Why invest in Australian Real Estate?

The housing industry in Darwin has taken some big knocks in the last 3 years, but Australia wide it is still the most robust investment option for the smart investor.

Here are some reasons why –

1. “Safe as Houses”

This old adage is well known, because it’s TRUE. Rismark Data clearly indicates that since 1926, the Australian property market has increased at an average rate comparable to the stock market, averaging 11.4% per annum. Despite succession of recessions, crisis and conflict. It has also achieved this with relatively low volatility, making it a safer investment over time. Property however is a long-term investment, settlements, marketing schedules, access all play a part on how successful your investment performs.

2. It is relatively easy to get access to property and property data. Unlike the share market whereby specialisation on types and performance of stocks is a must, you don’t need specialised knowledge to succeed in real estate.

Most investors in Australia, became investors through the property ladder, first buying their residential dwelling then using the equity to purchase more properties. The market can be determined as easily as attending several open homes in a particular area or suburb over a weekend.

3. It is relatively easy to attain finance.

Unlike attaining investment for shares or business, the risk in property and property developments is relatively low. Home loans are therefore a major part of the Banking systems business model. The amount of defaults on property is relatively small compared to credit card, and or other loan debt and therefore a higher proportion of lending (sometimes upto 100%) is lent against the asset.

4. Lending rates are at 50 year lows.

Home loan and investment property rates are substantially lower than private, share and personal loan rates.

5. You can leverage your property and use the equity

Borrowing to invest in property also means you get greater access one of the oldest and most powerful abilities in the finance: leverage.

Lenders will lend up to 100% of the value of the property, whereas they may only lend up to 50 or 60% of the value of a share portfolio. This greater borrowing power allows you to benefit from the capital growth of a larger asset.

Greater borrowing capability means greater opportunity to invest and generally leads to greater returns.

6. You have Greater control

If you invest in the share-market, you typically need to hire a broker to handle your trades for you, and the value of any shareholding is reliant on market conditions and the actions of the people running that company –introducing an element of uncertainty.

This is much less the case in property: once you’ve settled, you directly own the asset and you have complete control over it (assuming you can keep up the mortgage repayments). That’s a hugely powerful thing, as it means that you can influence both asset worth (by adding value) and cash flow (eg. by raising the rent) directly.

7. BUYING OFF-THE-PLAN

If you have ever seen a great-looking image of a property and an even better price, it is probably an off-the-plan sale. Buying off-the-plan means entering into a legally binding contract to purchase a property prior to it reaching the approval of occupancy. You are making a promise that as a seller, you will complete the development in accordance with agreed upon terms.

Buying off-the-plan can provide significant financial benefits for buyers. In Australia, buyers can enjoy tax depreciation benefits, government incentives and a NEW property without paying a market premium.

First home buyers in several states and Territories around Australia enjoy exemptions and concessions of stamp-duty for properties purchased off-the-plan. In some cases they can also enjoy government grants.

Before you make your next property purchase it is best to compare rates from all the lenders.

#EconomicPlanning #Realestate