Australians will continue to invest in real estate, says the REINSW.
Real Estate Institute of NSW president Rowen Kelly says whilst he is surprised by the number of people reported to be considering investing in property, he isn’t surprised at Australia’s continued faith in the property market.
Kelly says there is little doubt that the Sydney property market had lost some of the “heat” experienced in recent years, however property was still an attractive and profitable investment.
“Most Australian’s know from the experience of buying their own home that property is, and always has been, one of the safest and smartest ways to create wealth over the long-term,” he says.
Kelly was commenting on research released this week by Wizard Home Loans that showed over 860,000 Australians planned to make an investment in property over the next 12 months.
According to the latest Australian Bureau of Statics figures, investors currently account for about 45% of new loans taken out in Australia.
Many of these, according to Kelly, are baby-boomers using the equity grown in their family home to buy an investment property to help fund their retirement.
However, in recent times, these “mum and dad” investors may have been out numbered in the market by people looking for short-term gains in property.
“Over the last few years we’ve seen speculative investors, people who usually put their money into the stock market, have turned to the less volatile property market,” Kelly says. “Interest from these type of investors has had an impact on prices.” However, according to Kelly, conditions in NSW were returning to a “more normal market” with more home owners and long-term investors making up the majority of buyers over recent months.
REI figures show over the last two years there has been little increases in rents in most parts of NSW, but Kelly says this has obviously not deterred long-term investors.
Kelly recommends anyone thinking of buying an investment property should talk to their accountant about which types of loan best suited their tax situation and allowed them to make the maximum tax deductions.
“An added benefit of property investment is that at times when interest and the other costs exceeds your the rental income, you can cut your income tax through negative gearing,” says Kelly.
