We believe that residential property is a very long-term investment.
We base our position on proven reality. ABS statistics show that owners with a mortgage in Australia hold a property on average for eight years. For those lucky enough to own a dwelling outright, the average length between homes is 18 years & for those renting, most move every 17 months or so.
And how long does the typical Australian investor hold a property? Well, the answer is sadly no where nearly long enough. Recent research from RPData shows that very few sellers make a profit unless they hold a property for a complete cycle – typically 8 - 10 years.
In fact, their research shows that it is only by holding an investment for two cycles (more 15 years) that the majority of buyers have any real chance of making a capital gain let alone some serious profits.
Interestingly, holding a property for less than one cycle – regardless of whether it is one year or, say, five – makes little difference when it comes to the likelihood of a buyer making a gross profit on resale.
Also, the results – with the exception of Sydney – vary little between state, city or region.
In essence, regardless of location, the best chance to make a capital gain when it comes to residential property is to hold for decades. We refer to this as the “get rich, very slowly strategy.
Of course, the RPData figures are based on gross profit that is, reselling the same property for more than the original amount of money paid. It does not take into consideration any purchase or selling costs, or any rent, tax benefits or depreciation.
Again, we believe that residential property is a very long-term investment. Those who that that you can make a profit quickly by investing in property, are very likely to kidding themselves or extremely lucky in deed.