Invest Outside the Box
Did you know that the vast majority of property investors make their purchases locally? There are multiple reasons why this happens, many of which can cause a property investor to miss out on some of the best opportunities our vast nation has to offer. Consider the current environment we find ourselves in: the cash rate is at an all- time low which has stimulated affordability in our most expensive city – Sydney.
Would Sydney be the best place for an investor to purchase in 2015? I’d suggest not. This is because Sydney has just undergone a significant period of price growth, meaning in most cases you are just paying for the growth of somebody else’s asset.
The national property market operates in waves, and typically all cities follow a similar trend or ‘line’. What differs, however, is which city is at the top of the cycle each time and therefore where the best opportunities lie. Consider this table of the last ten years in residential property:
|Leading Australian Cities for Price Growth|
|CITY||LAST LEAD PEAK|
|Source: ABS 6416 Residential Property Price Indexes|
As you can see, there have been six major ‘price growth peaks’ since 2005. If you consider Australia’s top three cities alone, you can see that Brisbane has endured the longest ‘leading peak-free’ period, followed by Melbourne.
What this illustrates to us is that maintaining a mindset of investing locally can strongly hinder a wealth creation strategy focused on property. Focusing on one market individually (say, Sydney) means that an investor will have to wait for their city’s next ‘leading peak’, putting them back years (or a decade) each time. It will be quite some time before Sydney will again lead Australia’s housing market in price growth.
Once the most opportune city or region has been identified, the next step is to determine what property in that area is worth your investment. Operating in different states and cities can be an uncomfortable step for a property investor which is where the professional services of Robson + Robson Property comes in.
At Robson + Robson Property, one of our major roles is to study the national property market trends with a view to establishing the best places in which to invest. We do this on both the macro level (comparing states and cities), and also on the micro level (comparing suburbs and locations within cities).
Making it simpler and easier for you to “Invest Outside the Box”.
Originally published by First Link Property who are partners with Robson + Robson Property.