Property investment numbers on the up

16th Mar 2010

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The latest data released by the Australian Financial Group mortgage index has indicated the proportion of mortgages being taken by investors is the highest in the survey's four-year history, and a 25% increase from just six months ago in August 2009.

Queensland recorded the highest proportion of investor mortgages in Australia, at a staggering figure of 39.5%. New South Wales recorded the second highest proportion, coming in at 38.5%. It is clear that investors have taken the place of first home buyers, and this data shows first home owners accounted for just 11.3% of buyers, about 50% fewer than at the same point last year.

The unfortunate reality is that a sizeable percentage of these investors are likely to be making a costly mistake, simply due to the fact that they haven't consulted with an expert prior to investing in property.

There are a number of elements that need to be taken into consideration when selecting investment properties, and these are dependent upon factors individualistic to the area and investor.

Many investors mistakenly think the process of building an investment portfolio is as simple as choosing a property that is cheap, putting tenants in it to pay the mortgage on it and then hoping it doubles in value over a few years so they can sell it. However, done properly, the process involves a lot more work and research than just taking an educated guess on a property and hoping for the best.

Factors that need to be considered when selecting the ideal investment property include the investor's financial situation, their existing investment portfolio, and goals for the future.
What is the potential for growth in the area? This may be positive such as new infrastructure that will improve public transport, or negative such as a high density housing complex being built too near the property that may lead to a decrease in the property values.

A smart investor will purchase a property with their eyes open, having consulted with an expert first and obtained all the necessary information that is relevant to their situation.