Since Q2 of 2019, the real house price index has risen considerably from 100 to 131.4. This sharp increase is because of an overall rise in investor confidence, an increase in existing owner’s wealth, improved market health because of government policies, and the generally strong economic fundamentals the Australian Economy is showcasing.

The idea is that real estate investment can help people improve their current income and create more value for their portfolios in the coming future. And that is exactly what’s happened. The median property price in Australia has grown from ~AUD 646,000 (2019) to ~AUD 941,000 (2021) in just two years!

This shows a 68.22% growth during the period – much more than many other investment modes.

In this article, we will look closely at why property is one of the safest asset classes for the long term and how it can help you create wealth and achieve financial freedom!

An Overview of Property Growth In The Last Decade

In the past decade, Australia has seen consistent and significant growth in commercial and residential property values. There has been a steady increase in property prices over the past few years.

It is important to note that in 2010 and 2011, the industry saw a slight downfall. However, the overall trend is positive, and we can expect prices to continue to rise in the coming years.

According to our experts, property prices are not likely to go down in the coming years, either. The golden pot at the end of the real estate industry still remains visible in the form of active and passive earning opportunities.

The main reason for this is that Australia has one of the lowest unemployment rates in the world and is home to some of the largest corporations. This provides a stable and growing economy, which is essential for the property market to thrive.

Why Property Remains A Safe Asset Class For The Long Term

Better Resilience

Compared to other investments, such as stocks and bonds, the property has shown to be much more resilient during economic uncertainty. For example, during the global financial crisis of 2008, while the stock market crashed, property prices only fell by 20%.

However, as property investment advisors suggested, the value appreciated much more quickly afterward. This is because people will always need a residence, while businesses will continue to need offices. This ensures that there is always demand for property, even during tough economic times.

More Stability

The long-term nature of property investment means that you can ride out any short-term downturns in the market. This is unlike other investments, such as stocks, which can be sold quickly if the market falls.

Another key reason a property is a more stable class is that it is a physical asset you can see and touch. This makes it much easier to value than intangible assets such as stocks and bonds.

Easy Liquidity Conversion

Finally, real estate is a highly liquid asset, which means that it can be easily converted into cash if needed. This is unlike other investments, such as art or collectables, which can be difficult to sell quickly. Even if people aren’t willing to sell it completely, there is always the option of renting the property out for cash.

Nearly 30% dwelling units were rented out (34% of the total real estate industry) in 2021. What’s more, the rise in popularity of Airbnb and other home-sharing platforms has provided investors with an additional avenue to generate income from their property investments.

All these factors make property investment one of the safest asset classes for the long term!

Final Words

There are always risks involved when we talk about any kind of investment, be it in stocks, bonds or real estate. However, with the right guidance and investment strategy in place, these risks can be minimized. One industry that manages to reduce investor risks considerably in real estate. This makes property a much safer asset class for the long term!

If you are thinking about investing in property, get in touch with one of Equimax Property’s Investment Advisors. We will be more than happy to assist you in making the right decision for your future!