Why Investors Can't Get Enough of Australian Residential Real Estate

Every weekend, thousands of families get together for a barbecue to enjoy each others company and share some good conversation. Inevitably, the topic of property will surface. Property has been the investment vehicle of choice for many Australians for a long time now, helping many families get ahead in life and enjoy a comfortable lifestyle through their retirement. So lets take a closer look into why Australians are so fond of property.

The Big Two: Capital Growth and Rental Income

 The fundamental attraction to property investment consists of two essential elements.

Capital Growth:

This is the big one. Australian property values have demonstrated substantial upward trajectory over the long run. Real estate prices in Australia tend to track upward in the long run, with declines and periods of stagnation being generally only marginal compared to the long term gains. Because of this, Investors consider that the value of the property purchase today will most likely increase substantially when measured against current market prices, particularly when considered over ten, twenty or even thirty years.

Rental Income:

Because your tenants pay you money each week, the rental income serves as a regular passive income, helping to meet any holding costs on your investment. The strong rental yields within Australia's current rental can often cover mortgage expenses, rates, maintenance costs and even generate surplus money. This makes holding these investments for the long term far more comfortable.

But there is a lot more to like about property too…

The "Bricks and Mortar" Feeling:

The truth remains that people prefer investing in assets which they can physically touch and see. The physical nature of houses stands in contrast to investments such as shares or crypto which feel more theoretical. As an investor you can walk through it and perform renovations while the asset maintains a tangible quality. The physical nature of real estate assets provides many investors with both control and security in their investments.

Leverage:

I firmly believe that one of residential real estate greatest benefits is the ability to purchase such a large asset with so little of your own money. Borrowed funds through mortgages allow investors to control a much larger asset and benefit from the growth on this larger value. Because real estate serves as a stable security asset, lenders will provide substantial financing allowing less money down. The growth of your property value leads to massive returns on your initial investment. You create profits through the use of money provided by the bank.

Tax Advantages:

The Australian government has traditionally offered favorable tax conditions for property investors. Investors can claim many expenses against their rental income which decreases their taxable earnings. You can generally reduce your taxable income through the deduction of both interest payments on your loan and property related expenses such as management fees and council rates. The property can also generally be depreciated over time, allowing for further on paper deductions. Many investors take advantage of these benefits through negative gearing.

A Stable and Growing Market:

Australia’s property market maintains economic stability due to consistent population growth which results from both natural population increase and immigration. People will always value having a comfortable home, and so this influx continues to put pressure on our housing supply, particularly in our cities and large regional towns. This provides investors continual opportunities over the long run to profit from these market forces.

A Final Word:

Australian residential real estate is rightly trusted as a consistent and profitable investment vehicle for wealth creation. Despite occasional risks, investing in property provides an effortless way to accumulate wealth with minimal daily involvement. The combination of capital growth with steady income and leverage advantages together with tax benefits makes real estate an attractive investment opportunity, and as such, is likely to continue to be a top choice for Australian families who want to build their financial security over the long term.