Ever heard the phrase “safe as houses” and wondered it came from? Well wonder no more. Research recently undertaken by AMP indicated that the value of Australian property has increased at a rate comparable to that of the share market since 1926 – an average of 11.4% per annum. So, despite a succession of wars, disasters, recessions and crises real estate as an investment choice has been relatively safe (“as houses” – see what I’ve done there?!).
So why is real estate such a worthwhile investment and does it pose any risks? Real estate expert and Director of Position Property, Richard Lawrence shares his views on real estate as an investment option.
If you look at growth statistics it appears real estate overall is a solid investment – why do you think that is?
Real estate is a great investment for many reasons. You can enjoy an excellent rate of returns, great tax advantages, plus you can leverage real estate to build your wealth. Overall I think people like the fact that unlike shares and stocks, real estate is tangible – something they can see and touch. And I guess at the end of the day, so long as people live in houses, units & apartments, property will always be a solid investment choice.
What benefits can be derived from owning real estate as investment?
The five main benefits we see arising from the ownership of real estate are:
1) Real Estate provides great returns with limited volatility.
2) Owning real estate gives you more control of your investment. As such you cancapitalise on numerous revenue streams, while enjoying capital appreciation.
3) Real estate is a good way to of diversify your investment portfolio to spread out risk.
4) You can use the equity you build up in your real estate investment to fund other wealth building opportunities.
5) There is an investment for every budget. The too-often-made assertion that Australian property is unaffordable is simply untrue. Whilst you may not be able to afford an apartment in the middle of Sydney, middle-ring suburbs, regional towns and cities, or cheaper capitals (Adelaide and Hobart, for example) can all offer affordable entry points.
What should people look for when investing in real estate?
When you make thedecision to invest in real estate it is imperative you spend the time undertaking research. Ideally you want to find an area with excellent potential for capital growth and with good surrounding infrastructure. People are attracted to amenities – hospitals, roads, schools and airports can really boost values in suburbs.
Are there any challenges associated with buying real estate as an investment?
Of course with any investment there are associated risks and challenges however I think the benefits of real estate investment far outweigh the risk. So long as you complete due diligence, seek expert advice and be realistic with your budget you can enjoy a long lucrative real estate investment portfolio.