Why property can be a safe investment option

Why property can be a safe investment option

4 August 2020
man and woman having breakfast

If you’re looking to secure your financial future, knowing the right investment path to pursue can be overwhelming. From stocks and bonds to property and commodities, there are a number of options to choose from. All have the potential to build your wealth or improve your financial situation. But which one is the safest long-term?

This article explores the top reasons why property may still be the safest investment option to have behind you in the long run.

Property has performed well

For many Australian households, property will be the most important asset they own. Not only does it provide shelter for owner-occupiers and potential regular income for investors, it serves as the basis for many wealth-building strategies long-term. This is because, historically, property has performed well.

Over the past 30 years, Australian housing prices have increased on average by just over 7 per cent per year. Housing is now in demand again in the face of record low rates and eased borrowing conditions post Royal Commission. The fluctuations caused by the Coronavirus pandemic have caused an upset in real estate markets around the country. However, if this same historical rate of growth continues, property will well outperform other investment types long-term.

Property is less volatile than the share market

According to a special CoreLogic report, Coronavirus and the Australian property market, property is less volatile and slower to respond to market shocks.

The last six months represent some of the most unstable in living memory. Nationally, the industry expert’s home value index results showed that the dwelling market declined just 0.4 per cent over the month of May and 0.7 per cent throughout June. When compared to the stock market percentage losses of approximately 18 per cent since the beginning of the crisis, it’s clear that the share market is on shakier ground than property.

Investment properties can provide regular income

Prudent property investors look for residential options that produce reliable rental yields year-round. In fact, residential investment has performed exceedingly well in Australia over the long-term, providing similar returns to well-performing share markets (at 11 per cent per annum).

Choosing to take on an investment property to generate yields is a big decision. Be certain that you understand the associated costs that come with the purchase and upkeep of an investment property to get the most out of any income generated.

Property is a more tangible asset

Unlike shares or bonds, property is a physical investment that can be seen and touched. The low liquidity of a physical asset such as property makes it appealing to residential investors, as well as larger companies and institutions. This means that banks, builders, developers and governments all have a vested interest in keeping property prices high.

As long as property remains the backbone of the Australian economy, its strength as an investment option will also stay intact.

Shore up your investment strategy

If you’re looking to invest in your future, it pays to have experts by your side. The team at Advantage Consulting has the expertise and knowledge to help direct you along the right investment path for your circumstances. Contact Advantage Consulting for an obligation-free chat today.

Disclaimer: This is general advice and has been prepared without taking into account your particular situation or needs. You should consider whether it is appropriate for you before acting on it.