4 Reasons to consider investing in property now
Have you been patiently waiting in the wings, wondering whether or not to buy your first investment property in 2023?
You’re not alone. Many buyers have been spooked, what with all the changes in the market.
Whether or not now is the right time to buy really depends on your financial situation and goals, but there are certainly some compelling reasons to at least consider it.
The drop in housing prices may be stabilising
As a first-time investor, it may be a good time to take advantage of lower property prices.
Property values have been falling for several months following consecutive cash rate increases by the Reserve Bank of Australia (RBA). But recently there have been signs the decline in property prices could be easing.
According to CoreLogic, the national decline was only -0.14% in February – the smallest monthly fall since May last year.
CoreLogic’s research director, Tim Lawless, said the stabilisation in housing values over the month coincided with consistently low advertised supply levels and a rise in auction clearance rates.
“This trend towards a below average flow of new listings has been evident since September last year, coinciding with a loss of momentum in the rate of value decline.”
Rents are on the rise
Migration has returned with a bang. Demand for rental properties is outstripping supply in many markets and rents are going through the roof.
Last year we saw rents surge to a record high of 10.2%, reaching a median of $555 per week.
Meanwhile, rental vacancy rates hit record lows in February. Nationally, just 0.8 per cent of rental properties were vacant.
If you’re in a position to invest, you may be able to take advantage of the current conditions and find a property with an attractive rental yield. Imagine what you could do with that extra cash flow.
We may be over the worst of the cash rate hikes
While nobody has a crystal ball when it comes to monetary policy, some experts believe that the majority of cash rate hikes may be behind us.
RBA Governor Philip Lowe did indicate recently that the board was considering a pause after 10 consecutive interest rate rises, but the timing would depend on incoming economic data.
“We also discussed that, with monetary policy now in restrictive territory, we are closer to the point where it will be appropriate to pause interest rate increases to allow more time to assess the state of the economy,” he said.
“At what point it will be appropriate to pause will be determined by the data and our assessment of the outlook.”
Potentially less competition
With all the uncertainty about where interest rates and property prices will go, many buyers are waiting and watching.
In January 2023 in seasonally adjusted terms, the value of new loan commitments for total housing fell 5.3% to $22.1 billion, after a fall of 4.3% in December. It was 35% lower compared to a year ago.
For owner-occupier housing, it fell 4.9% to $14.7 billion, which was 35.1% lower compared to a year ago. Meanwhile, for investor housing, it dropped 6% to $7.4 billion and was 34.8% lower compared to a year ago.
The reduced appetite for finance indicates there’s less buyer competition, so you may have a better chance of scoring the property you want.
Ready to get started?
Whether or not you should invest in property at the moment comes down to your individual situation, but one thing’s for sure – all the right essentials are in place for opportunistic property investors.
If you do decide it’s right for you, talk to us about your finance options. We’ll explain your borrowing capacity and line you up with the appropriate investment loan to suit your needs.