Property…A safe bet?

Melbourne Cup Day presents the perfect excuse for Australians around the country to knock off work for an hour or two (or the whole afternoon if you take it seriously, or your boss does!), treat yourself to a feast for lunch and a glass or a bottle of champers. The serious punters get right into the gambling, and hope they don’t have to go back to work for the rest of the week, month or year, depending on the size of their winnings.

Here at All Brisbane Realty, we enjoy the festivities surrounding the day, and see it as a good reason to let down our hair, have a nice lunch (this year it was an “upmarket” fish and chips spread – salt and pepper calamari, salads and white bait fritters to be precise) and enjoy some good times as a team. We had a little bit of an office sweepstake so that watching the race was more thrilling.

The Melbourne Cup favourites, Alcopop and last year’s winner, Viewed, were placed sixth and seventh, with the unlikely competitors, Shocking, Crime Scene, Mourilyan, Master O’Reilly and Harris Tweed all ahead of them. I can only imagine the upset among those punters who confidently placed hundreds and perhaps even thousands on this year’s favourites. The odds for Crime Scene, for example, were at 44 on the day of the Cup and 120 for Harris Tweed. If you indeed picked one of the top five, you would have been laughing all the way to the bookies yesterday.

I cringe when I think of the poor misguided bugger on TV the other night, who was so confident of his evidently imminent win, that he had bet $400,000 on his favourite (he didn’t say which horse, so we don’t know if he is a millionaire or a broken man today). The journalist pointed out that his bet could buy him a home outright, or at least pay a very sizeable portion of his mortgage, but he replied that if he won, he could buy multiple investment properties, (and for a young guy of his age, this was quite an attractive option).
Yesterday’s Melbourne Cup only proved that, when you gamble, that’s exactly what it is. A gamble. There are no sure wins. You could most definitely earn a quick buck, but it’s important to view this as a bonus, not a given. Betting or gambling of any kind is not an asset, or a way of making a living.

That leads me to the question: are there are sure wins in real estate? Is property investment a safe bet? The answer is a little more involved. There are no sure wins in property, and there is no guarantee that holding and then selling a property will earn you a nice healthy profit. So much rides on the economy and the market at the time, and of course in which suburb you decided to invest in the first place.
Lets look at New Farm and surrounds as an example, since this is the suburb we specialise in. As the Australian flagship for urban renewal, the area has been transformed into a bustling arts, dining and entertainment precinct, and, being just 2 kilometers from the CBD, New Farm is home to young professionals and empty-nesters alike. This means that New Farm is currently in demand and it’s likely that it will continue to be, as Brisbane becomes more populated and suburbs expand out even further from the CBD. Therefore, there will likely always be buyers for your investment.

Is real estate a safe bet? Yes, compared to shares and other forms of investment, it most certainly is. Real estate is an asset, and as the price of property increases steadily over the years, you can be almost sure to make your money back and then some. Depending of course on the structure of your mortgage as well as other personal circumstances, it is only very seldom a home owner will actually lose money.

So the moral of the story is, unless you think its fun to ride a broken roller-coaster for a day, I would be placing my bets on property in New Farm, rather than on a horse called Shocking!