I recently read an article from “the leading property data, information, analytics and services provider in Australia” – I’m sure this is self-proclaimed. While the article has merit (I guess), at least from the perspective that the data is likely correct, the article was somewhat alarmist in its nature and ticked a lot of the boxes you would usually associate with click bait. However, it failed to really cover off a few important things. Let me bring you up to date.
The article was essentially talking about the percentage of people who lost money when reselling a property. The article went on (as you’d expect) about the large percentage of people who were losing money when selling property across the country. It dove deep into the locations in which people had lost money and almost no location was immune to these huge property losses. They also dove deep into the exact amount of money these people were losing when selling, quickly providing the original purchase price followed by the recent sale price and yep they had gone down. In some cases, people has lost thousands of dollars and in some cases, people had only lost a humble amount. The article not only gave you the dollar amounts, it also gave you the percentage of loss which was made.
So, at this point you’d be reading this article thinking “If such a large percentage of people have lost money and in a lot of locations across the country and the losses in general had been a large percentage loss, why would I bother?”. I guess if you were an everyday Mum & Dad investor or maybe a first time investor or buyer you could be forgiven for thinking this way.
So, has the article achieved its goal? Well I guess that depends on what the goal of the article was. Like most printed media these days (especially in the mainstream media) The goal is to get shares, clicks, likes, subscribers, purchases and so on. Hence the reason so many articles lead with a generally broad and often alarmist, click bait style title. (not too dissimilar to what I have done)
The main problem I have with this story and stories like it, is that they only focus on the negative and fail to generally explain why people sold for a loss, why did people need to sell in the first place and they most certainly never explain how to avoid falling into said trap of selling at a loss. Now let me firstly state that I don’t know any of the people they surveyed, I can’t confirm why the sales were made and there will always an exception to the rule. (E.g. a Divorce could force a sale)
I would however like to point out a few important things. Firstly the average hold time of the properties in questions were 3, 4 & 5yrs years max (they also did some even shorter time frames). As most of us know property is a long game and played wisely, over a longer period it will (generally) never lose money. As explained above there are exceptions to the rules and certain things which can impact price falls or market crashes etc. But I would challenge anyone to show me a loss on a property they have held for 20yrs in SEQ, I could almost guarantee they couldn’t.
Therefore, if we know property won’t lose over the long term and of course if we take out the exception to the rules E.g. Divorce, etc. then why would the stats have it so, that firstly so many people are losing money and secondly that the average hold time was less than 5yrs? Well probably because the stats might be correct. The better question is why are people selling at a loss and why are they only holding for such a short period of time? The answer is lack of knowledge, too many people don’t seek expert advice when it comes to the long game associated with property and the things you need to put in place to make it so, you only sell the property when you are ready.
At MSS Property, we always discuss the psychology of investing, the long-term expectations, the risk and rewards. But more importantly we discuss the process we use in selecting and building a property portfolio, which doesn’t require you to change your lifestyle in order to hold long term. We also educate our clients on putting in place the correct structures to prevent unforeseen issues causing undue stress. Which also allows you to hold the properties as long as you would like with an extremely high level of comfort.
Long story short, there is no reason you should need to sell a property for a loss if you A. Seek expert advice B. Pick the correct property which you can hold without effecting your lifestyle, and C. Have the correct structures in place from the start! If you’d like us to help you build a self-funding property portfolio with very little stress, then reach out for a chat, you’d be surprised just how easy it can be.