Core Logics monthly updates are out and there are some interesting comments which can lead to reasons for portfolio consideration. On page one of their monthly report they advised that …”
So if you are sitting on old property stock in your portfolio, it may be worth considering stopping being a nester. Can you use that equity for better reasons? One reason to adjust your portfolio could be to use any equity in the rental to clear any personal debt you may be exposed to.
Or re balancing your portfolio may allow you to find a stronger geared asset providing stronger tax benefits. Potential is also greater to invest into something new which will provide you stronger rental returns when your existing property becomes less competitive.
As you can see from the above image there have been some massive volatile swings in the market, most noticeably Darwin, small cities and townships reliant on few industries can be exposed to greater volatility in both directions. Interesting Sydney’s growth of .4% on rents is the lowest growth rate on record. Rental declines overall are based on poor wage growth and increased housing supply.
Does this mean as investors we need to steer away from property? No! It means we need to have a diverse investment portfolio inside the property market and also the financial market to minimize our risk. Diversification is a technique used to minimize risk to your assets.
What Nieuvision wealth solution specialists have been advising potential clients for last 12 months is to look outside of the popular borders of NSW and Vic. The rental yields in these cities are close to the lowest in Australia and even though that means an investor could be potentially taking advantage of negative gearing, it also means as investors we should be looking to other markets. Timing is everything, all markets go in cycles, so a downward or bottom end market could still have potential upside going forward.
Supply and Demand
When we are talking investing locations, we always want to consider the economic principal of supply and demand
When price is high demand for a product is low and therefore the quantity of product purchased is less. Therefore if the price is deemed too high by investors they will avoid the purchase. Hence why the demand curve is a downward slope, as price decreases investor demand increases.
The supply curve is an upward curve. When the price increases the supply will increase as the supplier (builder) is attracted to higher revenue.
So how do you use this to your advantage? It is used to your advantage by finding the right markets to invest in. Using data and experts like Nieuvision Wealth Solution Experts to find the right pockets where demand is either consistently going to be in that market or continue to be there.
Full report can be found here
More investor tips can be found here