Why property?

For generations, Australians have trusted ‘bricks and mortar’ as their favoured investment strategy. And with good reason.

While the stock market certainly works well for many, it can be a volatile and risky roller coaster ride. The biggest challenge with successful share investments is knowledge. Competing with professional traders and business people in the know can be a losing game for the everyday investor. Property prices also rise and fall, but cycles are generally a lot slower with milder peaks and troughs.

Property is one of the few investments that allows you to purchase largely with other peoples’ money (i.e. the bank’s), pay this back with other peoples’ money (i.e. rent) and in many cases enjoy a reduced tax commitment.

When you’re buying property purely as an investment rather than a home, you can remove the emotion from the deal and make decisions purely based on financial return expectations. While there are no guarantees, it is generally accepted that a well chosen property in a good area appreciates in value over time. For example:

• Over the past 15 years Brisbane has seen an average growth of 11.2% per annum, with annual returns of 20-30% in certain areas.
• Over the past 50 years in Australia, property has averaged 10% p.a. compound growth, with much higher returns in certain regions.
• Median priced property in Australia has achieved growth at 2 – 4% p.a. higher than inflation, making it a very solid investment.

Historically, the figures show that the average property value doubles every seven to ten years. Of course, returns vary according to the market, location and type of property, but carefully chosen properties can offer better returns than other forms of investment.