The weight of media commentary has almost always been negative when reporting on the residential property market in Australia. Yet we have a different take on long term property investment. News outlet’s seem to delight in reporting on how people who have invested in residential property have lost or were about to lose their shirts. Negative equity was being experienced by investors and homeowners alike and buying a residential property was about the last thing you should be considering doing. I guess that is all understandable because as the saying goes, “Negative Press Sells”.
But once again I thought it was time to inject a little more balance to the commentary on the performance of the residential property market in Australia. Specifically in relation to long term property investment. It is true that the market has faced some headwinds recently with the financial enquiry into the banks, the demonisation of mortgage brokers, how financial planners were all rogues taking fees for no service and basically everyone related to these industries was dishonest and couldn’t be trusted to give you balanced and fair advice. Clearly that is not the case and the industries mentioned are for the most part staffed by people of integrity doing their best to get a fair and reasonable result for their clients. There are, of course as is the case in all industries and professions, a few flies in the ointment. Anyone in any industry who has done the wrong thing should be hauled over the coals and be subject to the full force of the law.
In addition to the usual negative commentary with respect to the property market, we have also recently experienced heavy and adverse publicity regarding problems in the compliance of building regulations specifically relating to cladding on some high-rise buildings. That cladding is flammable and once or twice we have seen buildings catch fire. My understanding, by the way, is that the regulations have now changed with respect to that cladding so that buildings over three levels are not permitted to use those types of building materials. The regulatory industry and government bodies who charge a great deal of money to industry participants to sign off building works have got a lot to answer for. We have also seen residents being evacuated from buildings that showed cracks forming which put into question the structural integrity of those buildings.
There are hundreds of thousands of buildings all over Australia housing an increasing number of our population. I personally have lived in these types of buildings for the last fifteen years and I have never experienced any of the sorts of problems that we have seen reported in the media recently. Just because you fall off a bike sometimes doesn’t mean that all bike riding is unsafe. Of course, we need to ensure that our builders comply with all safety and building regulations because it is inevitable that more of us will live in this type of accommodation as our cities become larger and people don’t want to live on the far-flung fringes of those cities.
But back to the reason for this article. The 2018 Russell Long Term Investing Report is now available on the ASX website (follow this link to get a copy) and as was the case last year and the year before, Residential Investment Property has outperformed all other classes of investment in Australia over the last ten and twenty-year period. The results cannot be much clearer than that. Unless you are a speculator wanting to make a quick dollar by trading residential property, the way you can trade shares, then clearly a strategy to buy property as an investment and hold it long term has clearly shown investors the best returns achievable available to an investor in Australia.
That doesn’t mean you can buy any property, anywhere in Australia, anytime, and get a great result. You need to do your homework on what would make a good property investment that will match your specific circumstances. That is exactly what we do for our clients at Specific Property. Why not give us a call now?0