Investor

AUSTRALIAN PROPERTY: ‘SAFE AS HOUSES’ FOR PROPERTY INVESTORS

Property is a great investment because you make all the decisions and have direct control over where, when & what you buy.

It is a tangible investment that you can see and touch and decide whether you rent it out or live in it yourself, keep it or sell it.

Being a property investor offers leverage, as you can purchase a property with 5-10% deposit & borrow the remainder, and when the property increases in value, you get 100% of the growth. So if a $500,000 property increases in value by 5% in a year, that’s a $25,000 return. Over 10 years that’s $250,000.

Property:

  • offers predictable cash flow;
  • it appreciates in value, thus keeping up with inflation;
  • it provides a higher return because of positive leverage;
  • and it offers equity growth through debt reduction, ie: by making additional payments on the mortgage.

Unlike the share markets where there are complicated terminologies you need to get your head around, real estate is relatively simple. You know what a house, unit or an apartment is and though there is a deal of research, finance & paperwork involved, as a property investor this can be made easier with help from experts like us.

Blaq Property | Off-the-Plan Specialists | 8 Step Guide
Get your Free Copy of our 8 STEP Off-The-Plan Property Buyers Guide for detail on the key criteria in choosing the right developer and land estate.

As an investment, the property market is far less volatile than the share market, especially in uncertain economic times.  In the last decade, there have been 12 corrections of 10% or more in the Australian stock market whereas well-located properties have seen their value double in that time.

The housing market has shown some extraordinary changes over the past twenty five years, with conditions moving through five distinct growth cycles which have pushed national median house values 412% higher. Each of the capital cities have recorded annual growth in house values ranging from 5.9% to 8.1% over the past 25 years.

Over the same period, the ASX All Ordinaries index had risen by a substantially lower 261%.

Australian property has been through local & world events of:

  • Recession
  • GFC
  • Share Market Crashes
  • Major Company closures
  • Wars & Trade Wars
  • High Unemployment
  • High-Interest Rates
  • Banking Royal Commission
  • Threat of Negative Gearing benefits ceasing
  • Drought
  • Bush Fires
  • SARS, Swine Flu and now Coronavirus…

But historically, these types of events have not led to long-term declines in the property market.

Property Investor | Blaq Property | Off-the-Plan Specialists

SOURCE: Core Logic & Aussie Home Loans

During the Spanish Influenza in 1919, 15,000 people died in Australia. The property market also increased by more than 10% each year until 1921.

One thing that is certain is that housing markets will continue to move through their cycles, with periods of growth, decline and steady values conditions. Though as history has shown, over time, these cycles tend to smooth out the year to year volatility in growth rates.

Therefore as long as your property investment strategy is a longer term one, your property value will continue to rise. Note also, that the price drops most people fear are NOT real losses until you actually sell the property. If the property was purchased correctly and generates a healthy cash flow, the investment can be sustained until the price gets back up again.

And buying residential property offers very little risk as the continuing demand for housing, fuelled by strong population growth, ensures property prices are supported in general. There is also very little risk for you to overpay or buy a dud property as Australia has a very reliable Valuation system that ensures correct market value is paid.

Love Statistics & Data?

Email admin@blaqproperty.com.au with Subject Line: Send me 25 Years of Housing Trends and we’ll send the information through.

Another great benefit as a property investor is that you can claim a range of tax-deductible expenses through your investment property, which will help reduce your tax bills and improve your cash flow. A good accountant can help you legally cut your tax expenses by the tens of thousands of dollars, through your investment property.

All the while, having your tenants pay down your mortgage while you sit and watch your investment grow in value.

Property with strong cash flow can ride uncertain times, such as during a recession, for the simple reason that it meets a basic need-housing. People will always need a place to live, even during difficult times. They would do everything just to have a roof over their heads & would eat grass rather than lose their home. They are prepared to forgo luxuries & other necessities just to have enough money to pay for their rent or mortgage.

Property can make you rich! Real estate makes more billionaires than any other asset classes. In the recent Forbes Billionaire’s List, it reported that a total of 135 property tycoons now make up the world’s wealthiest list with 14 property billionaires joining the ranks this year alone, boosted by surging property values around the world.

Land appreciates over time, so even if all you can afford is a regional or outer suburb house – it could be a wise choice, provided you have assessed the supply and demand and local economic factors for growth. And contrary to popular belief, demand for highly-desirable, high-end suburbs is not as high as the more “meat-and-potatoes” type suburbs.

WHEN IS A GOOD TIME TO BUY?

Here’s one of the little known truths about investing: If you have a long-term strategy in place, timing has little impact.

It’s time in the market, not timing the market that matters.

Those who put off investing because they want to wait till the market ‘bottoms out’, are not likely to be able to identify when the market does hit the bottom. Even the experts are not able to perfectly predict where the market is going to go.

When is a Good Time to Buy | Blaq Property | Off-the-Plan Specialists

SHOULD I BUY NOW?

Yes! Here’s why…

• Interest rates are at a historic low and likely to drop further. On Thursday 19th March 2020, amidst the Covid-19 outbreak, the Reserve Bank of Australia announced it’s lowest ever cash rate of 0.25%. The board said that they will not increase the cash rate target until progress is being made towards full employment, and remains confident that inflation will be within the 2–3% target, which may be quite a while coming…
• Australia’s population continues to grow, increasing demand for property – 370,000 new residents per annum need to live somewhere! (As at 30 September 2019, 37.5% of annual growth was due to natural increase, and 62.5% was due to net overseas migration.)

• Sluggish building approvals point to supply shortages in the near future. The risk is that housing demand will start to track above new supply which will push vacancy rates down and put upward pressure on home prices. We need more people to buy off-the-plan property to meet DEMAND and to keep our construction industry booming!

• Better negotiating power – buying in times when others are holding back can put you in a bargaining position. Builders & Developers will offer price discounts and free upgrades that can amount to many thousands of dollars.

• The volatile share market will likely see more investors turn to property

• The government’s new FHLDS scheme means there are thousands of first home buyers rushing to market which will increase demand for housing and support property values see our first home buyers page.

Ready to find out if it’s the right time for you?

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