There are many reasons to invest in Australian property. These reasons include Stable, predictable growth, Tax breaks, diversification, and low risk. Let’s take a closer look at each one.
Stable, predictable growth
If we look at the Australian property market in 2022, prices will remain stable. The trend will continue, although not to the extent as in the last two years. Last year, the growth rate of property prices in Australia was the highest in the past two years. However, the pent-up demand is starting to decline. While people always want to move home, the recent Covid announcement delayed many people’s plans to move. That will limit the number of potential buyers in 2022.
Low risk
While all investment forms carry a certain degree of risk, an investor’s exposure to cyclical market fluctuations cannot be eliminated. While investing in multiple properties in different states may reduce a particular risk, it is unlikely to completely eliminate the overall risk. Diversification in investments in a single asset class is helpful in reducing this risk. But it is unlikely to eliminate systematic risk, which is the primary concern of a property investor. Instead, an investor should invest in uncorrelated assets with each other.
Property investments can be attractive because the money you put into them will almost always come back. This is unlike stock investments, where you can lose everything in a blink of an eye. In addition, the Australian property market, historically speaking, is much less volatile than the stock market. Although prices fluctuate, they generally go up and down and re-adjust themselves accordingly. Therefore, it is wise to choose a property investment only when you have a clear idea of how much you want to spend on the investment.
Tax breaks
One of the most important benefits of investing in Australian property is the tax breaks available to residents. When filing their annual tax returns, many investors claim these benefits, which amount to up to 10 percent of the purchase price. This benefit may not be available for every type of investment property, but it can make a world of difference in your bottom line. Read on to find out more about the tax breaks available to you. You can claim more than one property’s tax breaks, but it is important to be aware of your specific situation when preparing your return.
Diversification
One way to increase your returns and reduce risk is through diversification, especially when investing in Australian property. While there is no one “perfect” Australian property market, there are many smaller ones. Different regions have varying property cycles, and macro factors such as government policy and access to funding also play a role. Micro-factors that affect local property markets, such as the local real estate market, also influence returns.
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