When is a good time to Invest in Property?

I heard an enlightening anecdote over the weekend that I want to share with you :

A herd of elephants meandering through the plains in search of their next feed are enjoying the sun on their backs and the company of the herd. The male bulls are leading, the baby elephants in the middle and their mothers at the back of the herd all with no worries in the world.

A short while later a baby elephant became startled by an unusual noise and sets off a small panic throughout the herd. It turned out to be an approaching helicopter and within 3 minutes the helicopter had passed and the panic was over and the herd continued their stroll happily towards their next feed.

It turns out that the reason the panic was over so quickly was because there were no media present!

_____________________________

The reason I am sharing this with you is simple … the role of a journalist is to fill up space between the ad’s. Sensationalise and create hype! Bad news sells media!

Recent headlines : “Property bubble will burst!”, “Property overvalued”, “Property devalued by 6%”

These headlines are written as if one is buying a property today and selling it off tomorrow; however both you and I know that property is a medium to long term investment vehicle and like any other investment vehicle goes through cycles. There are always peaks and troughs in any investment vehicle! It is how to avoid the pitfalls, that is important to your investment strategy, we are sure you would agree?

Will the media moguls be putting up their hands and dipping into their own pockets offering you financial reward when you are unable to retire or unable to meet your own financial goals … because you chose to literally take on board what they have elected to deliberately share with you?

Actual Facts are :

  • There is no bubble. Yes some of the froth has settled after a rather unusual and unexpected run on property prices over the last 2 years. Did you know that :
    • Some suburbs have declined in housing prices
    • Whilst some continue to strengthen
  • There continues to be a drastic under supply of ‘inner suburb’ properties to meet the incredibly high demand
    • Predicted @ over 200 000 properties too few in Australia today
  • Rental income continues to escalate more
  • Lack of Affordability to purchase in the inner suburbs has lead to high demand for rental properties in these very suburbs most people cannot afford to purchase in
  • Property is by no means a short term investment!

 

FROM THE CEO

21 April 2011  MarketWrap with John Edwards, CEO of Residex

The market is moving to the position we foreshadowed many months ago and predicted as many as three plus years ago. That is, growth is slowing and rentals are again on the rise. This is as it should be, and in fact presents us with lower risk levels moving forward as the increases in rent rates will help to cover off interest rate rises when and if they occur.

Affordability is moderating our markets growth rate. There is much publicity about negative median numbers even though they are very small. An even bigger problem is that there are those who are clouding issues by aggregating all property types into one mix. This has two important impacts – it fails to allow us to see if the adjustment is uniform across markets and it presents a false impression about affordability. The overall value of a significant part of the market is overstated (the medium density market) and discourages uninformed people in entering the market and understates the house and land market.

Pricing of property (not in all suburbs) has slowed to normal levels yet rental incomes on these properties being charged are achieving record levels and continue to escalate. more

If you are paying Income Tax, have equity in your current property and have Financial Goals to attain a certain standard of living or being able to Retire with a secure realistic ongoing income … then a slowing down in the growth of property values DOES NOT affect you unless you choose to do nothing!

Property as stated is a medium to long term investment vehicle with a very low risk profile giving you returns that could help you achieve your own financial planning objectives.

The only dilemma you have is :

a.    Continue to adopt a wait and see attitude (by the way the media certainly have not shared the horror stories of the previous wait and see non-investors who are crying and now simply cannot afford to get into the market)

Or

b.    Use existing equity you have and acquire Investment Property

 

Did you know that if you want to get into the market at today’s prices but are not ready to do so now; we can show you how to secure a property today that will be ready for you in your chosen time frame!

Reasons why our clients and other investors are securing investment property today:

a.    Minimise personal income tax they are currently paying using Negative Gearing more

b.    To help achieve Retirement Planning goals more

c.    Secure a lifestyle in a chosen time frame more

d.    Have choice to not work their whole lives (unlike their parents)

e.    Helping their children acquire a property at today’s value so that when the children leave home they will already be in the property market

f.     Because they do not trust the stock market to help them achieve financial freedom

g.    Acquiring property in a Self Managed Super Fund more

h.    Renting where they wish to live, but investing where they can afford to invest

 

 

1 comment

  1. Anne Warren

    Nice blog post and totally agree with your comments on the role of media. As you say, property is a long term investment and the shortage of rental properties is an issue which needs urgent attention.

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