Smart Investors Diversify across Different Property Markets
According to property experts, many investors seem to believe that it’s a good strategy to concentrate all their investment properties in a single town hoping to corner the market.
This idea of putting “all your eggs in one basket” can be dangerous, as if you buy several properties in one location based on the economic opportunities that exist at that time, then you need to be prepared for changing circumstances that may affect your investments later on.
Having a geographical spread makes sense for many reasons.
It’s important to remember that there is no one single Australian property market across the country, but many thousands of local property markets. These markets move in various directions and at various speeds, and are affected by local circumstances that often have more impact than underlying national factors.
An example of this is that last year there were many property markets that recorded double-digit price growth, while in other markets across the country property prices increased more moderately, and some markets had sharp falls in values.
This is the more likely scenario for most of the time in any given year, and so by diversifying geographically you are spreading the risk. This results in a much smarter investment.