Oct 20, 2021

Our insights

Despite the challenges of the pandemic, Australian property prices have been reaching once in a generation heights, with Adelaide especially growing in popularity.

Why? In short, it has been a perfect storm of sorts with low interest rates, favourable government incentives, low stock and rising consumer demand. The pandemic had a big part in pushing housing demand up as lost holidays and work from home policies forced families to save, and lockdowns created a desire to upgrade homes. 

As momentum continues to increase, regulators have started making moves to make it harder for banks to lend money, in the hope that this will slow things down.

This frantic market creates a lot of uncertainty, especially for investors who might be unsure about what it all means for property investment in Australia.

Here’s some ideas on how to approach property investment and making the right moves.

Play the long-game

Generally, property is considered one of the most reliable forms of investment in Australia. However, just like the economy, the market will move through cycles. By viewing the property market through a long-term lens you are more likely to make better decisions, ride out the inevitable highs and lows, and come out on top at the end of the journey. Making short term plays on the property market comes with much more risk.

It’s critical to work closely with your financial adviser in accordance with your overarching wealth plan.

Buy in a good growth area

It's true what they say: 'location, location, location.' Because of this, people are often drawn to the areas with lots of buzz and accelerating prices. But by this time, you’re already too late. You want to choose a suburb and city that is poised to grow, but hasn’t yet overcapitalised.

Also, consider the type of property you would be purchasing. A home on a bigger block, with lots of potential for upgrades or redevelopment, is a good move. Especially when paired with a great location choice near a city, infrastructure, schools and other amenities. While apartments might look attractive, typically there’s much less upside and opportunity.

Consider affordability

The last thing you want to do is buy something you can’t afford and put yourself under financial pressure.

And this is a consideration not just for today, but for the future. Wages in Australia have not increased over the last few years. This may or may not be true to your situation, but it is something to consider. Property needs to be an investment decision that's right for you. And your financial adviser and work with you to ensure the numbers stack up.

Widen your investment strategy

Property shouldn’t be your only investment play. Superannuation, shares and other investment opportunities also offer excellent opportunities to build wealth, and also provide the diversity you need. This diversity is key, because if one asset or market is taking a hit, your whole portfolio doesn’t feel the pain.

Don’t have an investment strategy?

Whether you are a first-time homeowner or boast an impressive property portfolio, it's crucial to iron out your wealth strategy with someone who understands the entire picture.

To avoid being swept up in the heated property market and help you make the best decision to match your investment strategy, it’s important to work closely with your financial adviser, while a trusted mortgage broker will ensure your loans are optimised in your favour. 

Contact the team at Calder Wealth Management to talk through your wealth strategy and our team at Calder Finance will ensure you get the best loan deal for your needs. Call us on (08) 8373 3333 to schedule your free initial appointment.

Written by Anthony Hill at Calder Wealth Management.

This is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own circumstances or seek advice from a financial adviser and seek tax advice from a registered tax agent. Information is current at the date of issue and may change.