OH! Magazine - Australian Version September 2018 | Page 33
IS PROPERTY
STILL A GOOD
INVESTMENT?
Bushy Martin explains whether property is still the way forward for investors.
ou may have heard mixed reports
about the Australian property
market. From some sections of the media,
there’s talk of a property ‘bubble’ and
warnings that property growth can’t
maintain the skyward trajectory that savvy
Australian investors have come to know
and love. Others argue that property
remains a safe bet and will continue to be
so for years to come.
Y
If you’re a little confused, I don’t blame
you. But to bring some clarity to your
wealth creation strategy, I firmly believe
there is still no better way to build wealth
in Australia than through property
investment. Let me explain. There are a
number of key factors that will continue
to drive growth over the long-term.
more than 14 years (about 20 per cent).
Looking ahead, the ABS predicts that
average life expectancy will be 92 years
for males and 95 for females by 2050.
This means that people will need to be
housed for much longer, putting more
strain on housing availability. Since the
mid 1960s, the household has also
reduced from 3.4 to 2.4 persons. This 40
percent decrease is because Australians
are choosing to remain single for longer,
marrying, partnering and having children
later in life, and unfortunately divorce
and separation continues to rise. For
example, ABS statistics from 1986 to
2006 revealed that one parent households
rose by 120 percent and single households
were up 80 percent.
– property ownership must still be an
attainable goal for most Australians.
Experts, including RBA Deputy Governor
Phillip Lowe, believe the diversity of our
local market and the influx of skilled
migrants will continue to stimulate our
economy and increase household
incomes. Of course, high growth will not
be across every city and region in
Australia. It is expected that 70 per cent
of property market growth will come from
the greater capital city regions of the
eastern states, Queensland, New South
Wales and Victoria. This will be driven by
career opportunities (high employment),
infrastructure investment and lifestyle
needs.
Property: ‘As safe as houses’
Population growth
Scarcity of supply and growing demand
The value of anything is determined by its
relative scarcity, and scarcity is fuelled by
actual and perceived supply and demand.
Where there is more demand than supply,
the value of something is likely to rise. In
Australia, a housing shortage will continue
to drive the property market. Research
from ANZ in 2016 revealed that Australia
faces an estimated property shortage of
more 250,000 dwellings, a deficit of 2.6
per cent based on Australia’s housing
stock of just under 10 million.
Changing demographics
Australians are living longer, and residing
in smaller households. According to
research from Professor Graham Hugo,
average life expectancy has increased by
Australia has one of the highest population
growth rates in the developed world. This
is mostly due to our high immigration
rate. And this growth is set to continue.
The ABS predicts Australia’s population
to rise to between 36.8 million and 48.3
million in 2061, reaching as high as 70
million by 2101. Consider this simplified
forecasting – Australia will have 16.5
million more people by 2061 and, based
on the average household size of 2.4
persons, we’re looking at around 156,000
extra dwellings each year, on top of the
existing national housing shortage of
250,000!
Will Australians be able to afford property?
For the property market to continue to
grow sustainably, affordability will be key
When it comes to property investment,
it’s pretty clear that the numbers will
continue to stack up. To reinforce the
point, if the growth rates of property are
equal to or even slightly less than shares,
the power of leverage will almost double
your wealth creation compared to shares.
Of course, before throwing yourself into
the property market, make sure you do
your research, seek advice from experts
and put your own, personalised wealth
plan in place.
Bushy Martin
Bushy is a property investment specialist
and author of The Freedom Formula. He
and his wife Sonya have built an
international portfolio of 12 properties
that afford them a great lifestyle. Find out
more at www.khgroup.com.au
OH! MAGAZINE ( SEPTEMBER 2018 )
33