Too many Australians looking for a safe refuge for their money are wasting their investments with this simple error. Image: Jason Edwards
The Australians who invest in properties are usually people reluctant to risk that perceive bricks and mortars as a safer and more simple investment than shares, bonds and other assets, according to a new study.
The Australian Housing and Urban Research Institute (AHURI) has just published a research work on the characteristics and behavior of owners based on two decades of data from 2001 to 2021.
Ahuri discovered that the main motivations to invest are the generation of wealth through capital gains, rental income and fiscal advantages of the negative gear and the capital gain tax discount of 50 percent. Most owners see their investments as cornerstone assets that will be carried out in the long term for retirement.
More: ‘I shouldn’t get one’: fury about the hopes of rate cutting
Australians who invest in properties are usually people reluctant. Image: Newswire / Max Mason-Hubers
In terms of time, Australians are more motivated to buy an investment property when the economy is solid or interest rates are low. The owners are generally protected from bad economic conditions because interest rates tend to fall, thus reducing the highest cost of having a property.
There was a mild rise trend in the number of Australians who bought investment properties around two decades. By 2021, there were 2.2 million owners, which is approximately 8.7 percent of the population. About 72 percent of them had only one investment property.
Ahuri sought to identify the typical Australian owner through demographic data. He discovered that Australian investors are more likely to have more than 40 years or early 50s and are educated in tertiary, full -time employees and earlier ears than average income. They are usually married and have their own houses with a lower housing mortgage than Moreage. Geographical, extend throughout the country, but there are more in Sydney and Melbourne.
More: the great Australians of money trap are falling in love
Australians are more motivated to buy an investment property when the economy is solid or interest rates are low. Image: Newswire / Max Mason-Hubers
Huge mistake that many owners are making
Ahuri also discovered that there are two cohorts among the owners. The first cohort tends to buy and maintain its long -term investment properties, while the second cohort is sold within one or two years.
The two decades of data revealed approximately one in five investment properties are sold within the first year or property, while 28 per center remained for more than 20 years.
The median investment period is only two years, which is very worrying. This is because the key to building wealth through property is capital growth, which takes time. This means that you must hold on to your property for several years to really harvest your investment rewards.
In addition, the property implies considerable transaction costs, such as the timbre tax in the purchase that can be tens of thousands of dollars. Selling in one or two years means that it is very likely that you have a fair loss in your investment.
More: in no way! What 75PC of Australians do not want at home?
He discovered that Australian investors are more likely to have more than 40 years or early 50s and are educated in tertiary, full -time employees and earlier ears than average income. Image: Richard Dobson
Wait
The time in the market is crucial.
That is why it is extremely important to do everything possible to make sure that you can hold on to your investment in difficult times, such as high interest rates are higher. Ahuri’s investigation found that those who sold their investments were quickly typical younger investors under 35 years with lower income, who had lost their jobs or were not working enough hours.
Some investors sold their assets due to divorce, while others could not accumulate loans from both their homes and in their investments, perhaps due to the increase in interest rates. Other typical sellers of real estate investments are Australians older than 45 to 54 years who are huscating retirement. The report suggests that some of these investors sell to access their capital so that they can help their adult children buy a house. Some transfer their investment properties directly to their children.
More: the terror reason to the Australians are giving pets
Other financial promoters for sale include higher investment maintenance costs, what we have seen in recent years due to the growing inflation and tax changes that discourage investment, such as massive tax increases in land in Victoria.
It is important to highlight that Ahuri discovered that the negative gear helps owners to administer the costs of maintaining their long -term investments. This not only benefits the owners, but also the tenants by ensuring that a large and diverse group of rental properties remain greased for the growing number of Australians who rent their homes.
