(October 2023 Blog) 5 Property Investment Myths Busted

We’ve all heard the stories of people building incredible wealth through property investing. But we’ve also heard the stories of people suffering financial distress because of investing. 

So what separates the two groups of investors? 

Often, it’s knowledge. Successful property investors understand the rules of the game, whereas unsuccessful investors often fall victim to some or all of the five myths below. 

Myth 1: You should only buy when the market is rising 

One of the keys to succeeding with property investing is to focus on time in the market rather than timing the market. The way you build serious wealth is by buying a quality property in a quality location and holding it for the long-term, so compounding can work its magic. 

Back in 1970, Sydney's median house price was $18,700, according to research by Peter Abelson and Demi Chung from Macquarie University. At the end of September 2023, it was $1,381,045, according to CoreLogic, representing growth of 7285%. For Melbourne, prices have increased from $12,800 to $933,281, or by 7191%. 

During those 50-plus years, there were recessions, international crises – and, yes, periods when property prices went backwards. If you’d held a Sydney or Melbourne property through all those ups and downs, you’d be significantly wealthier today. 

The moral to the story is to ignore what the market is doing at the moment you’re thinking about buying – whether it’s going up, down or sideways – and to focus instead on the decades ahead. Because that’s what will determine your success. 

Myth 2: You need a big deposit to invest in property  

No, it’s not true that you need cash savings equivalent to 20% of the purchase price to buy an investment property. Some lenders will let you put down 10% or even 5%, although you’ll probably have to pay lender’s mortgage insurance. 

Alternatively, you can borrow against the equity in your existing home and use that to fund a deposit; in that scenario, you actually won’t need to put down any cash. 

Myth 3: It’s best to buy in your local area 

Your goal as a property investor should be to find a quality property in a quality location, wherever that may be. Australia is a big country with hundreds of different property markets – so what are the odds the best investment market will be your suburb? 

One reason people give for wanting to buy local is so they can check up on the property. But that’s what property managers are for. Another reason people give is that they know their local area and understand its investment potential. But do you really know your local area as well as you think? Do you know the data on building approvals, population growth, days on market, inventory levels and vacancy rates? And even if you do, do you know how your suburb compares with every other one in Australia? 

Myth 4: There’s one Australian property market 

Following on from that last point, it’s not true that there’s one ‘property market’, although you often hear this term in the media. There are actually hundreds of different markets that have different fundamentals and move in different cycles. 

For example, the Melbourne suburbs of Toorak and Footscray are very different markets. 

So you don’t invest in ‘Australia’. You don’t even invest in ‘Melbourne’. Instead, you invest in a suburb. Ideally, that investment should be made by analysing hard data for hundreds of different suburbs around Australia. 

Myth 5: You can do it alone  

Imagine you were taking an overseas flight. Who would you rather have in the cockpit – a professional pilot who’d been flying for years or an amateur who’d never flown a plane but had consumed lots of flying videos, flying podcasts and flying articles? 

Looking to buy a quality investment property? As an expert buyer’s agent, A Game Property Advisory can help you secure a quality property at a good price. Get in touch with Jim by calling 0422 446 170 or emailing jim@agameadvisory.com.au.