Dollars With Sense has been airing its’ television show every Monday at 6:30 pm on C31 for over 10 years. Each week we discuss important topics to help our viewers make smarter, more informed financial decisions.
On this weeks’ show our hosts Dallas Brooks and James Lynch discussed when and where to buy property.
James explains that “in Australia being exposed to the market for a long period of time has proved to be the right decision for a lot of people. With a long period of time being 10,20,30 years. You just need to look at the house prices from 20 years ago to see the amount of capital growth that people have been fortunate enough to experience.”
Timing is less important for property investors looking for long-term growth. The people for whom timing of property investment is important are speculators. Speculators try and time the market. If they believe prices are going to rise quickly and sharply they act accordingly. Correspondingly, if they believe a drop is imminent they act with that speculation in mind.
James points to those who have invested in apartment buildings in Docklands, Melbourne over the past few years who are more than likely currently sitting on a large loss on their original investment.
Conversely if you had invested in units in Geelong last year, you would have seen a 13-16% increase. Two very different markets, only an hours drive from each other, with very different results. Picking a good location is very important to investment success
While property prices have now returned to positive growth over the past months, before that you could have been forgiven for thinking there was a housing crisis, with all the negative news in the media. However, if you looked at the performance of the outer suburbs over that time, then prices did not go down. With greater council conditions on providing amenities, schools, shops, as well as materials and labour costs increasing, Dallas explains “there’s a fair chance that it won’t be going down as it really has no where to go in real terms.”
Where if you buy a property for $2 million in the inner suburbs then you are more subject the the supply and demand of the market. A block of land in the inner suburbs and outer suburbs may be identical, the difference in price comes from the higher demand for the inner city property and the lesser supply. This is what was seen over the period of downturn before the turnaround over the past months. These more expensive, inner city blocks have more room to flex their prices.
With population going up and people getting older and moving in to family homes and older Australians holding on to family homes longer it is driving up the price of 4-bedroom family home prices.
A popular saying among property investors is that “It’s not when you’re in the market, but how long you’re in the market for.
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Here is the full episode: