Property – A Historically Sound Investment

Over recent years, Australia’s residential property market has experienced increased volatility and disruption. Speculation around the markets’ strength and future trajectory has been at the forefront of property-related communications, influencing people’s confidence and ability to buy or invest. 

Fundamental to understanding whether property is a suitable asset to help grow your financial portfolio is ensuring that you are aware of current trends, but more importantly, understanding the longevity and history of the Australian residential property market. 

Surely, one of the most confusing metrics based on reports in the popular media, is the residential price Index on residential property.  Meaningful data is hard to access, and at times the popular press will contradict itself on the same page of the same newspaper on the same date!  

According to CoreLogic’s 2022 report, Australia’s property market has experienced six cycles of growth and decline over a 30 year period, starting in 1992. Despite this cyclical variance, national house values have increased by 382% over a 30-year period until 2022. 

Looking to the present day, the market continues to experience fluctuations, both in growth and decline. This includes CoreLogic’s recent report indicating that Australia’s National Home Index rose 0.4% in January, with diverse results per state and territory. While immediate updates such as interest rate rises, or interest rate holds may influence your decision to either buy or sell, the historical trajectory of the property market should also inform your decision. 

In the key points below we have outlined three key considerations for investing in property.

• Diversification
Property may be a valuable asset to achieve diversification, depending on your current situation and portfolio. If your current assets mainly include stocks and shares, investing in the property market may help you diversify your portfolio and mitigate risk. The research also indicates that in the long term, it is likely to be a worthwhile investment. Maximising the opportunity might be a game of patience but seeing out a decline may be worthwhile.

• Tangible Investments
Unlike shares or bonds, land is a tangible asset which can also be used to generate rental income. Unlike many other tangible assets like cars or computers which will depreciate, CoreLogic’s insights indicate that land as an asset almost always appreciates over time.

• Consistency
Population growth, influenced by our ageing population and increased migration, is indicative of the growing and consistent need for property. In conjunction with Australia’s relatively stable political environment, which encourages property investment through grants and schemes, property has historically proved to be a strong financial asset. 

While the media often provides a self-contradictory or pessimistic narrative of the property market, CoreLogic provides a contrasting opinion, revealing the long term growth and consistency of Australia’s property landscape. If you are looking to expand your current portfolio, property might be the right asset for you. It all depends on your current situation and financial goals. 

To learn more about property as an investment or how to strategically expand your portfolio, speak with our team today

Share this entry