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How to beat affordability blues by investing in property

28/08/2008

People who put off buying property because they are fearful of financial constraints and interest rate pressures risk leaving it too long to get a foothold in the market, according to one expert.

Property Investors Alliance managing director Justin Wang said many people delay buying property because they believe real estate is currently unaffordable. However, he argues that it is fruitless to wait for the right moment as it may never come.

"Too many people just wait for something to happen, such as looking for government policies to solve the problem, but the truth is that in every decade for the past 50 years, and even before that, people have believed that property in their time was too expensive to easily afford," he said.

"But this is not the reality. It's a matter of looking for ways to organise your finances according to the time - and understanding the solution."

Wang believes one solution to entering home ownership is to follow "the B+R model", ie, to buy with a view to renting out, rather than buying a home to live in.

"You are far better off to buy a property that has the potential of high capital gain and strong rental return - whether you like the location is not important. You are not going to live there. This is your investment," Wang said.

"In turn, you rent where it suits you to live from a work and location perspective. This also makes it simple to move if your work changes, or to move if you need a bigger place for a growing family."

This strategy would allow would-be home owners to enter the market in locations that suit their budget; "there can always be an affordable entry to owning residential property," Wang added.

"The important factor is to get into the property market now - and stay there for the long term," he said.

"Historical factors will always favour long-term property investment and there will always be a balance point of capital gain and rental income by the adjustments of supply and demand."

 

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