With Australian housing values once again heading north, a research paper from the University of Sydney has found a person’s assets such as their home rather than their employment status operates as the critical decider and distributor of their life chances.
In the paper Environment and Planning, A: Economy and Space, social scientists Professor Lisa Adkins, Associate Professor Melinda Cooper, and Professor Martijn Konings also argue against the conventional thinking that employment status and wages determine a person’s wealth.
The Sydney University research is hardly surprising when you consider the total value of Australia’s 10.3 million residential dwellings is equivalent to $6.7 trillion, according to the latest study from the Australian Bureau of Statistics. Moreover, Australia’s property ownership dwarfs share ownership, which one wealth manager estimates to be $US1.3 trillion ($A1.89 trillion).
Why property continues to attract our affection
While the Sydney University researchers haven’t addressed the fact that property is part of our DNA, Angus Raine, Executive Chairman of Raine & Horne, suggests there are many reasons for residential property’s popularity. “Unlike a business listed on the stock exchange, property is a fundamental necessity which explains its value.
“Everyone needs a roof over our head, whether we own a home or rent, while listed companies come and go off the stock exchange,” Angus said. Moreover, the values of shares can be impacted by the latest tweet from a world leader, attacks on oil refineries, or a poor performance during reporting season.
Additionally, most Australians understands bricks and mortar — they have either owned, rented, or lived in a home. It’s for this reason, more us are considering purchasing an investment property over the next few years. Angus explains, “Residential property is familiar to us, and this awareness allows us to feel safer when investing in property.” On the flip side, owning shares represent uncharted waters for many of us.
Property is a consistently strong investment performer. Last year, for example, the Aussie/CoreLogic 25 years of Housing Trends report revealed median house values in Australia grew by 412% cent or $460,000 during the previous 25 years.
Moreover, there are fantastic tax advantages for those who invest in real estate. For example, a 50% capital gain discount applies when you sell a property that you have owned for more than 12 months. Better still, owner-occupiers don’t pay any capital gains tax. Moreover, you can claim the costs of owning an investment property as tax deductions, which also contributes to the popularity of investing in residential real estate.
To discuss the value and benefits of owning a quality, well-located property, contact your local Raine & Horne office.