Australian Property: The Great Wealth Builder

The dream of owning your own home sits at the heart of the Australian dream for many. 

Indeed, whether we’re talking about a Melbourne terrace house or Byron Bay Beach shack – it’s less about the specifics behind the property in question and more about the idea that property evokes.  

Indeed, money, while an important and ever present consideration process in any discussion about property, misses the point of just how significantly owning property has become embedded in the psyche of everyday Australians. Maybe it is that which explains why property is so richly valued in Australia! 

The Current State of Play

According to the property research firm CoreLogic, Australian property prices might have just about bottomed out. 

This comes after falling 9.1% between May 2022 to February 2023, according to the research firm. With prices increasing in March, could they continue to run higher in 2023?

While inflation, which has driven Australia’s reserve bank to push interest rates to highs not seen in many years, saw property prices come off, a confluence of factors are now contributing to price gains, with the market seemingly shrugging off the prospect of more rate rises.

These factors include a tight rental market which is driving purchasing activity and expectations around significant net migration in 2023 and beyond. 

This represents a ‘narrative flip’ for many, with big banks, like the Commonwealth Bank of Australia previously forecasting a 15% decline in property prices, from peak to trough. Such a drastic selloff never came and may never arrive.

Property as a Goal 

For many, owning property is a cornerstone of the Australian dream, representing a key personal and financial goal. 

Beyond the practical considerations of owning your own home, property ownership – whether a single dwelling or an extensive property portfolio – is also a cornerstone of much of Australia’s wealth. 

According to research conducted by Credit Suisse, the wealth of Australians has been significantly driven by the run up in property prices we’ve seen in recent decades, contributing greatly to the country’s median net worth of US$28,450 (2021), per person. 

While this figure is likely to have softened in the wake of recent price declines, it underscores the importance of property for Australian investors as well as the country’s perception of wealth. 

For perspective, between 2011 and 2021 National house values increased 5.61% annually, according to CoreLogic. 

Yet despite the attractiveness of property investing, getting started in the market – and getting that initial deposit – is one of the key barriers to entry.

While products like term deposits and savings accounts offer stable returns for investors looking to boost their deposit hopes, for many it is a non-optimal solution.

On the other hand, much has been made about the power of exchange traded funds or ETFs for DIY investors. To be sure, ETFs that track benchmarks like the S&P 500 and the Nasdaq have performed remarkably well over the long term. 

What ETFs alone can’t help investors do is align their preferences and goals with their investment decisions. 

Depending on where you are in your wealth journey, you might have a long or short time horizon. You might be willing to take on a lot or little risk. Or you might have certain investment style preferences. 

An ETF that tracks the S&P 500 is potentially not suitable for investors with a short term investment time horizon, such as someone in the latter stages of saving for a house deposit. 

This is where Syfe Smart Baskets could play an important role in your investment journey. With Smart Baskets you can easily find a collection of ETFs and stocks – aligned with your investment time horizon, risk tolerance and investment style. Making it effortless to line up your investments with your personal and financial goals – like buying a house.

Start Achieving your Goals Today

Whether you choose to leverage products like Smart Baskets or take a more DIY approach, questions around the specific time frame in which you want to achieve your financial goals – such as saving up for a deposit – are key.

Ultimately, how and why you invest will be radically different based on who you are and where you are in your life. For shorter term goals income-centric products such as bonds might be something worth exploring, while for longer-term goals stocks might be more suitable, depending on how much risk you are willing to take on.

The flip-side of this equation is someone who doesn’t know what their goals are. For this person, lining up their ambitions with their investments can be difficult and even confusing. This is where Syfe’s Goals feature comes in, which allows you to set, track and invest against your biggest goals.

With Syfe’s intuitive goals feature you’ll be asked four key questions to help you define and put you on the path to achieving your goals:

  1. Choose and define a goal spanning: Financial Freedom, Retirement, House Deposit, or set a Custom goal
  2. Choose a dollar amount you want to assign to your chosen goal
  3. Define the time period you want to achieve your goal in
  4. Decide how much you want to invest on a monthly basis + your initial investment amount
  5. Link your Goal with your investments (Smart Baskets or choose from 12,000+ stocks & ETFs)

By making specific goals, you get closer to your aspirations; letting you match up your investments with your ambitions – setting you up for success – in all aspects of your life.

Smart Baskets are pre-packaged orders formulated according to investment attributes of the underlying securities/ETFs (such as geographic and industry exposure, historical dividend yield, and historical capital appreciation), and do not take into account your personal circumstances, risk appetite, and goals. Past performance figures are based on information provided by third parties and may not be accurate. Past performance is not indicative of future performance. The information provided does not suggest or imply and should not be construed as any guarantee of future performance, or as investment advice or strategy. Each Smart Order comprises several separate orders for ease of execution only, and should not be construed in any manner as a managed discretionary account or a managed investment scheme.Investing involves risks, including the risk of losing your invested amount. We do not provide personalised advice or recommendations. You should decide if the orders to be placed are suitable for you. Any information we provide is general advice and current at the time written. Please speak to your financial or tax adviser for personal advice.