Why 2019 could be the best time to invest in property
With property prices falling in some areas, investors are cautious. However, DPN advises this could be the best time to invest by finding hidden value.
Research from CoreLogic shows that property has delivered investors significant returns via capital growth over many years. Regardless, buyers become wary when prices fall. After twenty-two years of observing several property market cycles, DPN explains that when buyers hesitate, better value emerges.
Setting aside fear and uncertainty when investing in property
Real estate has long been a favoured asset class to manufacture wealth, especially in comparison with alternatives. The share market sees periods of high return but comes with significantly greater risk. Putting your money in the bank is a safe but low-growth option. Most cash deposit rates earn 1-2% per annum. According to CoreLogic, property returns have averaged more than 10% per annum over the last 20 years.
Those with the ability to research and find the right properties in a correction, find value. In a falling market though, people are reluctant to invest when there is uncertainty or fear of the unknown.
The value proposition of a falling property market
Within this hesitation, better value emerges for buyers. This includes less competition at auctions, deposit threshold decreases and lower interest rates. Property prices deviate from forecast growth trends, offering a larger buffer to realise capital growth and wealth.
Property is a long term investment and socioeconomic challenges are always overcome, however, buyers still freeze when the market declines. It’s smarter to invest when others are deterred than when buoyant amid higher prices – the quote from Warren Buffett has never been more relevant. For these reasons, value may always be found in any given market, even during a correction.
For more comprehensive information, see DPN’s article: A falling property market could be the best time to invest and build your wealth.
Disclaimer: Chan & Naylor take no responsibility for the accuracy of any research material of contributors to our newsletter. Contributions to our newsletter such as this article, “Why 2019 could be the best time to invest in property”, are meant to be educational only and Chan & Naylor does not endorse any promotional material promoted in their articles. Readers should do their own research to determine the accuracy of their material.