Investing in either the share market or real estate is usually people’s first choice when looking to grow their wealth. Making sound financial decisions is important at the best of times, but with the COVID-19 pandemic impacting job security and industries on a global scale, being well informed about your investment options is crucial. That’s why we’ve taken a closer look at the pros and cons of the property and share market.
Investing in the real estate market takes time. You need to save a deposit, secure financing and find a property that suits your needs. The transition into the share market is much easier – it doesn’t take as much time or money to buy stocks. What’s more, real estate is not as liquid as stocks, so it can take a bit longer to see any financial benefit.
The share market offers quick rewards but also presents high risks. It’s in a constant state of flux – responding to the market, economic and inflationary changes. When COVID-19 first struck, the market recorded some of its biggest falls in history. Things have stabilised slightly in response to the easing of restrictions, but financial experts agree it’s impossible to tell if the pandemic will have an ongoing impact on the market.
While COVID-19 has impacted Australia’s economy, it’s also created a unique opportunity for first home buyers or those looking to expand their real estate portfolio. Earlier this month the Reserve Bank of Australia announced they’ll be cutting interest rates to 0.01% – the lowest it’s ever been. The move is aimed at encouraging banks to continue lending cash.
This spells good news for those looking to buy into the real estate market. With property prices dropping, it’s a great time to snap up something that might ordinarily have been out of your price range and start building your portfolio.
Thousands are already starting to take advantage of this unique opportunity. According to the Australian Bureau of Statistics (ABS) data shows 13,040 first-home buyer loans were approved across the country in September – an increase of 6% over the previous month.
Most real estate investors make money by collecting rent, so unlike shares, investing in the property market provides you with steady passive income. Passive income is considered the holy grail of supplemental income. You have the potential to build your savings, pay off debts and achieve financial freedom with a minimum of effort.
Investing in the share market also allows you to generate passive income – often faster and more profitably than the real estate market. But as we mentioned, the value of shares is contingent on a variety of economic and political factors – so financial benefits are not guaranteed. A rental agreement on the other hand guarantees a steady flow of income which may be more profitable for you in the long term.
What’s more, when you buy real estate, you acquire physical land or property which appreciates over time. With a little patience and the right real estate advice, you could sell your investment for a tidy 6.8% profit.
The COVID-19 pandemic has resulted in thousands of job losses Australia-wide. With the unemployment rate sitting at 7.5% many renters are facing a difficult situation. Tenant management is an essential part of real estate investment, so landlords find themselves dealing with equally difficult circumstances. While rent represents a passive income for investors, it also helps cover the cost of property maintenance, council fees and more.
But don’t let the current situation deter you from exploring real estate investment. Last month the Victorian Government introduced an $80 million rent relief grant to assist renters experiencing hardship due to COVID-19.
Those who qualify for assistance will receive up to $3,000 as a one-off payment. Grant applications are open until the 28th of March, 2021.
Investing in either the share or property market comes with its own unique risks and rewards. But at the end of the day, the key to making any investment decision is research and access to good advice.
Our friendly staff are here to help you make the right real estate choice for you as well as providing property management services that save you money. Gives us a call on 1300 828 652 to schedule a chat today.
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