The Value of Luxury Properties as Long Term Investments

Dec
20
2019

There are endless choices when it comes to investing in property within Australia. There’s buying a house to live in; there’s flipping a ‘renovator’s dream’ and selling it 12 months later; and then there’s long term property investment. Many Australian and foreign investors are currently looking to long term investment in premium property, and in particular luxury apartments in Sydney and Melbourne. Here’s why.

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Why are property investors planning for the long term?

Playing the long game benefits property investors just as it commonly does share and stock traders. As Warren Buffet has famously phrased, “Our favourite holding period is forever.” Investing in property in the long term can better protect you against market changes and fluctuations. Long term rental income can bring you a positive cash flow, provide negative gearing advantages or cover mortgage payments until the loan is paid off. Property management costs and maintenance costs can both be minimised if you have excellent long-term tenants.

The Aussie/CoreLogic 25 Years of Housing Trends report puts the advantages of long term investment into crystal clear perspective. The median Australian house has grown in value by 412% in the 25 years since 1993. If Australian property values rise at the same rate of growth that they have in the past two and a half decades, the national median for a house will be $2.9 million for houses and $2.1 million for units by 2043. Apartments for sale in Sydney and Melbourne could be selling at a median of $3,471,588 and $2,847,206 respectively.

What makes buying luxury property an appealing investment for the long term?

High-end properties such as luxury apartments in Melbourne or Sydney tend to hold appeal and demand effectively over the long term. There’s certainly a trend towards more luxurious living; people of all demographics have come to expect and seek out a lifestyle rather than simply a home. This means that resort-style amenities such as an in-building gym, swimming pool and rooftop gardens can make all the difference to potential renters – and will make tenants less likely to move out if the market changes in either direction. Luxury property also tends to be meticulously planned and built to a high standard as with Crown Group, so you could be far less likely to encounter major maintenance or structural issues over the long term compared to a cheaply and rapidly built development.

Finding the perfect luxury long term property investment isn’t simply a case of going to your local real estate agent and selecting a premium property for the sake of it. Naturally the investment could be higher, so it will be vital to carry out due diligence in your research and to be selective. Property investors who do invest in the right luxury properties could well be enjoying higher returns with lower volatility in the long term.

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