Your prospects for financial development will come down to the risks you are willing to take. Over the years, have you saved a significant amount of money that you would like to invest in an industry that will give you considerable returns? Are you looking to ensure your family's financial stability and beat our country's inflation? If so, one of the best ideas you can have is to invest in real estate in Green Valley or similar suburbs. Why? Ultimately, it's a matter of supply and demand.
The real estate market in Australia is growing steadily, and the prices of listed properties show no signs of falling any time soon. While it's true that in the last decade, most Australian cities have gone through a housing boom, the available offers, at least so far, still can't keep up with demand. Want to take advantage of this situation? To make an investment that, in a few years, is likely to become your most valuable asset? If so, real estate is the way to go.
In addition, you should also look at the practical advantages. Purchasing a house in a Sydney suburb will involve lower monthly expenses than living in a more central area. Plus, your children will grow up in a quiet environment, closer to nature, and far removed from the hustle and bustle of the city. Homes listed in Sydney's suburbs are appreciating, on average, by about 7% per annum, which is a value that beats inflation. In almost all cases, investing in a suburb property will be a great idea that will ultimately translate into a significant ROI and give you the flexibility to pursue extra income streams.
Think About the Monetary Flexibility
Houses available in Green Valley have typically been built in the last twenty years and are situated close to all the amenities you need for everyday living. GV has, over the last decade, gone through an extensive infrastructure development plan, which has transformed it into one of the most sought-after suburbs West of Sydney’s CBD. House prices in the central parts of the city have risen steadily in recent years and today have reached values that are unmanageable for most Australian families. However, for suburbs, things are a bit different.
Although the last 12 months have resulted in real-estate price increases of more than 11%, properties in GV can still be purchased for less than $1 million, which, in Sydney terms, is a steal. Suburban houses have a more affordable entry point than downtown properties and can also be rented for a considerable but predictable passive income. Investing in a suburban house can simplify your life and bring you the monetary security required to continue your daily activities and pursue new passions.
What Will Be the Returns?
Let's say you take out a mortgage for one million dollars, which will have to be repaid in 30 years and involve a 4.5% interest rate. Furthermore, let's assume the annual growth rate of market-listed real estate in Green Valley remains constant at a level of 7% and inflation stagnates at 3.5% for the next thirty years. For a one-million-dollar mortgage, your monthly financial obligations will amount to $5000 per month. So, in thirty years, for the one million dollars you borrowed, you will have to pay back approximately $1.8 million.
If you decide to sell after thirty years, the market value of your home should now be $5.5 million. However, accounting for inflation, the value will drop to approximately $2.35 million. In other words, if you don't have any remaining mortgage balance, then your total profit, after you pay back the mortgage, will sit at around $1.3 million. It's not a bad investment.
Of course, such calculations have a high margin of error because, in thirty years, the financial markets can go through radical changes. Will a new economic crisis tank property prices? Will the housing shortage in Australia's major cities be solved in the next few decades? Will the price of properties listed on the market increase by values similar to today? These are all questions that have no definitive answer. So, in a way, investing in dwellings can be considered a risk. However, as things stand, the housing market shows no signs of slowing down, and prices are rising year after year.
Consider the Rental Profits
If the market continues to grow in the future as it has done in the last ten years, then your family's profit at the end of the mortgage repayment period will be guaranteed. However, you can do even better than that. Let's say you invest $150,000 in the construction of a two-bedroom granny flat that you would rent for $500 per month. If you achieve an occupancy rate of 80% per year, then, after three decades, your total rental income will be $624,000. Plus, granny flats add at least 20% to the real-estate value of dwellings. The financial advantages of granny flats are apparent. So, their popularity, at least in NSW, is at an all-time high.
Of course, you will also have to take into consideration the income taxes and how inflation will affect the rental market. However, in almost all scenarios, your profits will be guaranteed. Granny flats are a fantastic investment and are also practical constructions that can increase your dwelling's square footage and act as a private space for your passions and work requirements. A granny flat can be a separate unit that you rent for significant profits, an extra bedroom for your visiting relatives, a studio utilised by your significant other, or even the home gym you always dreamed about.
A Choice with Long-Term Benefits
Do you want your family to escape the hustle and bustle of the centre of Sydney? Have you had enough of the traffic jams, the rising property prices or the growing crowds? In that case, Green Valley may be the ideal place for your children's wellbeing. Sydney's suburbs are characterised by their proximity to parks and recreational centres. So, they are sought-after and are ideal investments if you are looking for a stable rental income. Plus, the value of suburban properties listed on the market is continuously rising.
Buying a home will involve a significant expense that is not always suitable for the lifestyle of typical Australian families. However, if you can afford it, by the time your mortgage is paid off, the profits you can expect from selling your property will be significant. Suburban properties will grow in popularity in the coming years, and the neighbourhoods where they are located will develop rapidly. Nobody knows with certainty how the property market will look in thirty years. However, what is sure is that your investment, made now in 2024, will most definitely pay off.
