It’s all over the news at the moment – the sky is falling on property! Property prices are collapsing!

Does this mean we should all sell our properties and never invest in property again?

Current negatives

  • Yes, property prices in Sydney and Melbourne are falling in a lot of areas. However, this is following significant rapid rises in the value of property in these areas over previous 5 years. In many other areas of Australia, property prices have not fallen – and are even increasing.
  • Following government pressure and concerns about mortgagees coming after lenders if they had issues affording their loans, many lenders have become more restrictive in how much they will lend over the last 12 months or so.
  • The likelihood of the Labor party winning the federal election this year and their proposed changes to negative gearing and capital gains tax have spooked some potential property buyers.

However, if your investment timeframe is long term, such potential negatives may not be relevant for you.

In fact, they may actually create opportunities for your wealth creation and financial freedom.

While past performance isn’t always the best predictor of the future, if property prices were to rise in the future at the same rate as over the past twenty five years, according to Corelogic research reported by Aussie, here’s what Aussie’s report forecasts:

Obviously these are simple extrapolations and don’t, in fact can’t, account for the many economic, demographic and political variables that will play out to 2043.

However, Australia’s government realises with its ageing population that it needs to keep growing its population. As a result, we have one of the fastest growing populations in percentage terms of any developed country in the world with 350,000+ people being added to our population each year.

The areas where the most of this population is being added to each year, includes Sydney, Melbourne, Perth and southeast Queensland.

Thus, the law of supply and demand would suggest that where population growth is strongest, house price rises are likely to rise the most.

At Doctors Wealth, we believe in a diversified investment portfolio, including where possible, buying and holding onto good long term residential property investments for the wonderful compounding and leverage benefits that this type of investment can offer.

Amongst the upturns and downturns in property markets and any changes in government legislation, there are always opportunities for you to benefit from, if you make smart choices and focus on the long term.