How to build a portfolio so when you retire, you have a guaranteed income
| Supply versus Demand – What Should Property Investors Know About This? |
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Many Property Investors in Australia are new to investing in property. They began over the last five years when population growth has been exceptionally strong and demand weak. They know they have been successful however do they understand the fundamentals to ensure their ongoing success?  A strong foundation of fundamental indicators can assist you in your decision making about your property investment portfolio.  Australia’s population has had an extraordinary rise with growth rates rivalling African countries and exceeding those of our Asian neighbours1. Growth has slowed post the GFC from its peak of about 2% to 1.6% in the latest releases2.  Housing starts have been malingering at similar levels for two decades as shown in the above graph. Supply is not changing to meet the increase population demand. However this does create pressure on rental returns. More people need to rent and the demand for good rental properties exceeds supply. This has been helpful for investors to support the holding phase of property investment strategy.  Current figures show population growth slowing, though still high, and housing starts increasing significantly. Is this cause for concern? How do I find out about my area(s)?  SQM are supplying the magazines with figures that support a closer appreciation of what is going on. They provide Stock on the Market figures which are an indication of supply. It is supplied by postcode and hence covers rather large areas in many cases. They also supply Vacancy Rates which are an indication of demand for rental property in that postcode. Graphing these figures on the same graph to observe trends can supply valuable data to a property investor.  In some areas there are questions being asked about over supply, so keep an eye on your area and know that a good rental property is always in demand though rental returns can soften.   [1] http://www.google.com/publicdata?ds=wb-wdi&met=sp_pop_grow&idim=country:AUS [1] ABS www.abs.gov.au |
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