If you’re familiar with the property market, it may be no surprise to you how extraordinarily it has emerged and grown in the past twenty-five years. With house prices more than doubling in the past decade, property investing in Australia has proved to be one of the leading trends for investors and many residents looking to increase their equity. Because of the recent boom in the property market, many people are weary of a potential drop along with the uncertainties of COVID-19. If you’re thinking about investing in a residential property this year but may have some concerns, we’ve spoken with our internal finance broker to provide you with some insight on what to expect from the market!
When it comes to investing, the question isn’t how much the house is worth, but rather how much it will be in the future. If there is one thing that history has taught us, it’s that housing prices have continued to rise over, and this doesn’t seem to be slowing down any time soon. With house values rising at the annual rate of 6.8%, it is predicted that in conjunction with critical land scarcity, supply shortages and the climate of the pandemic, both house and land prices will continue rising.
The pandemic has no doubt helped accelerate the rapid growth of the property market over the past 2 years, with the introduction of government incentives, working from home changes and the increased expenses of housing materials. It’s important to keep in mind that the strong upturn phase of the market has been on the horizon for less than two years; and market booms usually last at least 5 years. Additionally, with Covid-19 constraints beginning to drop, it is predicted that international travel and immigrant residency will pick up again; meaning that an increase in rental housing will most likely reduce vacancy rates. Although the pandemic carried in a lot of uncertainty to begin with by initially reducing the property market value by 2%; these figures have soared over time and are predicted to continue doing so in the next 5 years.
In the last year, Australia’s property market values have increased at rates that are difficult to comprehend and many home buyers are feeling like they may have missed the window of opportunity. To be brief, although the property market is predicted to slow down, the housing market value will continue to increase throughout 2022 and 2023. If you’re tossing up on whether to purchase an investment property with your current financial status, we believe that now is always the best time with mortgage interest rates increasing. Although it’s near impossible to determine the accuracy of the market, property advisors have stated that the property market will continue growing at the rate of 6-7% per annum throughout this current year.
Choosing a strong investment property is something that needs to be done strategically and requires a degree of research in the market. Although purchasing a house and watching the price rise over time is an ideal way of investing, there are certain features of the home, location and time that will perform more effectively; granting you a better return of investment. Finding a home in an area with a history of strong capital growth is one of the leading factors of attaining a succesful investment. With land shortages on the rise in Sydney, buying or building a property on a block that's relatively near Sydney CBD is a perfect example of a good investment. Additionally, you want to buy a property below its intrinsic value - Finding a property where you can manufacture capital growth by renovating, knocking down or redeveloping is your best bet.
With housing affordability becoming more difficult for first home buyers, property investors are becoming more popular in the housing market; making up over 42% of the value of new housing finance. Although it's difficult to determine the performance of any market in the unforseeable future, the property market has continued on an uphill trajectory for over 25 years. Ultimately, residential properties have proven to be the most stable and guaranteed investment opportunities over time and this is predicted to persist with the impending critical shortages of land available, rising house prices and a demand in rental properties. The stars are aligning for you!
If you would like more information about interest rates, mortgage tips and government incentives to get on your way, reach out to us today.