If you’ve been considering property investment, chances are that you’ve had a good look at Australian real estate. Investing in real estate has long been a great opportunity and Australian property investment is a great place to start – but do you know why it’s a good idea? Or is it just familiar and convenient for you? Let’s take a look at the pros and cons of investing in Australian property.
Cons to Investing in Australian Property
The real estate market for investors has been strong in previous years but experts are predicting that growth is going to slow down in 2018. Australian property is projected to experience low to negative growth in many areas and buyers may be harder to come by. Growth peaked in 2016 and has seen a downward trend since then.
Another obstacle investors may face stems from funding regulations. The Australian Prudential Regulation Authority (APRA) introduced new restrictions on mortgage borrowing for investors in 2017. These restrictions were put in place in response to rising housing prices and debt. The changes limit the amount of interest-only lending to just 30% of any new lending on residential properties.
The value of homes is also expected to fall. On the one hand, this is a great time to buy, but on the other, it will take longer to see profits made from your investment. It’s important to remember that the market is cyclical and will show upward trends again, although how long it takes to turn around is anyone’s guess. Even with the market slowing down, Australian property investment is a smart move as the population and demand continue to grow.
Pros to Investing in Australian Property
The same cyclical nature of the real estate market that makes buying smarter at different times over others also makes Australian property investment a great opportunity. If you have properties and the market takes a downturn, it’s only a matter of time before it swings back up. Property is one of the few investments that are both powerful and stable.
Investing in property also allows the investor to use that property to secure loans or funds for larger investment opportunities. Because the value of property stays relatively steady, even with fluctuations in the market, it’s a great backer for other loans, allowing the investor to branch out into different areas.
Property investment brings other benefits aside from the obvious. Investors are able to claim their property and receive tax benefits. They’re able to grow their investment by making improvements to the property itself. If you’re investing in stocks in companies you don’t have control over, there’s nothing you can directly do to increase the performance of that company. Few investment opportunities allow for direct action to increase the value of your holdings.
The best incentive for Australian property investment may be that it’s low risk. Population growth and demand for housing in Australia mean that property prices will continue to rise. There are lots of options for property, from renting to long-term tenants or operating a vacation rental, to completing improvement projects and resale for higher cash value. If you’ve wanted to start investing, property investment is one of the best ways to do it, and the Australian market is the perfect place to invest.
To find out more about where the smart money is being invested, have a talk with Adpen.