WHEN it comes to the property market there are plenty of common sayings people take as gospel.
However, Wakelin Property Advisory associate director Jarrod McCabe said buyers should be careful about accepting these sayings as truth.
“There are a number of these myths from the property market,” Mr McCabe said.
“There is sometimes some truth to them, however, people should be careful about following them blindly.”
Take a look at four property myths Mr McCabe thinks buyers should consider carefully.
1. WORST HOUSE ON THE BEST STREET
“Investors sometimes think it doesn’t matter about the condition or type of property they are purchasing if its in the right area or street,” Mr McCabe said.
“However, if it’s not the norm for the area you won’t get the standard growth.”
For example buying a 1970s brick veneer house on a street filled with Victorian terraces was not advisable.
“You’ll see the growth of the land value but not on the improvements,” Mr McCabe said.
2. BOOM & BUST
“This theory suggests that it is good to get in and out of growth markets quickly,” Mr McCabe said.
“However, buying and selling are expensive so should be a long-term strategy, not a get-rich-quick scheme.”
Mr McCabe said compound growth was stronger the longer an investor held a property, so no one should buy an investment property with the aim of selling the within five years.
3. HOT SPOTS
“Investors and homebuyers feel like buying in the next ‘hot spot’ ensure the investment can’t fail,” Mr McCabe said.
“The reason an area is labelled as an up and coming hot spot is usually because of some sort of change that will lead to short sharp growth but not necessarily be continued in the long term.”
Mr McCabe said while infrastructure developments might lead to short term price growth in areas where growth was consistently below average, growth was likely to revert back to below par levels in the long term.
4. FLIPPING FOR PROFIT
“Attempting to flip a property is often seen as a sure fire way of turning a profit,” Mr McCabe said.
“However, if the market isn’t working in your favour its an expensive process.”
While Mr McCabe said people should consider ‘flipping’ properties as an option, the market should be considered carefully.
“There are also a lot of costs involved,” Mr McCabe said.
“You are getting no income from the investment property, there are renovation costs, as well as buying and selling fees.”