Is real estate investment picking up?
With the official cash rate at a historical low, many Australians have been searching for ways to invest in assets and grow their wealth.
And in recent times, investing in real estate has been a top option for Aussies – but why?
Investment lending spikes up
Recent figures from the Australian Bureau of Statistics (ABS) showed a significant uptake in the number of investors borrowing to buy property between August and September this year.
According to RP Data analysis of the ABS figures, the proportion of investors taking out finance hit a record high during this period . With investor numbers as high as they are, there must be reasons why such strong activity is occurring.
Market commentary from RP Data explained that Australians are searching for “returns that are broadly unavailable outside of property”, signalling why so many people are choosing real estate.
“Of course low mortgage rates occur in concert with low interest rates which mean cash savings get low returns, as a result investors push into other markets such as residential housing,” noted RP Data Research Analyst Cameron Kusher.
Mr Kusher explained that the last time investor activity peaked was when mortgage interest rates were low – the same situation Australia is seeing now.
Long term real estate investing paying off
Figures from RP Data’s Pain and Gain report for the June quarter show that holding onto property for the long term is paying off further down the line.
The report measured which properties achieved a gross profit or loss at the time they were re-sold. And according to the results, properties that achieved a profit of over 100 per cent, compared to the price it was previously purchased at, were held for an average of 16.5 years.
In Brisbane, almost 30 per cent of properties sold during the June quarter made 100 per cent or more in gross profit.
Remember, property can generate wealth in two ways: through rental income or capital gains. Keep in mind that the property you select needs to match up with your personal financial goals you’ve outlined.
For example, if you’re looking to supplement your income during retirement, property can be an easy investment to help generate wealth through weekly rent.
If property sounds like the ideal investment option for you, make sure you get expert wealth coaching to go along with it. Real estate isn’t an every day purchase, and your investment strategy is all part of being successful on your journey to wealth.