Why People Invest in Residential Property
A diversified investment portfolio will include property, as history shows property can provide steady returns as well as capital growth.
Property remains one of the most popular investments for Australians. Recent figures put the value of investment in residential property in Australia at between 6 & 8 percent of GDP and reference to the growth rate of property values over time is widely and regularly published and republished.
One reason why property is a popular investment choice is that as the value of your property increases, so does your equity in that property. This “sleeping” equity may be used as leverage, allowing you to build a property portfolio and create a passive income to help fund your retirement. Australians invest in residential property as it continues to demonstrate the following benefits:
- strong growth over time;
- increased income (cash flow) through rental returns;
- tax benefits through depreciation of building costs, fixtures, fittings & expenses;
- combined rental income & tax benefits to help fund the costs of the property;
- the flexibility to sell, hold or even move into the property at any time; and
- rental properties add diversification to your investment portfolio.
Other reasons why investors consider residential property a great choice include:
Security – Lending institutions will lend up to 95% of the value of residential property to enable you to purchase your own home or investment properties as against 70-75% for commercial/industrial property and shares.
Performance – Research has consistently shown that people who own their own homes end up with an average net worth many times greater than that of those who rent.
Leverage – Residential property also allows you to use a small amount of money to acquire assets at a much higher value than simply investing that same small amount of money in cash deposits and/or shares.
For further information or a consultation please do not hesitate to Contact FAAR
