You’ve worked hard for your money. The trouble is, with so many options in the market, how do you invest it wisely? A family home or a residential investment is just the answer.
“Residential property not only provides comfort and security, it can be very attractive medium to long term investment,” explains Brad Matthews, Managing Director, ResCom.
“As well as the lifestyle benefits, it can deliver investors or owner a safe and stable investment with high capital growth.”
On average? Australian residential property prices have increased by approximately 10 per cent every year in the last 10 years.
Brad cites some interesting research that shows the median prices paid for residential properties in both ends of the market - the most expensive suburb in Melbourne, Toorak, and Victoria’s lowest price address, Churchill, a rural town in the Latrobe Valley.
“In 1996, the average price paid for a home in Toorak was $622,500 and in 2006, the average price was $1,525,000. That represents an increase of nearly 150 per cent,” he explains. “While in Churchill, the median price paid in 1996 was $58,000 and ten years later, it was $126,000. In both cases, you would have more than doubled your money.”
A residential property is also a great basis for other investments - if you wish to borrow money for other investments, you will generally need to secure them with property.
“The power of gearing into residential property means you can borrow for a larger investment with a smaller initial capital,” he explains.
“Home owners can borrow from their equity (what the property is worth, less what they owe) to invest in other areas or buy a car, go on a holiday or renovate the home itself. And rates are generally much cheaper than taking out a personal loan or using a credit card.”
And, as Brad says, contrary to what you might hear, chronic housing under-supply means that there is still room for growth.
“Good residential real estate is a proven performer,” he adds. “We strongly recommend to our clients to pay off as much as they can on their family, or at least get some good equity established and then look to further investments.”
“Residential property offers security, well being, independence and lifestyle benefits. And don’t forget, it’s still probably the best medium to long term investment you can make.”