Why Choose Property to Invest in?

Investing in property can be a great strategy to increase your wealth. People invest in property for the following reasons:

1. It’s a Stable Investment 

Property is stable. In fact, property prices go up over time at a steady pace. Any losses in property values are in the short term and the long-term property prices will increase. Even today, the real estate market in Australia is showing promising growth. 

For instance, the median rental prices for houses in Adelaide went up by 10.7% while unit and apartment prices soared by 7.2%. You can expect a good return if you own an investment property in Adelaide. You can rent a house for $620 PW with an annual rental yield of 3.7%, and units can go for $557 PW with a rental yield of 6.0%. 

2. Easy to Understand

While stocks and other investments offer good returns, property is very easy to understand – property language is used in everyday life, and there are limited products available to buy and sell property.

You don’t need to be an expert to grasp property investment basics. The market is relatively simple, with fewer variables than shares or hedge funds, where company performance and global events play a big role.

3. More Leverage Opportunities

Unlike most other investments, property is easy to leverage. It is easy to obtain a loan against a property, as property is a secure investment. This means you can buy an investment property with lower upfront costs. When you rent out your property, the rent can be used to pay the repayments on your loan. 

4. Rental Income and Long-term Returns

When you buy an investment property, you can generate passive income through rent. In Australia, rental yields can range from 3-5%, depending on your location. This cash flow can cover your mortgage and other expenses. Over time, as property values increase, your rental income can also grow, providing even better returns.

5. Tax Benefits

The Australian government offers several tax benefits for investing in property. For example, if you have owned the property for more than a year and are an Australian resident, you may be entitled to a 50% discount on the capital gains tax. Depending on your location, property size, and income, you may be able to enjoy other tax benefits.

6. Diversification

Diversification is a cardinal rule of investing, and investing in a property helps diversify your portfolio. Unlike stocks, which can be volatile, property tends to be more stable and offers long-term returns. Having a mix of assets like these can protect you from market fluctuations, ensuring that not all your wealth is tied to a single investment.

7. Building Equity for Your Future

As your property investment increases in value, you build equity. Over time, you can use this equity to leverage other investments, which allows you to grow your portfolio without needing a large amount of cash. Many investors use this strategy to continue expanding their assets.

8. Better Control Over Your Investment

When you invest in shares or managed funds, you’re often at the mercy of company directors or hedge fund managers. But with property investment, you have direct control. You can decide whether to buy an old or new house and when to buy, sell, renovate, or lease it. This freedom gives you more power over your financial planning. 

9. Hedge Against Inflation

Although Australia’s inflation rate (2.7%) is at its lowest since 2021, it’s a stark reality. However, property investment is an effective hedge against inflation. As the cost of living rises, so do property values and rental prices. Investing in property helps your asset appreciate with inflation and maintain or grow your wealth in the long run.

10. Growing Demand

Australia remains one of the fastest-growing countries in the world. Since 1960, the urbanisation rate in the country has been above 80% and reached 86.62% in 2023 — the highest ever. Several things are responsible for this tremendous growth, such as the growing economy and increasing immigration. 

This growing population and urbanisation are creating increased demand for housing, particularly in major cities like Sydney, Melbourne, Adelaide, and Brisbane. That, in turn, drives property values up, making it an attractive long-term investment.