Long Property

If you’re pessimistic on the Australian property market (all of it), then you really have two options…

1. Don’t buy anything; OR
2. Take solace in the fact that if you buy well, finance sensibly, and things don’t work out, then:

• it would be the first time in several decades these strategies work against you; and
• it’s unlikely anything else you could have or should have done with your money would have worked out much better.  For example if disaster strikes, then the share market isn’t likely to perform much better than the property market.  Your own business maybe?  A lot of new businesses fail, and you could quite easily lose everything, so that’s still a very risky proposition too…

So there’s an argument around enthusiastically following a sensible investment path, or unenthusiastically following one anyway.

You’ll either do well (more likely in my opinion), or you’ll be extremely unlucky (less likely in my opinion), in which you’d be hard pressed being too disappointed with yourself.

Consider making educated investment decisions, and utilising property as a relatively low-risk long term vehicle for wealth creation.

Over the past 30 years, the value of well located residential properties in Melbourne, Sydney, Brisbane, Adelaide and Perth have each increased consistently at around 7% p.a. [1]

This strong performance is despite the following events which have all worked against the market:

• 1987 – stock market crash
• 1989-1990 – “recession we had to have”
• 1991 – unemployment at 11.3%
• Mid 1990’s – World economic slowdown and Asian currency crisis
• 2000 – 2010 – introduction of GST, September 11, oversupply of investment properties in the inner city areas
• 2008-2009 – Global Financial Crisis
• 2011-2012 – Economic troubles in the US and Europe
• 2016 – China slowing and falling commodity prices
• 2017 – Banks tightening policies, restricting lending to property investors and reducing exposure to interest only loans

In my post last month I also provided 6 reasons why the the long term outlook for well located residential property in Australia is positive.

It’s easy finding ways to procrastinate and use excuses like the above to justify inaction.

But by buying the right kinds of properties, financing them correctly, and adding value to them, thousands of Australians have still done very well from their investments, irrespective of their market timing.

What’s more important in my opinion than timing the market is buying well when the time is right for ‘you’…

Does this line of reasoning resonate with you at all?

[1] Michael Yardney, How to grow a million dollar property portfolio in your spare time