Those who decided to invest in the Australian property market in the past few years are probably feeling pretty good about that decision right now.
According to CoreLogic RP Data, home values across the combined capital cities achieved a year-on-year increase of 8.5% by the conclusion of 2014. This was just down from the 9.8% achieved during 2013.
However, the market can sometimes move in unexpected ways, so here are my 2015 New Year’s resolutions as a property investor.
I will: think outside the box
I see it time and time again – investors looking to purchase in the area they grew up in, or one they are familiar with. In doing so, they may potentially be overlooking other areas with much higher growth potential in favour of the comfort of familiarity.
This is a mistake I was guilty of making in my earlier years as a property investor. I bought in a town I had lived in for a long time, rather than relying on performance indicators or other such metrics to guide my purchasing decision. This may have resulted in a sub-optimal investment decision.
Investors who follow the herd and rush to purchase in the more predictable investor locations can often be guilty of overlooking other possibilities. The lesson learnt this year with the increased activity in rural and regional locations, not traditionally considered typical investor markets, was that it can pay off to consider all possibilities.
I will: be ready to act
I witnessed many prospective home owners sitting on the fence throughout 2014, undecided as to whether it was a good time to enter the market. Some of these people are sure to be feeling disappointed now, after witnessing the capital gains realised by many others.
The naysayers of doom and gloom will always be out there, warning of property market crashes or plummeting property prices. But those who followed the advice of these negative commentators last year are likely regretting doing so. Buying a property can be a big decision, and no one should ever rush to purchase without thinking through their options. But remember, indecision may keep you from what could potentially be a rewarding investment decision.
Once you are mentally prepared to act, it’s just as important to be financially prepared. This includes having considered your budget and price range in great detail and seeking pre-approval from your finance provider. That way you will be ready to take advantage of any opportunities which come your way, and avoid the regret of what could have been.
I will: get real about my budget
Sometimes budgeting can slip off the radar. With the current extended period of historically low interest rates, it can be easy to get comfortable in thinking that extra bit of cash will always be around.
However, there are few guarantees in life and it can never hurt to have a bit of money saved up on the side. One way to better understand your true expenditure is to track your spending for one month. By committing to recording every expense for an extended period, you’re sure to uncover any mindless or wasteful spending you may have otherwise been unaware of. This will help you create a budget that is accurate, achievable and useful, as well as assisting you to drop bad spending habits along the way.
I will: take advantage of cheap money
Speaking of interest rates, it’s fair to say that they’re unlikely to remain at historic lows for long. Though the Reserve Bank has not yet given any indication of an impending rate rise, I would still suggest investors take advantage of the current situation and consider locking in rates where possible. Money is cheap now, but it can’t last forever.
I will: enjoy the ride
Finally, none of us really know what 2015 will bring. We can’t actually say for sure whether interest rates will rise, fall or stay the same. Nor can we predict with complete certainty the locations or property types which will provide the greatest capital gains or the highest rental yields. My main resolution as a property investor is to simply be ready for whatever comes along in 2015. Enjoy the ride that is property investment. Adaptability and flexibility, with mental and financial readiness to purchase, will be key in the Australian property market heading into the New Year.
Happy 2015 to all. Here’s to a prosperous and fulfilling new year.
This article was first published here: www.realestate.com.au/blog/new-years-resolutions-property-investor/