PROPERTY
Property features at some point in most success stories, either as the means to wealth or preserving it.
“Realistically, the only way you make quick returns in property is through luck or a boom,†Mark Bouris, who founded then sold Wizard Mortgage Corporation and is a successful developer, reveals in his book Wealth Wizard.
The closest to a property boom in the next year is likely to be office blocks in Melbourne.
Office values slumped 25 per cent from their peak during the global financial crisis and in 2010 recovered only 5.3 per cent, says Martin Hession, head of property at Australia Unity.
He points to a shortage of new developments, which have a lead time of two or three years, due to a lack of bank funding, as well as a forecast $22 billion pouring in from offshore this year seeking Australian real estate, compared with the usual $9 billion.
“Vacancy rates have fallen dramatically. Melbourne will be the standout performer with values rising 30 per cent in the next two years,†he says.
At the same time, house prices are weakening, though Sydney has the best prospects because it has been a laggard.
“Sydney has upside with prices likely to average 6 per cent annually over the next three to four years. For capital growth it will do a bit better (than other cities) over time,’ says Robert Mellor, managing director of leading property forecaster BIS Shrapnel.
“It hasn’t moved much since 2003. Maybe it was 20 per cent over-valued then but it’s since fallen in real terms.â€
But back-to-back interest rate rises this year would pull property priced down 5 to 10 per cent.
Rents are rising and until first home buyers are back in force, the market is there to be had for investors.
In what may herald a permanent break from the past, units are in more demand than houses.
Among the time-tested rules for buying residential property are that it should be close to public transport, schools, parks or beaches, have few other rentals in vicinity, and that it meets the area’s demographics.
The largest price rises in 2010 were for houses in Melbourne (up 49.7 per cent) and units at Nambucca Heads in northern NSW (up 47.2 per cent), PR Data says.
Capital city properties within 10 kilometres of the CBD are generally regarded as fail proof, and properly expert Margaret Lomas says Adelaide offers the best value.
Since the key to property is location, other potentially winning investment opportunities include car parking spaces or your own ATM.
Further afield, property prices have collapsed in the Unites States, presenting bottom of the market opportunities for investors, but are in a bubble in China and in most of Asia.
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