Never sell property.
That’s the common saying that is bandied around quite regularly in the real estate industry. It’s been tried, tested, and continues to be a key driver of wealth amongst Australians.
I agree wholeheartedly with the philosophy and strategy. Land appreciates as time evolves and it’s quite common to see property prices double within 10-20 years of ownership. If you invest wisely and with a ‘long-term lens’, this can set you up for life.
However, the market we’re currently in is unprecedented. Nine rate rises in twelve months has never been seen before. (you know it’s legitimate when the governor of the RBA is a household name).
Household budgets have been stretched beyond repair and investments have swapped from positively geared to a negative surplus in a matter of months. If you have a home loan or a property portfolio, how long do you hold on for and at what cost?
If you’re an owner-occupier (on an average loan of $500k), your loan repayments have increased by $1000 a month. With the rising cost of living, this may put many in the mortgage stress category. Can you sell at a surplus and move into a lower asset class? If not, renting may be the only feasible option, however your surplus may get eaten up by excessive rent costs. In our view, protect your home for as long as possible (within reason) and hold on to your largest asset.
If you’re an investor, there are more options available. Are the repayments on your investment properties eating into your lifestyle? If so, is there an opportunity to increase the rent or refinance to a lower rate? If these strategies don’t work, can you sell and pivot to a different asset class? There’s a potential to sell and generate a surplus and wait for a lower investment purchase in the future. As this is not centred around your place of residence, you have more choice and opportunity to pivot.
If you’re an investor, be open to the possibilities and a pivot in your strategy. Times like these call for an open mind and potentially a ‘change of course’ from that famous philosophy that you should never sell property.
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