06 June 2011

Are Your Investment Real Estate Values Falling?

A recent report put out by Real Estate Analysts SQM Research has certainly brought a mixed reaction from those who hope to get into the home market and are pleased that prices will go down to those who are very tightly geared and do not have much room for movement in property prices without facing some major decisions.

“Real Estate Analysts SQM Research have crunched the numbers, finding houses prices are falling almost everywhere.” Their predictions are that while most areas are devaluing in price, Perth and Brisbane will suffer another 4-6% loss over the balance of the year.

The Gold Coast and the Sunshine Coast may suffer quite severely due to the high Australian dollar and the fact that these areas do attract a significant number of overseas tourists which is also a part of their economic backbone. It is the apartment market that will be hit the most because of the lower tourism numbers.

So how can an investor manage a drop in value without creating a risk to their portfolio?

* spend a few more dollars on the Real Estate in upgrading but if an investor does this they must be aware that they will not get that money back until prices start rising again
* pay some more capital into their loan so that there is not the risk of a mortgagee sale
* sell the property and possibly take a small loss

When Real Estate values decline there is not a very pretty answer to any of the questions, but what does need to be done is steps taken to limit any loss that may be occurred.

We encourage all Real Estate investors to keep a very close eye on the market in areas where they have investment Real Estate .

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