity for investors to profit through property.
New couples and new families are the largest market for rental properties in the country. Currently, there is more demand for rentals than there is supply. An investment property with features targeted to the typical lifestyle and affordability of a small family or working couple (e.g. 2-3 bedroom, small yard, convenient location near public transport, shops and schools) will ensure capital growth.
Not only will the house sell for profit, if you’re renting it out, the mortgage will pay itself!
Even though Australia certainly doesn’t have a lack of land, population density and urban sprawl is becoming a big issue in major cities and coastal areas. We are already seeing a huge increase in property costs in locations close to major cities because of housing demand and a lack of land.
In Sydney housing prices have increased by around 17% in the last 15 years, while surprisingly, Sydney is experiencing the smallest property boom in the country it is still growing at a healthy rate; particularly the cities outer western suburbs.
Australia’s property prices have increased consistently for more than two decades.
Government incentives such as The First Home Owners Grant and property releases are seeing more and more new homes built – tailored for small families and working couples – and the urban lifestyle is becoming increasingly popular.
The market doesn’t look to be slowing and current interest rates favour investors and existing home owners.
All these factors make property investment a great method for increased wealth. It almost doesn’t seem a gamble!
Article by James Parnwell & Jordan Cox
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