Sydney’s housing market has shown robust growth since the early 1980s, with the median house price doubling approximately every decade during this period. In fact, several suburbs have delivered above-average growth. Melbourne has experienced comparable growth rates over the last 40 years. However, in contrast to Sydney, property in Melbourne tends to be more affordable, …
A property’s rental yield is the amount of gross rental income that it attracts relative to its market value. In Australia, gross residential property rental yields typically fall between 2% and 5% annually. This yield can provide insights into a property’s fundamentals and therefore anticipated investment returns. What drives a property’s rental yield? Two primary …
Property investors should think about the investment returns they can anticipate over the next decade and beyond. This process assists in shaping realistic expectations to make informed financial decisions. It’s most advisable to create these expectations based on evidence and data. The past decade has delivered below average returns The chart displayed below illustrates the …
Readers of this blog own property or intend to purchase it in the future, whether for owner occupied or investment purposes. Property is an excellent asset class for accumulating and preserving wealth. This is primarily due to its fundamental nature as a necessity, its historical tendency to appreciate in value, and the relatively lower level …
In 2007, laws changed to allow SMSFs to borrow for property investments if they met specific compliance rules. This led to a surge in super-funded property investments from 2007 to 2017, totalling around $45 billion. However, major banks withdrew SMSF borrowing products between 2017 and 2018 and super contribution rules were tightened, making this strategy …
A property’s value is typically divided into two components: the land value and the value of any improvements, such as the dwelling. Conventionally, land tends to appreciate over time, while buildings depreciate as they get older and suffer more wear and tear. However, the rise in construction costs poses an interesting question: what impact does …
Despite bearish property price forecasts over the past few years, capital city markets have proven to be very resilient. I note that Westpac joined other major banks last week by revising its property price growth forecast higher to 7% for the 2023 calendar year. However, Perth is the outlier. Its median house price has only …
Commentators often refer to the price of property relative to household incomes. For example, it is estimated that property in Melbourne and Sydney now costs more than 10 times the median household income. But is this really a meaningful measure because if it is, property cannot continue to grow at a faster rate than incomes …
All investment asset classes move in cycles. Investment returns are almost never linear. As such, investors must expect good and bad periods, which is why patience and discipline are big contributors to an investor’s success. I suspect that commercial property investors’ patience and discipline are about to be tested. This asset class is facing a …
The unrefuted trend in all investment markets is mean reversion. It means that a period of below average returns is always followed by a period of above average returns. It is my thesis that investment-grade property in Melbourne looks attractive compared to other markets and that there are several economic tailwinds that may result in …
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