Why You Should Invest in Property

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The GFC, record levels of world debt and smashed major commodity prices have all greatly impacted on how we invest our money; what worked 30, 20 or even 10 years ago probably won’t give the same results in today’s economic conditions. Today’s digital era and globalisation has brought about new ways of thinking and investing, however, we’ll always need somewhere to live. And this is why many investors still look to bricks and mortar for investment opportunities.

Although there are times when the market is slow, ultimately, property values have been increasing for nearly two centuries now – and they’re not showing any signs of stopping! Here are just a few more reasons why people continue to invest in property.

Supply and demand
The Australian Bureau of Statistics predicts both Melbourne and Sydney populations will double to approximately eight million people each by the middle of this century. However according to the Housing Industry Association, properties aren’t been built fast enough to keep up with the current demand.

In many parts of Australia there is actually an undersupply of housing, and while there may be some dips in the market, generally the value of houses go up. That said there are some areas of oversupply such as in CBDs, and here the property prices might be inflated.

The price is right
Even in areas of oversupply, the astute property investor will always pick up a bargain. People have different reasons for selling, and sometimes even similar properties in the same block of units can sell at vastly different prices.

Staying in control
Unlike other investment opportunities which are controlled by market forces, property investment is asset-based. Furthermore, you can add to this asset by renovating and developing.

Lenders want investors
Although the Australian Prudential Regulatory Authority (APRA) has restricted the banks’ lending to investors, and they are now requesting bigger deposits in response to a 10 per cent a year cap on their loan growth, less regulated non-banks have no cap.

It’s worth noting too that banks actually need the property market to survive; much of their profit comes from residential property lending. Indeed, Australia’s residential property is worth more than $6 trillion according to CoreLogic RP Data.

Essential to government
One Gratten Institute report has highlighted property is potentially a very large tax base for government at all levels. Worth $8.3 trillion in June 2014, governments are not about to let anything drastic happen to this valuable source of revenue.

Australia’s inflation rate is relatively under control and with most banks setting their five-year fixed interest rates at under five per cent, it looks as if interest rates are going to remain low for some time.

So plan, research and take control of your financial future; we’ve been in business for over 40 years now, and still believe bricks and mortar are an outstanding investment!

Vacancy Graph

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