How Safe is Property Investment in Troubled Economic Times?

Recent economic activity, including the fall and partial recovery of the stock market, understandably has people concerned about the safety of their investments and overall projections for the Australian economy. No longer do people feel entirely confident and optimistic about their investments and long term financial security.

However, people also need to consider that current circumstances will not remain the same for the longer term. The stock market inevitably experiences peaks and troughs and while it can be disconcerting to see returns on your money fall, it is often the case that things return to a healthier position reasonably quickly.

In troubled economic times, it is common for questions to be raised about the security of property investment. While property has traditionally been seen as a secure source of investment that pays good long term dividends, an unstable economy can force people to question whether real estate is truly the best way to invest their money.

So, how safe is investment in property?

  • Despite the broader economic conditions, real estate remains a very good way to invest money and a strategically effective way to save money. In contrast to money kept in banks, real estate offers an opportunity to obtain more benefit as it is extremely rare for property to lose its value. An investment property that is well chosen, well managed and maintained in good condition will almost invariably provide positive income.
  • Of course, the process of choosing an investment property is an important (and not always straightforward) one. A number of conditions have to be right for a property to represent a sound investment. For example, the property needs to be in a sought after location and with good access to shops, services and transport. For an investment property to do well in unstable economic times, the factors that make an area and property attractive matter more than ever.
  • Real estate experts also suggest that having an investment property (or multiple properties) still fosters the possibility of building a nest egg no matter whether the economy is stable or more unpredictable. Generally speaking, property provides a sense of security because it is tangible and, with inflation, the value of a property most often increases.
  • A residential investment property is also a worthwhile investment in the current economy because the demand for rental properties remains high. In fact, there is a shortage of quality residential properties for rent in most major cities and other areas of Australia, and therefore competition is fierce amongst prospective tenants. The challenge for property owners in this circumstance is not so much finding tenants, but ensuring that good quality tenants are found who will care for the property and consistently pay their rent on time and in full.

No one likes the uncertainty and fear that tends to come with an unstable economy and worse still, no one likes to watch the value of the money for which they have worked so hard, deplete. However, being reactionary in troubled economic times (and in doing so avoiding or pulling out of property investment) rarely carries any advantage.

Investment properties represent one of the most secure and lucrative forms of investment over time and, even when the economy is changeable and unpredictable, property remains one of the best value and most secure investments for the long term.

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