Those who decided to invest in the Australian property market in the past few years are probably feeling pretty good about their decision right now.
According to the latest CoreLogic RP Data statistics, home values across the combined capital cities achieved a year-on-year increase of 8.5 per cent by the conclusion of 2014.
This was down from 9.8 per cent achieved during 2013.
Certain locations recorded even higher growth levels, such as Sydney with its 13.2 per cent year-on-year increase achieved by the end of 2014.
This growth exceeded the predictions of many pundits, who may also have been surprised to hear of the unexpectedly high growth levels in several rural and regional areas.
BMT Tax Depreciation found the numbers of depreciation schedules produced for regional areas increased significantly in the most recent financial year.
As an example; the seaport town of Point Pirie in South Australia achieved a 169 per cent increase, while the New South Wales south-coast city of Nowra achieved a 64 per cent increase.
These results demonstrate that the market can sometimes move in unexpected ways.
By now, many investors may have forgotten or broken the resolutions they made at New Years.
With hindsight of the lessons learnt during 2014 and to help investors stay on track with their goals, the following are my ‘will do’ resolutions for property investors in 2015.
I will: think outside the box
I see it time and time again – investors looking to purchase in the area they grew up in, or one they are familiar with.
In doing so, they may potentially be overlooking other areas with much higher growth potential in favour of the comfort of familiarity.
This is a mistake I was guilty of making in my earlier years as a property investor.
I bought in a town I had lived in for a long time, rather than relying on performance indicators or other such metrics to guide my purchasing decision.
This may have resulted in a sub-optimal investment decision.
Investors who follow the herd and rush to purchase in the more predictable investor locations can often be guilty of overlooking other possibilities.
The lesson learnt this year, with the increased activity in rural and regional locations not traditionally considered investor hotspots, was that it can pay off to consider all possibilities.
I will: act now
I witnessed many prospective home owners sitting on the fence throughout 2014, undecided as to whether or not it was a good time to enter the market.
Many of these people are sure to be feeling disappointed now, after witnessing the capital gains realised by many others.
The naysayers of doom and gloom will always be out there, warning of property market crashes or plummeting property prices.
However, the reality is that people who followed the advice of these negative commentators in 2014 are probably regretting doing so now.
Buying a property can be a big decision and no one should ever rush to purchase without thinking through their options (and their budget).
However, don’t let your indecision keep you from what potentially could be a rewarding investment decision.
I will: get real about my budget
Sometimes budgeting can slip off the radar.
With the current extended period of historically low interest rates, it can be easy to get comfortable in thinking that extra bit of cash will always be around.
There are no guarantees in life and it can never hurt to have a bit of money saved up on the side.
One way to better understand your true expenditure is to track your spending for one month.
By committing to recording every expense for an extended period, you’re sure to uncover any mindless or wasteful spending you may have otherwise been unaware of.
This will help you to create a budget that is accurate, achievable and useful – and drop a few detrimental spending habits along the way.
I will: take advantage of cheap money
Speaking of interest rates, it’s fair to say that it’s unlikely they’ll stay at historic lows forever.
Although the Reserve Bank has not yet given any indication of an impending rate rise, I would still suggest investors take advantage of the current situation and consider locking in rates where possible.
Money is cheap now, but it can’t last forever.
I will: enjoy the ride
Finally, none of us really knows what 2015 will bring.
We can’t actually say for sure whether interest rates will rise, fall or stay the same.
Nor can we predict with complete certainty the hotspots which will provide the greatest capital gain or the highest rental yields.
So my main resolution as a property investor is to simply be ready for whatever comes along in 2015 and to enjoy the ride that is property investment.
Adaptability, flexibility, with mental and financial readiness to purchase, will be key in the Australian property market heading this year.