It is generally an accepted investment principal that diversification can reduce your risk and improve investment returns. The common vernacular is, spread your eggs amongst various baskets. I would agree with this principle, so long as it doesn’t result in deterioration of investment asset quality. Sometimes property investors should not diversify. That’s because the quality …
A common question people ask is, “can property prices continue to rise at the same rate which they have over the past 3 to 4 decades?” The short answer is no, they cannot. Mathematically, this is unlikely to occur as incomes are not rising at the same pace. I came across the interesting graphic/visualisation (below) …
During 2020, most economists and commentators predicted that property values would plummet by 10%, 20% or even 30%! In May, I wrote a blog (and in The Australian newspaper here) outlining the reasons why I disagreed with these overly bearish forecasts. We now know that property prices didn’t fall by any more than 2% to …
One of the advantages of investing in property is that you can make improvements to enhance its value and consequently your personal wealth. A disadvantage is that dwellings require ongoing maintenance, and this expense reduces an investment property’s cash flow. Minimising or avoiding maintenance costs is often a false economy. Maintenance cannot be avoided, only …
It is my observation that investment-grade apartments in Melbourne have under-performed (from a capital growth perspective) compared to houses over the past 8 to 10 years. That is, apartments have generated very little capital growth (sometimes none), whereas houses have grown in value by between 5% and 8% p.a. over the same period. I have …
Update: Since writing this blog the government has announced that it will abolish ‘responsible lending’ rules in March 2021 which means lenders may no longer have to review borrowers living expenses. This change will increase borrowing capacity and increase the supply of new loans. And this will stimulate the property market in 2021 which will …
This blog’s title is a bit deceptive, because every property you buy is important, for either lifestyle or financial reasons. I contemplated using the title: “why the first property you buy is the most important one”. But the reality is, if you have made a mistake on your first property, you can always start again. …
Melbourne’s Covid transmission outbreak has been widely publicised by the media. Melbourne’s daily positive test rate is relatively benign by world standards (i.e. 0.5-0.6% versus 7.5% in the USA). However, the reinstated 6-week lockdown of Melbourne is likely to have a negative impact on Australia’s economy. Melbourne is responsible for producing over 19% of Australia’s …
The price you pay for an investment property will only matter if you purchase the wrong asset. An investment grade asset will, in the long run, mask any purchase price errors that you may have made. That is why focusing on the quality of the asset is easily the most important thing you must do …
There have been a number of economists and commentators who have predicted that property values will fall anywhere between 10% and 32% this year. It seems like it’s almost become a competition for who can be the most bearish. However, my view is a lot less bearish. I believe property values won’t fall by more …
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