The severe bush fires in 2019 caused panic and fear for real estate investing, especially close to forests which are approximately everywhere across the continent. Those who invested in real estate made good profits in the past three years.
The start of the COVID pandemic stopped people from looking for property because of another fear mainly caused by the media that emphasised the unknown economy and gloomy future for real estate. Those who understood the opportunity and joined the real estate game were quite fortunate.
Queensland’s severe floods at the beginning of the year that lasted a few months didn’t stop the high demand, capital growth and rental yields from increasing, particularly in areas attached to the floods.
We can look further into past events and see the same pattern repeatedly.
In 2008 the GFC caused the same media noise, but it was an opportunity period as well, with an interest rate of 8% approximately, and it was fine. We didn’t know any better, and we didn’t imagine that mortgage rates could go down to 2%, we collected rent every month, collected some tax, and it was pretty all right even with multiple properties.
Today we face the same dilemma: what to do? The world is entering into recession or a challenging financial climate, China’s big banks might collapse due to real estate corruption, the war in Ukraine, the cost of living increase significant and again, the Reserve Bank has hiked interest rates for the fourth consecutive month, lifting the nation’s cash rate target by 50 basis points to 1.85 per cent. It means we pay more, and for those who have multiple properties, a lift in the monthly mortgage payments for roughly $500-900 for a million dollar loan (AVG Statistical figures).
If you look carefully at the entire picture, you can see that the rent is also going up, but if you are still working and can hold this increase for a while, in 2 years, you will also forget about that and think that this is what it is.
Real estate investment is a long-term game. The best investment decisions were yesterday!
Of course, you have to do your research to find a low equity risk property and something that you can hold for the long term. You will have to hold tight between the rain drops until you reach the end of the tunnel.
The investment journey isn’t easy and not for everyone, we might have some challenges around the route, but mainly it’s a psychological challenge caused by the media.
Make an informative decision before you purchase any property to understand the risk and return along the path so that you will have peace of mind in every market and decade situation.
Contact investinproperties for questions, concerns, or to hear about our buyers’ advocacy service.
