Four property investment myths debunked

property myths debunked

Everyone has an opinion when it comes to first-time property investment, so sometimes it’s best not to believe everything you hear. Let’s examine four of the big property myths that might deter would-be investors, and how you can plan a successful investment strategy. 

Myth 1: Time of year doesn’t impact on buying or selling property

Many buyers neglect to consider the effect of the seasons on the property market, but the numbers show otherwise. Figures from the Real Estate Institute of New South Wales reveal the best clearance rates last year occurred in September 2012. Their data shows that 2233 NSW properties were listed for auction that month, with a clearance rate of 62 per cent.

Unsurprisingly, Christmas and New Year were the worst times of year to buy and sell. Only 217 NSW properties were listed for auction in January 2012, with a clearance rate of 76 percent. Clearly the month really does matter, with spring presenting that perfect opportunity for buyers to tap into a widening property pool and sellers to meet increased demand.

Myth 2: First-home buyers are being forced out of the market

True, many exclusive suburbs in our capital cities have become unaffordable to the average first-home buyer, but that doesn’t mean the market as a whole is out of reach. These days, first-time investors are simply entering the property market on a lower rung, opting for apartments, townhouses or renovator delights. Outer fringe suburbs with promising infrastructure are also an affordable option for first-time buyers, as are regional areas with strong employment opportunities.

Sure, times have changed since our parents’ day, when the classic first property purchase was a freestanding house with a hills hoist out back. However, with plenty of research and some lateral thinking, first-time investors can still make a strong entry in today’s property market.

Myth 3: Most properties are overvalued

Australian property prices continue to be the hot topic of newspaper headlines and dinner party conversations around the country. With 61 per cent of Australians believing that our property prices are overvalued, it’s no wonder first-time investors are wary about making the big jump into property. However, it pays to put this debate into perspective.

Australian housing affordability has significantly improved over the last few years. Today, the average Australian homeowner spends around 32 per cent of their household income on mortgage repayments. Compare this to 38 per cent of household income in 2011 and 44 per cent in 2008 (pre-GFC). What this tells us is housing is actually becoming more affordable – good news for every would-be investor.

Myth 4: Low auction clearance rates are preventing houses from being sold

For most Australians, low auction clearance rates usually mean one thing: houses aren’t selling. But first-time investors are wise to challenge this misconception, because auctions aren’t always a definitive indicator of sales. Buyers are becoming increasingly savvy, and very often auctions are simply providing a means for buyers to gauge market value and then negotiate a sale privately.

Beyond the myths, there is one fact every investor agrees on – hiring an expert property manager is the best way to protect your investment. Speak to K.G. Hurst today about your property management options

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