O'meara Property

So why does the relatively humble Australian residential property investor continue to end up at the top of the investment heap?

Investment income
With prices at the bottom end of the cycle, rental returns are at probably the maximum you’ll see for many years.

Cost of borrowings
With 5 year investor mortgage loans available at around 7% and with rate rises being telegraphed pretty clearly by the Reserve Bank, there is a clear cut path to locking in costs for the next market cycle.

Demand
Continuing population growth, increases in immigration, first home buyer subsidies, historically low mortgage rates, state government stamp duty packages and continuing stock shortages say it all really.

The simplest law of economics states that when demand exceeds supply prices will increase.

Add value and keep control
When I buy shares in BHP Billiton (fine company that it is) I have zero ability to change the way they do business. When I buy a unit or house I know exactly what I have to do to increase both its rental value and ultimately its resale value.

Location
There are libraries full of data about each and every post code in Australia. You have access to council, state and federal government data that may impact the value of your investment. You also know how much each post code averages in both rental yield and capital growth.

Although we seem to be heading towards economic recovery faster than everyone expected, some market commentators are still predicting rough weather in the next few years as many corporate and sovereign debt issues have yet to be resolved.

Either way just keep quietly investing  in quality residential property. You’ll be richer for the experience.