Home and especially Australian property is a fantastic investment. Certainly not only is it much harder to lose money in property than in the stock market good results. property you also benefit both from stable capital growth and from rental income. And as rental income increases over time it protects you from inflation. At the same time you can borrow money to buy property and despite Australias high taxation environment property investment can be very tax efficient.
Lets have a look at these advantages and some more beneficial facets of residential property investment in a lttle bit more detail.
An investment market not dominated by buyers
To start with you need to realize that some 70 percent of all household property is owner busy and only 30 % is owned by buyers. That means that home property is the only investment market not in fact dominated by buyers which means that there is a natural barrier in the market that is not available in the share market. To put it simply if property values crash by 10 20 or even 40 most of us still desire a home to stay in and so most owner occupiers will simply ride away any major crash instead of sell up and rent compare this to the stock market where a major drop in prices may easily trigger a serious meltdown. Sure property values can and do go lower nonetheless they simply do not show the same level of volatility as the share market and property offers a considerably higher level of security.
And if you don't believe me once i notify you that residential property is a safe investment then just ask the banks. Banks have always seen residential real property as a fantastic security and thats why they loan up 90 of the value of your property; they know that property values have never gone down in the long term.
Property prices in Australia tend to transfer cycles and historically they may have done well doubling in cycles of around 7 - doze years which means about 6 to 10 gross annual growth. We all know that history is no guarantee for future years but combined with common sense its all we have. There is no reason to feel that the trends in property of the last 100 years would not continue for the next few many years but to succeed in property investment you must be prepared and qualified to ride out any intermediate storms in the market but that can be applied to any investment vehicle you choose.
Australias average house price between 1986 and 2006 as printed by the Real Property Institute of Australia REIA shows that back in June 1986 you would have bought a typical home for 80800. That same home would have recently been worth in 1986 which is virtually double of what you paid twelve years earlier. Another 15 years later in 06\ that average home was worth some. So between 1986 and 2006 that average home went up by practically 400 or about 8. 3 every annum.
Not bad. And quite based on the for a longer time term history.
Actually as Michael Keating remarks in his blog on twenty fourth January 2008 Why Melbournes properties will keep growing it happens to be on the low side in comparison to the historical average. Australias property prices have been tracked for something like the last a hundred and twenty years and on average they have risen twelve. 4 per year. Merely in case you might assume that had to do with Australia like a recently found colony and won't believe this would be sustainable in the permanent look at this. In the UK records of property sales go back till 1088 and analysis of the info shows that in those 920 years UK property typically has gone up by 10. 2 every year.