Embrace big property downturns, investors told

“Let’s say it did drop 40 per cent in Sydney; we’ve had gains of up to 100 per cent, so if you’re giving back some, it’s not an ‘end of the world’ sort of thing – it’s a market cycle at work,” Mr Kumar said.

“The market cycle is that you gain some, you give some back, you gain some, you give some back; it’s not a linear trajectory as such.”

Investors should also keep in mind that losing equity as values soften is not unusual, and other factors like cash flow are what sustains a portfolio through a tougher market.

“So long as we can hold onto the properties from a cash flow point of view, the market can do whatever it needs to do: the rent’s not going to come back significantly; the only thing that would be that you may be worth less on paper for a year, two years, maybe even 10 years.

“When you look at property investing, you need to be looking at it from worst-case scenario, and the worst-case scenario being that you need to be able to hold onto your portfolio during the bad times.”

Mr Kumar added that investing needs to be viewed with a long-term perspective, particularly to avoid short-term panics. 

“We’ve got used to [these] phenomenal gains within a couple of years and people are expecting it to continue happening,” he said.

“It has to stop and then come back and then it takes off again when the supply dries up, and that’s what people tend to forget.”