Investing In Property, Investing In Real Estate Investing Australia

Property investment - advantages: on average, Australian residential property has maintained an annual long-term growth rate of more than 10% and residential property has doubled in value on average every seven years - Sydney , Melbourne, Brisbane, Adelaide, Perth, Darwin, Hobart, Canberra - real estate Australia

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Advantages Of Property Investment

On average, Australian residential property has maintained an annual long-term growth rate of more than 10% and residential property has doubled in value on average every seven years. However, the recent Australian property boom, which sent real estate prices skyrocketing in 2000-2002 resulted in much stronger than average property value growth

A less volatile investment

While returns from property can vary significantly, on average, shares have historically generated greater investment returns for investors. However, due to the greater volatility of the stock market, share prices can fluctuate by as much as 5% on any given day.

Therefore, you run higher risk of loosing your money by investing in shares, particularly in short term. But, over the long-term shares tend to perform better than other investment classes.

The greater popularity of investment property over shares is partly due to its low volatility. Property investors are unlikely to experience the roller coaster ride of share investors through the sudden peaks and troughs of the stock market. With investors owning around one-third of Australia’s property, during a downturn in the property market we don’t witness the mass sell-offs that can accompany a decline in the stock market. This contributes to the relative stability of the property market.

Returns also tend to be more constant from property compared to shares because of rental yields. The antidote for fluctuating markets is time. In order to level out market risk, the recommended investment time frame for both asset classes is seven to ten years – and a minimum of five.

Long Term Benefits

Given the “boom and bust” character of real estate, a long-term investment strategy is important when considering and investment is this type of asset. This is particularly important as the initial costs involved are considerable higher than for other asset classes.

In some years the median price of your property could grow by as much as 50% - 75 % or more depending of the location. However, in other years the growth rate might be zero or may even go backwards!

Property experts advise that, if you buy quality property in right location at a realistic price, it is possible to ride the highs and the lows of property by adopting a long-term strategy.

Investment property can also be a tax effective investment and can be expected to beat the ravages of inflation over the long term. On average, over the past 50 years, Australian median prices have risen at about 2% above inflation.