The ‘Crisis' In Perspective

Buying property has always been expensive but investors with a social conscience can help solve the problem.

- Matt Bateman And Luke Harris

The so-called property “affordability crisis” is thrown around in the media to capture our attention and tug on our heartstrings. But as investors,learning to minimise the impact of our emotions and developing an investment plan based on facts, data and research is often a better way.

The reality is that purchasing property as an investment or a home has always been an expensive and challenging exercise and most likely always will be. We just need to put the affordability argument into perspective.

Think about all the things that have happened economically and socially over the past 100 years or more: the Great Depression, the Hawke-Keating “recession we had to have” and at least five major stockmarket crashes, including the GFC.

Yet throughout all of this property has shown to be a steady performer, according to a report released in October 2017 by the Swiss-based Bank of International Settlements (BIS), which looked at 20 advanced economies and 27 emerging market economies from around the world. In fact, the report showed that in Australia property prices have climbed a whopping 6556% since the 1960s. That is the equivalent of an average increase of 8.1%pa.

Now, if we were able to fast-forward 10, 20 or 30 years into the future we would most likely look back to the “good old days” of 2018 when property prices were “cheap”. Why do we say that?