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Pros and Cons of Buying an Old Property as an Investment

There is a certain allure to buying an old property; a whimsical proposition similar to the charm offered by an antique. There is history within those walls; aged perhaps but rich in character and personality. But beyond the romanticism lies the reality that buying an old home is a decision that has its share of risk and rewards. Here are the pros and cons of buying an old property as an Investment: Pros:1. Lower Acquisition Cost Generally, buying an old home should cost you less compared to a new one. Of course, this is not always the case. While the house itself is a depreciating asset, the land on which it stands is not.The final cost of the old property would depend on the location, its overall condition and the average selling prices of similar houses within the area.If you did a comparison, you would find that a modern 3 bedroom house would be priced much higher than an older home with the same number of rooms. 2. Prime LocationMany older homes were built at a time when the area itself was in its early development stages. They are usually located closer to the commercial and business districts of the city which are key contributing factors to the value of the property.The home itself could be located within proximity of schools, small shops, supermarkets, banks and public transportation. These amenities not only provide convenience but also generate more interest in the property despite its age.  Many older homes were built at a time when the area itself was in its early development stages. They are usually located closer to the...

Housing affordability – how income to price ratios have changed

Over the past decade, there is no doubt there has been a property boom across the country, particularly in Sydney and Melbourne. This boom has spawned many heated conversations about the affordability of housing and whether it’s becoming more and more difficult for generations to enter the property market. Much of this debate is due to changes in income to price ratios. Income to price ratios is measured by average house prices as a multiple of average household income. According to Core Logic, Sydney is currently the most unaffordable with a ratio of 8.4-times, with Darwin the most affordable at 4.7-times. The Australian property market is made up of micro-hubs, meaning that each of our capital cities has their own property market. As you can see in the above graph, no two capital cities have the same income to price ratio, making some areas more affordable than others. Sydney and Melbourne, the country’s largest capital cities, are the main drivers of price where there are continued population growth and more demand than supply. Core Logic’s recent Home Value Index states house prices in Sydney are up 18.4 per cent on a year ago, making it the highest annual growth rate in 14 years. Head of Research, Tim Lawless says “The strong growth conditions across Sydney have provided a substantial wealth boost for homeowners, however, the flip side is that housing costs are becoming increasingly out of reach. This is especially true for price-sensitive segments of the market such as first-time buyers and low-income families,” (source: News.com.au, March 2, 2017: http://www.news.com.au/finance/real-estate/buying/annual-growth-in-sydney-house-prices-the-strongest-in-14-years/news-story/86990c26dd01855d2b98428ff910e6c6) If we compare these results to the income to...