When you’re looking to build long-term wealth, one of the first questions that come to mind is what types of investment would generate the most wealth for me? And for Australians, that may mean a decision between investing in shares or in property. In Australia, it’s worth noting that while the share market may have had a record year pre-COVID-19, the market shift after has led to a decline in returns.
On the other hand, the Sydney property market has had its slowdown but is currently well on its way to recovery. In fact, data from Corelogic shows that property owners had an average 15.9% gain over the last five years.
Many Australians still opt for property investment, which is why Aussie banks will loan up to 95% of the value of a residential property compared with all other investment options.
In this article, we’ll do a top-down review of why many Australians are opting to buy property rather than shares.
Buying shares comes with a number of risks and it’s important to understand and be comfortable with them before investing. In the long run, many Australians opt to invest in property rather than shares because of higher returns, but what can also be gained from investing in the share market may outweigh the risk for some people.
Below are a few reasons why Australians are more hesitant to invest in the share market.
With COVID-19 still dramatically impacting the Australian economy, there are no guarantees. Shares are more likely to be impacted by market fluctuations at any time compared to a residential property in the short term. Before investing, you need to be wary about the strength of your returns and how much loss you’re willing to settle for.
Although selling your shares overnight can still earn you cash whereas selling your property can take much longer, you’ll reap higher returns from property investment in the long run.
Despite the current climate, the Australian property market has remained relatively stable. Although there have been significant changes, home values have remained constant throughout Australia.
Below are just a few reasons why many Australians still prefer to invest in property.
But on top of its upsides, it’s important to note that owning a property has its share of challenges. On top of maintenance, other property expenses, and mortgage repayments, selling it may take longer. Investing in property is a choice that you’ll need to make according to your needs and whether or not it fits your current circumstances.
Whether you’re thinking about investing in property or shares to build your wealth, it is crucial to factor in the current state of the market and how this will affect returns both in the short and long term. To be successful, it’s important to consider investment timeframes and how comfortable you are with risk for both options.
If you’re planning to invest in the Sydney property market, Shore Financial can offer you the best strategic advice to ensure your investment is aligned with your current goals. Making informed decisions can help you reap positive results amidst the current market challenges.
Get in touch with Shore Financial today.