4 reasons why people invest in property

4 reasons why people invest in property

The latest lending figures from the Australian Bureau of Statistics show the value of new loan commitments to investors rose 9.4 per cent. This is a 22.7 per cent rise through the year.

What’s more, this growth has been particularly strong in New South Wales, with the ABS charting the 6.7 per cent rise in loan values, making them as high as they have been since June 2018.

All of the above suggest there is a real confidence in the market at the moment. So why are people investing in property?

People invest in property generally for one or all of these four reasons:

  1. Wealth Creation

Wealth creation is the reason why people invest, and property offers lots of possibilities. For starters, it generates an income which can be used to either fund a lifestyle, boost super funds or be put to other investments.

Furthermore, improving the property could increase the rental value, and hence income. Later down the track, the property can be used to secure finance for another investment property, or other investment opportunity, and thus increase wealth.

  1. Retirement Planning

Bricks and mortar are rapidly becoming a vital piece of the retirement funding jigsaw. Income from property can be used to supplement any super income; for some property investors, this additional income has even allowed them to retire early, or at least cut down their working hours as they approach retirement age.

Super funds can in some cases be used to purchase property; we strongly recommend seeking advice from a financial specialist as using super for property does come with rules and regulations as to how it can be used.

  1. Capital growth

Property is not a get rich quick scheme, and while there are ups and downs in the market, generally the value of a property does increase over a few years. The canny investor buys when the market is at a low, and sell when it is at a high.

But the even cannier investor doesn’t sell, and as per point 1, uses this capital growth to increase wealth.

  1. Tax Benefits

Like any other business, property does have numerous deductions that can be off-set against tax. Generally, you can claim back any costs associated with operating, and managing a property. Indeed, some investors use negative gearing as a strategy to lower their tax bill if they have income from other sources.

But it’s just not operating and managing costs that can be offset; many people don’t realise depreciation is also tax deductible. Paying for a depreciation schedule at the start can save several 100s or even 1000s.

With interest rates still at a record low, we believe now really is a great time to invest in property. Everyone needs somewhere to live, and investing in property really has stood the test of time. Why don’t you do a bit of a review of finances, talk to a financial specialist and see what they come up with?

If you’d like to know more about property investment, or if you already have an investment property and you’d like to know how you can enhance it to increase rental return, please do get in touch.

Quality property management doesn’t cost you money, it makes you money; with over 40 years of experience behind us, we’ve helped thousands of people achieve their financial goals through property.

Give us a call on 02 4956 9777, send us an email to mail@newcastlepropertymanagement.com.au  or pop into our Cardiff office for an informal chat.

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