{"id":1597,"date":"2022-01-23T09:04:25","date_gmt":"2022-01-23T09:04:25","guid":{"rendered":"https:\/\/royabhishek.in\/urbanbuyer\/15-property-investment-lessons-i-learned-from-covid\/"},"modified":"2022-01-23T09:04:25","modified_gmt":"2022-01-23T09:04:25","slug":"15-property-investment-lessons-i-learned-from-covid","status":"publish","type":"post","link":"https:\/\/royabhishek.in\/urbanbuyer\/15-property-investment-lessons-i-learned-from-covid\/","title":{"rendered":"15 property investment lessons I learned from Covid"},"content":{"rendered":"

[ad_1]
\n<\/p>\n

\n
\n

Please use the menu below to navigate to any article section:<\/p>\n<\/div>\n

The naysayers and property pessimists were proven wrong.<\/strong><\/p>\n

\"PriceDespite prolonged lockdowns, no immigration, no international students, the threat of high unemployment, and all the negative forecasting for Australian housing markets, the value of many homes around the country grew by more than 20% \u2013 or by as much as 30% in some locations \u2013 in the last year alone.<\/p>\n

The past two years have been among the most tumultuous in living memory, and yet Australia looks set to emerge better placed than almost any other country and our property markets have surprised just about every commentator.<\/p>\n

Obviously, these have been unprecedented times therefore we can\u2019t blame some of those forecasters who made predictions early on in the pandemic for getting it so wrong.<\/p>\n

\"CovidSo let\u2019s put some context to what has actually happened over the past couple of years.<\/p>\n

Although our two largest capital cities experienced numerous lockdowns, our property markets experienced incredible growth from the cities to some of our smallest regional towns.<\/p>\n

Now that it seems we\u2019re slowly coming out the other side \u2013 across that bridge Scott Morrison said he would build for us \u2013 I wanted to take a look at what home truths can be taken from Covid to make us better property investors.<\/p>\n

Here is what I learned about property thanks to the pandemic.<\/p>\n

1. Our property market is too big to fail<\/span><\/h2>\n

\"PropertyThe government and banks have a vested interest in keeping the housing market propped up.<\/p>\n

They are invested with us and when things got tough in the thick of the pandemic, they stepped in to help those in need.<\/p>\n

Given the incredible circumstances, the past couple of years has thrown our way, the resilience of our banking system is also clear \u2013 it is also too big and too strong to fail.<\/p>\n

2. The supply of money is important<\/span><\/h2>\n

\"PaperProperty investment is a game of finance with houses thrown onto center stage.<\/p>\n

When cash is plentiful (and cheap like it\u2019s been in recent years) property values rise.<\/p>\n

Now, however, the financial landscape is beginning to change as lenders start to slowly move up their fixed rates and APRA steps in to ensure sound lending practices.<\/p>\n

3. The wealth effect is key to consumer confidence<\/span><\/h2>\n

The government knows the best way to guide a population out of a recession is for people to spend their way out.<\/p>\n

When we feel wealthy, we are more likely to spend money which in turn makes the wheels of industry go around.<\/p>\n

Those who held assets and particularly property, be it their homes or investments, have benefited from government stimulus and therefore have been keen to reinvest in the market.<\/p>\n

4. Knowledge-based workers have job security<\/span><\/h2>\n

\"LabourAnyone who could do their work remotely was at an advantage during the pandemic.<\/p>\n

These Australians were able to \u201csell\u201d their knowledge, rather than rely on their hands to make money, which meant not only could they work from anywhere, but they were less impacted by lockdowns.<\/p>\n

One takeaway lesson if you are looking to future-proof your career is to consider pivoting to a knowledge-based job if you\u2019re not in one already.<\/p>\n

It means your skills are likely to be in strong demand moving forward, you\u2019ll attract higher wages and won\u2019t be disrupted in the event of another pandemic meaning you\u2019ll have the money to invest in assets.<\/p>\n

5. You can\u2019t rely on one income stream<\/span><\/h2>\n

\"GrowingWhether it\u2019s one job or one business, you need multiple sources of income for financial security \u2013 but the rich have always known this.<\/p>\n

Next time it may not be another pandemic, it could be a personal health issue or other unique circumstance.<\/p>\n

If you have an additional passive income from an investment property then you could live off the rent or even sell a property if needed.<\/p>\n

The pandemic was a wake-up call for many Australians to save and invest as they realised they were really only a few weeks of lost income away from being broke.<\/p>\n

6. Cashflow buffers are important<\/span><\/h2>\n

\"Savings\"Having plenty of cash savings provides a safety net in case your income unexpectedly falls, or a large expense crops up.<\/p>\n

This doesn\u2019t necessarily need to be in cash \u2013 it could be in an offset account.<\/p>\n

Ideally, you would want to hold between 6 and 12 months of living expenses in cash savings but depending on your financial position and risk appetite it might make sense to hold more.<\/p>\n

That cash buffer just reduces unnecessary stress and anxiety plus ensures you have sufficient time to make whatever adjustments are prudent, including selling assets.<\/p>\n

And clearly, this is a lesson many Australians learned as it is estimated we have amassed a war chest of over $200 billion in pandemic savings and an estimated 80% of homeowners overpaying on their monthly mortgage payments.<\/p>\n

7. Financial security lets you sleep at night<\/span><\/h2>\n

\"Savings\"Many people have been working hard for years (or decades) and have very little to show for it other than their own home and compulsory super.<\/p>\n

So building a nest egg outside of these main assets provides greater financial strength to weather any storms \u2013 pandemic or not.<\/p>\n

For example, if you lose your job and have liquid investments such as shares, then you know you have a fallback position that doesn\u2019t involve selling the roof over your head.<\/p>\n

If you haven\u2019t been regularly investing, perhaps Covid is your reason to start.<\/p>\n

8. Markets will always correct<\/span><\/h2>\n

Property Market corrections are not uncommon, in fact, they seem to occur every 8 to 12 years.<\/p>\n

But I don\u2019t try to time them, and neither should you.<\/p>\n