It is becoming common for new property investors to enter the market without a clear roadmap for their goals.
A recent study by Momentum Wealth showed that around one in three investors are breaking into the market without a plan. This share rises to almost half, or one in two, of all first-time investors.
Momentum Wealth managing director Damian Collins said the lack of strategy among investors is concerning, as this could result in them missing out on potential opportunities.
“For first-time investors, planning is especially crucial as it ensures an informed purchase decision at the start of the property journey and provides a solid launch-pad for further investments in the future,” he said.
Furthermore, there is a need for a viable strategy given the current market conditions, in which the impacts of inflation and rising interest rates are dampening the housing demand.
The study showed that around one in four property investors are targeting to get enter the market within the next 12 months, with Western Australia as one of the top destinations.
In fact, figures from the Australian Bureau of Statistics showed that Western Australia reported a continuous growth in housing finance, growing to $0.74bn in May.
“In the current Perth property market, we are seeing considerable interest among investors, particularly those based in the eastern states, who are attracted to the value and growth potential of the Perth market,” Mr Collins said.
Perth is among the only three capital cities that recorded a monthly growth in dwelling price in July, rising 0.2% to $560,020.
On an annual basis, dwelling prices in Perth increased by only 5.5%.
“As an investor, property selection should not just be price-driven,” Mr Collins said.
“Different properties and locations will each deliver differing results in terms of cash flow versus capital growth. This makes it critical for investors to understand what they are aiming for in a property investment, and plan accordingly.”
Veteran investors follow a plan
For experienced investors, having a strategy is a must — the study showed that 80% of investors with at least two properties and 86% of those with over five articles follow a plan.
Mr Collins said the high share of investors who have a plan in place reflect the value of having a blueprint as part of a long-term investment strategy.
“Of course, our financial situations are constantly evolving, and a plan made today needs to be regularly reviewed and fine-tuned to reflect changing preferences around risk and shifting personal needs while identifying further opportunities to advance wealth,” he said.
“I encourage all property investors to develop a personal roadmap to be confident they are investing in a suitable property to achieve their goals — this is an area where the advice of property experts can prove incredibly valuable.”
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