The economy has been steadily improving, and so now is a good time to consider building your wealth through property investment, no matter what life stage you are in.
Here are five reasons why:
1. Property has always been, and continues to be, a good long-term investment. There’s much less volatility in the property market than there is in the share market. If you do your research, substantial capital gains in the medium to long-term are possible. In the meantime you have the opportunity to build up your credit rating and the equity in your property. Equity is a kind of cash reserve that you can borrow against.
2. Interest rates are still low, which makes borrowing right now a good proposition.
3. People always need homes and there is currently strong demand in the rental market across most of Australia’s capital cities. This means that rental properties are producing a reasonable yield for owners.
4. The Australian tax regime favours property investment, which means there are a few strategies investors can use to offset tax. For example, interest on investment loans is still a deductible expense against rental income; this is called negative gearing. If you have an existing home loan, you should seek advice to ensure you can structure your borrowings as tax effectively as possible.
5. You can buy through a self-managed superfund (SMSF) and improve your retirement portfolio. Recent changes in legislation enable investment property to be purchased through a SMSF. These changes allow a SMSF to borrow (at conservative levels) to invest in property which means that a SMSF can better diversify its investment portfolio and 'spread the risk' across a broader range of assets.