Property Investors Relying On Past Performance For Future Success
When it comes to investments we're constantly told not to use past performance as a guarantee of future success.
When it comes to investments we’re constantly told not to use past performance as a guarantee of future success.
Yet over half of property investors are doing exactly that, according to a survey by home loan lender, ME.
When asked what gave them most confidence their investment was a safe one:
- 56% said ‘Australian house prices have always gone up in the past’
- 11% said ‘so many other people are buying investment properties it must be safe’
- Only 34% nominated ‘advice or analysis’ as the main basis for confidence
ME Head of Home Loans, Patrick Nolan, said the results are a timely reminder for caution and objectivity when it comes to property investing, particularly with property prices being so high.
Nolan said when buying property as an investment, purchasers should carefully consider a broad range of factors that may affect future value like location and other demand and supply factors.
“Australia’s property market is diverse and not all properties are performing equally at any one time.
“While Perth is currently recovering from a downturn, Melbourne and Sydney are growing, albeit not as fast, while growth in Hobart has improved.
“Apartment development in Brisbane, Sydney and Melbourne are also at record high levels, with some commentators speculating supply may outstrip demand in the short-term.
“Your investment timeline is another important factor: the longer you’re able and prepared to remain invested the more likely you are to see growth.
“Some other factors to consider include population growth, surrounding infrastructure, employment, education and lifestyle facilities, which can influence a steady rental income stream and the long-term value of the property. As well as the age, condition and how much upkeep the property will cost in time and money to keep it attractive to tenants.
“In the end, analysis and advice is the best basis for making any investment decision, particularly if you’re tempted to rely on past performance, or indeed if you are basing your decision on what other investors are doing.”