Home ownership is the great Australian dream, and for good reason. While the profile might shift from quarter acre blocks to apartments close to the city, the Aussie love affair with property is consistent. In fact, the Australia Bureau of Statistics says that home ownership has been fairly stable at around 70 percent for decades.
So what makes property such a great investment? Whether you’re living in it or renting it to someone else, there are some solid reasons for looking at property investment. Here are 10 of them:
1. Property is relatively straightforward
If you’re looking for an investment that is easy to research and understand it’s hard to go past property. There is a lot of information in the media about what’s happening in the market and some great advice available on how to make your investment work.
2. Property is a tangible asset
If we learnt anything from the global financial crisis it’s that the further away you get from an investment you can see, the harder it is to know its true value. With a property investment it’s easy to canvas a range of opinions and talk to people who know the value of your investment.
3. You can get an additional income
If you choose an investment property you can earn a reliable income from rent, particularly if you focus on areas with young populations, or areas with people moving around a lot (eg: close to a defence force base, university, mine etc).
4. Property increases in value over time
Property is a long-term investment, and if you look at it over a 20- or 30-year period you’ll see the value of housing in Australia is increasing steadily. The difference between the value when you sell compared to when you buy is known as the capital gain.
5. It’s easy to borrow money to get started
Property commentato Michael Yardney sums up this point nicely: “Property investment is not just for the wealthy. It doesn’t really take large sums of money to get involved in real estate. This is because banks will lend you up to 80 percent against the security of residential property, which means that most Australians with a steady job and a little capital behind them can afford to buy investment properties.”
6. There are tax advantages
If you invest in property, many of the expenses are tax deductible. This can include interest repayments, the costs of finding tenants and inspecting it on a regular basis as well as the costs associated with maintaining it for your tenants.
7. You can live in it
If you own your own home or are paying off a mortgage you still have a significant investment. You may not get the tax benefits associated with owning a rental property but you’re improving your financial position, not your landlord’s.
8. Renovations can improve the value
Over time the value of your home will increase, but you can hurry this along with a savvy approach to renovation. It could be as simple as keeping your home well maintained to keep pace with what is expected in the neighbourhood or you can add real value by updating old features or expanding. The key is to not spend more on it than someone would be prepared to pay.
9. You can start small
Property in Australia can be expensive but sensible property investment doesn’t have to mean expensive. We don’t all need to buy in Sydney and Melbourne’s inner-city suburbs, you can start small with an apartment or house in a smaller town and work your way into bigger properties as their value increases.
10. People will always need somewhere to live
It’s important to remember that we’re not just talking about a financial strategy. Housing is one of the basic human needs and it stands to reason that the more people there are, the more demand there will be for property. Whether you’re living in it yourself or renting it out, a property investment has value for the long haul.