For most of us, property investing is a long term proposition. Some people buy, renovate and flip houses or buy homes as stepping stones to their dream home. But the long term strategy is where most of us sit and, in my opinion, it’s the safest and surest way to build wealth.
Part of this long term strategy is to ride out the peaks and troughs of the market without over-reacting and without losing sight of your plan.
Some key points taken from a 25 year housing market analysis, prepared by Aussie Home Loans include:
- Nationally, the housing market moved through five distinct growth cycles which have pushed the national median house values 412% higher.
- Over the same period, the ASX All Ordinaries index has risen by a substantially lower 261%.
This clearly demonstrates why Australians love property and it’s our favoured investing style!
AMP Capital economist, Shane Oliver wrote in an article in May 2022, “Last year saw national average home prices rise 22%, their fastest 12-month increase since 1989, with gains propelled by record-low mortgage rates, home buyer incentives, coronavirus driving a switch in spending to “goods” like housing, recovery from the lockdowns, a lack of supply and a fear of missing out.”
This is outrageous growth and those of us with property sat back in pride at the great investing decisions we’d made.
In contrast, the CoreLogic RP Data Home Value Index recorded a year-on-year increase over the 5 capital cities of just 5.2% with figures as outlined below.
This, and other talk of rate rises and continuing decreasing value has us concerned and wondering what’s next.
The point of all of this is that if we just take a snapshot in time when looking at figures, we’ll get a really distorted view. If we take action based on fear – or don’t take action based on fear – then we may really lose out.
Property values don’t mean a lot unless you’re buying, selling or refinancing. The rest of the time, it’s just interesting information.
Research is what we need. Good, solid, data based research and analysis gives us facts and the ability to make sound decisions.
That’s where we can help!
If you’re ready to explore your investing options, we’d love to arrange a time to chat.