Is property a good investment in Australia?

by Mike Wood for Australian Broker

Investment in property in Australia is one of the biggest no-brainers in the current marketplace. In terms of capital growth, it might not have the speed of crypto or stocks, but in terms of delivering consistent results over time, real estate is as good an option as there is to be found.

Mortgage brokers are more than aware of the current climate regarding interest rates – we’ve been run off our feet in the last few months by the crazy state of our sector in Australia – and with the Reserve Bank of Australia unlikely to move their schedule forward, we can expect to see it continue.

With that in mind, brokers have a duty to introduce their clients to the potential to increase their property portfolio and earn in the long term, as price growth seems unlikely to slow down in the near future.

Future potential growth of the property market

Buying properties is always a popular choice for investors in Australia, and with good reason. Our market has consistently delivered results over time, and for mortgage brokers, investment clients are just as valuable as the traditional home buyer segment.

Real estate investment is based on three factors: the ability to find a tenant to keep up with repayments and deliver rental income, the ability to develop equity in a property that can be leveraged over time and the chance to use bricks and mortar as a form of managed funds, letting assets sit and accumulate over time.

Less volatility than stocks

A rental property might seem like it takes more effort than other forms of investment, but compared to the stock market, it is a far surer bet. As an investment strategy, it requires a little bit of upfront work in terms of finding someone to live in your property and consistently deliver that rental yield, with the minimal amounts of ongoing work that comes with being a landlord.

But once you have that sorted, it delivers a much more secure, long-term gain than the ASX, crypto or other interests. Property investment can deliver results for clients than pretty much anything else on the market.

Tax deductions available

Long term investment in the property market can also be beneficial in terms of the tax deductions that are on offer for clients. Those with a rental property are able to secure a wide range of exemptions from the Australian Tax Office, from advertising costs to corporate fees and charges, as well as rates reductions from the council, insurance and land taxes.

Long-term investment

Investment property in Australia is as close to an open goal of price growth as exists. The property market has shown consistent gains over time that are all but unmatched, and a property portfolio is one of the most secure bets you’ll find.

Whether in a capital city with an ever-changing turnover of young professionals and international students or in a regional area with consistently low vacancy rates and steady tenancy, buying properties to rent out is an investment strategy that makes sense, and that mortgage brokers should always be recommending to clients.

Security and stability

One of the downsides of property investment is often said to be that it has an excess of security and stability: that is, it only works in the long term, and that it takes too long to sell an asset once the time is right.

Rental yield, price growth and interest rates are unlikely to ever be as interesting and eye-catching as cryptocurrency market fluctuations or shooting star stocks, but if your interest is an investment that will show clear capital growth, then the property market cannot be beaten.

More control in decisions

Investors love to be in control, and that is another benefit to a long term investment in property. While those who stick their cash in Bitcoin can have the value of their investment wiped off by one tweet from Elon Musk, those who buy bricks and mortar can have been as hands-on or hands-off as they like, and have total control of their asset.

Rental yield often rises and tenants can be changed every 12 months to keep maximal revenue coming in, while more money can always be invested into a property to improve it and enable price growth either through higher rents or by selling the property at a higher value.

Access to equity

Equity is the counterargument to the claims that money invested in property is hard to get out. While it might be complicated and time-consuming to sell a property in Australia, it is always possible to leverage the equity gaining in real estate to buy a new house or get a better deal from your mortgage broker on refinancing.

With interest rates at a historic low and vacancy rates perhaps even lower, the time has never been better for those with an investment property in Australia to get on the phone with us and have a conversation about their property investment strategy.

Skybridge Capital is an MFAA accredited finance broker with expertise in commercial finance committed to the highest industry standards. Contact us for more information now!