The Importance of Property Investment
Aug 17, 2019
Have you ever wondered why the phrase “safe as houses” is so widely used? No doubt the reliability of investing funds in property has a lot to do with it. For long term capital growth, an investment property is certainly one of the more robust options. Houses as investment may have fluctuating popularity, but in the long term the returns are generally higher and the risks lower than buying shares.
“When you factor in the return and risk associated with buying property and shares, property wins hands down. Shares have [marginally] higher capital growth, but the difference in risk is huge. The risk is measured in variation in returns and capital growth (or loss) on shares can range from +40% in a year to -40% in a week! You don’t get that sort of variation in property, hence it is considered a safer investment.” Peter Koulizos, Author and University Lecturer.
Australian property has actually increased in value at around the same overall rate as shares. Since the early 1920’s, property investments have increased at just over 11% per annum.
Besides this obvious steady growth, the other benefits include being able to start a property investment portfolio with little expertise in financial investment.
Property investment is easy to begin, simply buying your first house will get you started and investing in your first rental property will require a lot less learning than investing in stocks.
Apart from total control of your asset (unlike investing in shares where you’ll probably use a broker) and long term growth and stability, the power to generally increase the value of the investment with renovations, subdivisions and development, you will also be able to use your property to write off investment expenses against your tax.
Australia’s relatively solid economy means that we will continue to attract new people needing a rental property. This is especially true for those of us in WA where the resources boom, although is slowing down slightly, is expected to continue for some decades.
Furthermore, if things don’t go quite to plan at any point, a house is an asset you might just need. It’s difficult to live in a share.