From what we’re hearing on the television and radio, and reading in newspapers and websites, it’s all doom and gloom out there at the moment.
BY VANESSA DE GROOT
Consumer confidence has been down for some time and the renewed turmoil in the global economy really isn’t helping. People are scared, understandably. They’re not sure if another global financial crisis (GFC) is around the corner. And the uncertain political situation in Australia, with a government throwing around something as controversial as a carbon tax at a time like this, is making matters worse. Even some property experts are starting to waver on their staunch optimism faced with these current conditions.
Last week when the first signs of a stockmarket crash were starting to show, I was asked if I was concerned, seeing as I’ve recently entered into a contract to buy an investment property. Until I was asked, it hadn’t even occurred to me to be concerned. And I’m not worried. If anything, I’m relieved to have my money in property. I’d be concerned if it was in shares! The reality is that even though property prices have stagnated or fallen marginally, they haven’t dropped significantly like shares have and it’s proven, once again, that property is the safest place to put your money.
While I have no concerns about my property investments, I asked my partner whether he was worried and he reasoned that another GFC might actually be a good thing for us as property investors (although I cringe to write that, because for many it won’t be good news) because interest rates would likely drop and as we intend to hold our investment for the long term (probably around 20 years) any short term fluctuations in the market won’t affect us.
A few days later I was asked again, this time by a different person, if I was worried buying property at a time like this. And again, my response was no. And having this question posed by yet another person really drove home for me that as an investor, in order to make money you have to take a risk. And as we all know, fear of taking that risk is what prevents many people from investing in property and furthering their wealth prospects.
At the end of the day there’s always risk in investing, but in fact there’s actually more when the market is up and almost peaking. Now prices are down and we know that even if they drop a little further, we’re fairly close to the bottom and the only way really is up. That means we’ve bought at one of the lowest prices, and when the market picks up again (and it will) we believe the value of our property can only go up.
If you educate yourself properly and you know the market you can make a good decision and buy a good investment. You just have to believe in your investment and the history of the property cycle, which shows that while there are down times, it always goes back up. Ignore what’s going on in the media – believe in the fundamentals and forge ahead!
I’d be urging people to go out and buy a property now. If you can afford it and you’re in a secure position financially, take advantage of the lack of confidence out there creating buying opportunities for savvy investors.
If you don’t, when all is said and done and the market is booming again, you’ll be saying (as we’ve heard a million times): ‘If only I’d bought when the market was down…’
What do you think about the current global economic turmoil? Does it worry you? Are you running scared and thinking about putting your properties up for sale, or are you looking to capitalise on everyone else’s fear and buy?
Vanessa De Groot is the deputy editor of Australian Property Investor magazine, www.apimagazine.com.au