AUSTRALIAN Property Monitors predict a 7.1 per cent increase in the median house price (to $569,061) and a 9.8 per cent increase in unit prices (to $400,819) for Sydney. And according to APM economist Matthew Bell "moderate to strong growth is expected for the whole market". Many people are now wondering is now a good time to invest, and if so, how and where?
Historically the market has doubled every seven to 10 years and it is yet to be seen whether this trend will be thwarted by the global financial crisis. Although history provides no guarantees of future trends, property is typically considered a long-term investment strategy. I am seeing an increase in the number of people self-managing their superannuation and using it to buy property. Many accountants are now specialising in this area.
Rose Guerin is one such accountant. "There is a huge increase in demand for self managed super to buy property," she says.
In any market if the market price is expected to increase then that would be a good time to invest, provided you understand the basis on which these recommendations were made (and agree with them) and if financially and otherwise it's a good time for you to invest.
Only you can decide, based on your personal circumstances, if it's a good time for you to invest. Your job stability, relationship stability, timeframes for investing, saving or equity levels all need to be considered, amongst other things. Once you have considered your personal situation, there is the possibility that researchers are basing their reports on things you don't understand or were not aware of. Learning how to study the economy for this reason is vital as is independent research.
One gentleman I interviewed last year, John Lindeman from Residex, provides paid research to real estate agents (similar to APM) and to individuals. So far I have found his research very accurate. They could tell you, for example how much immigration went up by, which areas are likely to benefit and how, and what the property prices could then be expected to do — provided no other major global change happens.
Research is a useful tool for property investors, however it's always just an educated guess. It's still a guess, never an ironclad guarantee. With this in mind however, when I evaluate which of my clients have done well at investing and who hasn't, those who had done the most research made the most profit. This is a good thing though because it's something most people can achieve. You don't need to start with huge wealth, just simple research and planning ahead.
By Virginia Graham, www.modelmortgages.com.au.