While the recent increases in interest rates have caused hesitation and a bit of a shakeup in the investing world, property investors need not worry.
A few basic statistics about the Australian household and trends make it clear that your investments will not only be worth it, but put you in a better position than most when planning for retirement.
According to ABS, around two-thirds (66%) of Australian households owned their home in 2019-20 – either with or without a mortgage, and this figure is down from 68% recorded in 2015-16.
“The fact that 30% to 35% of Australians rent now isn’t going to change,” says APFG CEO Matt Sully. “That’s a fairly big portion of the population and it’s growing, so they need investors to buy those properties.”
Full-time workers earn $84,628, but when taking into account that many Austrians are hourly or part-time, the average annual income is less. There is also another portion of the population, 1 in 3 Australian adults who are not working because they are retired, living with a disability, caring for others, or unemployed.
So the typical adult’s income (from all sources) is less again, at $39,468.
We often talk about the high earners, those who have the money to invest in property, but the reality is that only 3.5% earn more than $180,000, and it’s less than 10% who make more than $120,000 per year.
“We can see clearly why the renting pool is growing. For Australians, if they’re single and trying to buy a house on $80,000 a year or less it’s very very hard. So where did they go? They’d become part of the more than 30% of Australians who rent.”
This is the approximate amount of super a person should have now to reach a "comfortable" retirement by age 67, according to the Association of Super Funds of Australia (ASFA)
“The average standard is not that comfortable,” says Sully. “If these Australians don’t have a plan in place to retire with roughly $2 million, they are going to keep working until they are physically unable to drive the car, 75 years old. But just by looking at these averages, if they haven’t got a plan to have a very significant amount of super and they are going to be working until they are really old, because there’s no other options for them.”
See more: The Myth of the Super: Will your Superannuation really look after you?
Australians who are nervous about what to do with their money don’t need to hesitate on property investment. The rental pool is strong, and will keep growing while Australian home ownership declines, and there are more students and overseas workers needing temporary homes. Furthermore, the sad fact is that most Austrlians cannot afford to own homes, so they will continue to rent long into the future.
Even more of a sure bet, is the various options of properties with guaranteed rental returns, some as high as 6%. Talk to our team today to find out more.
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