Property Risks
Oct 4th, 2010 by chrischoi
In August 2010, Australian home prices in capital cities, especially Perth, are drastically falling. From an 8 percent increase in property prices last year, no one expected that it would fall 1.2 percent this summer. Analysts predict that there will be continuous declines in the following months ahead. Richard Black, a property owner in Perth, finally sold his apartment last weekend for $2,150,000 after dropping $750,000. Even though he profited from this sale, he believes that he “just [hasn’t] ended up with as much money as [he] thought.”
There are two types of property buyers; people who buy properties to profit and those who actually want to make it a home. In this situation, homemakers have nothing to worry about but profit-seekers do. Richard Black is a perfect example of an investor being affected by this dramatic drop in property prices. My analysis shows that the drop in home prices isn’t just a negative thing, as it now allows more people to purchase houses at lower prices instead of having investors buying it and “flipping them for a quick buck.” Ultimately, not only are there risks when buying stocks, but there are also risks associating with buying property.