Property Investment News – February 2011
The RP Data-Riskmark Home Value Index was released this week so I thought I'd give my two cents on what all this means.
If you've been reading my blogs you'll know all about my 7-10 x 7-10 property investment strategy. It's based on the biggest assumption that we make in property – that it will double every 7-10 years (as long as you invest in areas with good, solid fundamentals). Now there has been a tonne of speculation in the media about how Aussie house prices will hold up long term against the GFC as well as the recent spate of market change, flooding and cyclones.
This week's property news feed
Contrary to all of this the Home Value Index shows that over 2010 there was a 4.7% increase in house values in capital cities. Now this doesn't mean values increased everywhere – for example as you'd expect Melbourne and Sydney had the biggest increases (8.4% & 6.6% respectively) whilst Perth's values fell by -2.3% and Brisbane by -1%.
So what does this mean? Well firstly, as always take all of these statistics with a pinch of salt. Whilst it's good that there was an overall increase in values you might not feel so confident if you're trying to sell a property in Perth. There's a lesson to be learned here. As a property investor, whatever the weather, with some investment education, do your due diligence and buy with good solid fundamentals you wont need to stress. Things like “Home Value Index Reports” will be an interesting read but won't mean the sky is falling.
That being said, with values down in some areas it could be a great opportunity to jump in and snap up good deals -ust do your research first. For those of you feeling the squeeze there's some good news – The Reserve Bank is holding on any rate rises for the moment so you should be able to breathe easy at least until March.
If you've already bought and you're seeing your property drop in value just hold on. The most important thing to remember is that property cycles, prices go up and down but the long term trend is upwards. you need to adapt your strategy to the market and always be educated on your cash flow so that you can afford to hold through the slumps.
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