4 Property Investment Myths | Your Finance Adviser

While everyone loves talking about property in Australia, the reality is that few people are experts. Here are some of the most common property investment myths that you might hear.

Blue-Chip is Best

One of the main things you might hear when you talking about property is that blue-chip is best. What this means, in most cases, is buying into the top suburbs as close as possible to water or the city. While this is good advice in that blue-chip suburbs have performed well over a long period of time in terms of capital appreciation, the main thing to consider is that you have to be able to afford to buy into such an area.

IF you’re in a high-paid job, then purchasing a negatively geared, high-priced property might be something that is good advice. However, if you’re constrained by borrowing or equity, then it’s not always the most helpful property advice. Interestingly, while many experts will tell you to buy only in cities in blue-chip locations, over the past 20 years, there have been numerous examples of semi-regional markets that have performed strongly and come in at lower prices with far higher rental yields.

One Property Market

If you read the mainstream media, you would think that Australia has one large property market, and you have to simply sit back and take what the market gives you. In reality, there are tens of thousands of smaller property markets across the country, and they all differ. We can clearly see different markets at the state level, suburban level and even street level. The clearest example of this might be a suburb that has a ‘good’ end and a ‘bad’ end. We even see streets that have very different prospects as one side of the road might be zoned differently to the other.

You need a lot of Money

While it’s true that you do need some money to get started in property, cash isn’t always the most valuable commodity when it comes to buying property. These days, the ability to borrow money has become a lot more legislated than it used to be, and you will need to prove your ability to service a loan. If you have a steady job or form of income, then you can also take advantage of several different types of loans and even Government incentives that could allow you to buy a property with as little as a 5% deposit.

Property Always Goes Up

While property in Australia has had a rich history of performing very well, there are periods when prices go sideways or even fall. The most obvious example of this would be Perth and Darwin, which both saw huge capital growth during the mining boom, only for prices to retrace and stagnate for the next five years.

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