You probably know that property markets throughout Australia have been booming during 2021.
CoreLogic reported that Australia’s median property price rose by a remarkable 13.5% in the year to June – the fastest rate of annual growth since 2004.
However, CoreLogic also found that price growth has slowed at the top end of the market, which might suggest the rest of the market might cool soon.
So, is Australia’s booming property market starting to cool? Right now, it’s too early to say. The real question, though, is not whether the market is cooling, but whether you should be worried if it is.
The answer to that question is – definitely not. And there are four good reasons why.
- A slowdown was inevitable
No boom lasts forever, especially one like the current boom, where prices have been growing at extraordinary rates. Maybe the slowdown has already begun; maybe it’s still some time off. Either way, a slowdown was always inevitable.
- Prices are still forecast to grow
Slowing down does not mean going backwards. Even if price growth slows from 13.5% to 5% per year, property investors will still be making strong gains, especially once you add rental income into the mix.
- The outlook remains promising
Speaking of 5% price growth – that’s what Westpac has forecast for 2022, on top of a forecast of 15% growth for 2021. So both the short-term and medium-term future look promising.
- History shows the property is a good long-term investment
Smart property investors think in terms of decades not years. So what really matters is the long-term outlook. If the past is any guide, property prices will experience ups and downs over the decades ahead, but grow handsomely over the long-term. (Please note, though, that past performance is no guarantee of future performance.)
How to succeed with property investment
No matter whether the market is going up, down or sideways, you need to focus on your personal situation: That means making sure you:
- Buy a quality property in a location with long-term growth potential
- Have the capacity to pay off a 30-year mortgage
If you tick both those boxes, your property investment journey is likely to be successful.