Investing in real estate

Bendigo Weekly | Bendigo Weekly | 30-Oct-2011

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A few weeks ago it was reported in the media that there were ‘thousands of battling homeowners forced to sell properties at a loss’.

This seemed to be a concerning issue; after all, as the article explained, the median price had increased by nearly 30 per cent over the same time.

What the article failed to do, and this can sometimes occur, was put the issue in context.

In real terms, the sum of the ‘loss’ was quite small when compared to the actual volume and value of other sales over that time. The article discussed losses, around $300m worth over a three-year period, from 2008 ‘til 2010. Over that time, residential sales to the value of $166B were transacted. Put into context, the losses were under two per cent of the total sales in dollar value.

Under that analysis, the overall headline does not look so large.

What is true is that investing in property is not a guarantee of profit, particularly if you seek to do it over the short term. Analysis by RMIT has shown that, over the long term, property delivers better returns than shares, but the short term is a different matter altogether. In the short term, investors are more liable to affected by the cynical nature of the market, especially if, as it appears to be the case here, they bought at a peak and sold in a soft market.

So, not unlike any other investment research, professional advice and time are important factors if you are seeking to profit from property investment.

Enzo Raimondo

CEO REIV


b.Entertained

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