According to recent reports, house prices eased in 2019 but are on the upward slide in 2020 as markets rebound. If you’re in the market to buy an investment property, you should make a move now. Here are ten reasons why you should pounce on an investment property right now.
10 reasons to invest in real estate right now
1. Record low interest rates
The official RBA cash rate is at 0.75% and holding – a record low in Australian financial history. If you’re waiting for interest rates to fall, don’t hold your breath; there aren’t any clear signs they’re set to drop any lower.
2. Property investor experts say there’s no better time
Peak property investment body Property Investment Professionals of Australia (PIPA) in their Annual Investor Sentiment Survey, says that 82% of investors believe now is a good time to invest in residential property, up from 77% in the previous year.
3. No cap on investment loans
In July 2019, The Australian Prudential Regulation Authority which has a hand in regulating the lending industry removed the cap on the number of investment loans an individual can take out. If you’re looking to go for more than one property, now is a great time.
4. Waiting longer can cost you money
If you’re waiting for the perfect ‘time’ – don’t. It can actually cost you in the long run. PIPA research in September 2019 showed that investors who attempt to ‘time’ the market could lose an average of $140,000. So don’t wait, move!
5. A buyer’s market – while it lasts
Since house prices have fallen slightly over 2019 (but may climb back to the record peaks this year!) you should put on your negotiation cap and look for an absolute property bargain.
6. Lower outlay; higher returns
It also stands to reason that if house prices rise back to their peaks this year, you’ll reap a greater return on investment than if you waited. So, if you have the capital lined up, move now or regret it later.
7. More competition in investment loans
In the wake of the Royal Commission into the Banking Sector last year, Savvy CEO Bill Tsouvalas says non-bank lenders and brokers have driven more competition in the sector: ‘Applications with the Big Four banks could slide by as much as a third, which may indicate non-bank lenders are driving home more competitive rates. If you’re going to buy an investment property, it’s worth looking into.’
8. Negative gearing
Since the Coalition was returned at the last Federal Election, changes to negative gearing proposed by the Labor party will not come to fruition. That way you can still take advantage of tax breaks through negative gearing if you decide to buy an investment.
9. Secure your retirement
If your superannuation isn’t anything to write home about, an investment property now can help you secure a comfortable retirement. The extra cash flow or an eventual sale of an investment property could net you extra cash when you’re not working.
10. Supplement other investments
If you already have investments in shares or money markets, diversifying your portfolio with an investment property is one way to spread risk and create another stream of income. That way, you can pocket the rest or use it to fund further investment.
Weighing up these ten reasons can help to inform your decision on whether investing in property is the right move for you in 2020. So why not start hunting for the perfect investment property today?
This article is republished from www.homely.com.au under a Creative Commons license. Read the original article.
Property Industry Expects Interest Rate Rise
Property industry confidence levels are near record highs but there are rumblings that interest rates could to increase soon.
The ANZ/Property Council industry survey for the March quarter found confidence levels has improved drastically since the pandemic started, led by the residential sector.
The survey canvassed the views of more than 830 respondents—including, owners, developers, agents, managers, consultants and government—across all major industry sectors and regions.
The results revealed respondents also believe there will be an interest rate increase during the next 12 months.
This comes as the Reserve Bank of Australia closely watches the housing market as “cyclically low-interest rates and rising asset prices create a risk of excessive borrowing”.
According to the RBA financial stability review, this could lead to financial instability particularly if lending standards are weakened, which could expose lenders to large losses.
Interest rate changes
For the meantime, the Reserve Bank decided to hold the official cash rate at 0.1 per cent for the fifth time in a row.
Despite expecting an interest rate rise, survey respondents were confident about work expectations, national growth and house prices in the next year.
Property Council of Australia chief executive Ken Morrison said the expectations for house prices were at the highest level in the survey’s 10-year history.
“When the property industry is confident it is exceptional news for the entire national economy because it employs so many people—more than 1.4-million Australians,” Morrison said.
“While the economy still faces significant challenges, the property industry is clearly buoyed by the speed of our turnaround and the strong demand they are seeing, particularly in the residential and industrial sectors.”
ANZ senior economist Felicity Emmett said that for now the combination of record low mortgage interest rates and targeted stimulus was clearly supporting the housing sector.
“Property sentiment has improved again, reflecting stellar economic performance, a large pipeline of work for the coming year and a strong outlook for property prices,” Emmett said
The survey also revealed an easing of concerns about the office sector as more CBD workers return to their work places.
Article Source: theurbandeveloper.com
Property confidence stages remarkable comeback
The latest results from the ANZ/Property Council Survey reveal surging confidence levels in Queensland’s property sector, despite the slower than anticipated return of workers to major business precincts.
Property industry sentiment in Queensland bounced from 124 points in the December 2020 quarter, to 144 index points in the March 2021 quarter. The result shows that industry confidence has nearly tripled since the height of the COVID pandemic, when a low of 58 index points was recorded during the March 2020 quarter. A score of 100 is considered neutral.
Property Council Queensland Executive Director, Chris Mountford, said the results were nothing short of phenomenal, however, it was critical that the positivity was not taken for granted.
“The results highlight a remarkable recovery for Queensland’s property sector, which proved resilient throughout the challenges of last year and is now spearheading the State’s economic recovery,” said Mr Mountford.
“The industry has recorded strong results on most metrics of success, from crane counts to property clearance rates, to our own quarterly confidence surveys.
“However, we do need to maintain some degree of caution as these positive results were recorded prior to Brisbane’s most recent lockdown, and while the benefits of Government stimulus programs continue to be felt.
“It is well documented that these lockdowns cost our economy millions and impact on the confidence of employees to return to their places of work.
“Office occupancy within Brisbane CBD has stagnated at circa 63 per cent, showing the road to recovery for our city centres has clearly not been as smooth as in other property sectors.
“With the end of JobKeeper and the ever-present spectre of another lockdown, there is clearly a need to support our CBDs and the many businesses that rely on the daily visitation of workers, students and tourists to make ends meet.
“Over the coming months, the Property Council will be working with its members, Brisbane City Council and the Queensland Government, to implement a plan to support our city centre and ensure it continues to drive Queensland’s economy,” concluded Mr Mountford.
Article Source: www.miragenews.com
Home Loan Deposit Tops $100,000 for First Time
The average deposit required by first home buyers has topped six figures as record low borrowing costs, stimulus payments and low stock levels send prices racing higher.
Recent Australian Bureau of Statistics data has revealed the national average deposit needed to secure a mortgage is now $106,743—an increase of 16 per cent since January, 2019.
It is the first time in Australia’s history the average deposit has exceeded $100,000.
For first home buyers it means a longer path towards homeownership with the burden of raising a deposit—based on higher values—greater than ever.
According to comparison website Finder, which surveyed more than 1000 first-home buyers, one in four first home buyers need between five and 10 years to save a 20 per cent deposit.
More than a third of respondents—38 per cent, require between two and five years to save for their deposit.
The ACT had the largest house deposit increase since 2019, with the upfront amount required surging by 24 per cent to $117,790 as the rise in entry-level house prices exceeds wage growth.
NSW was just 1 per cent behind at 23 per cent for an average of $128,469.
The average deposit in Tasmania has climbed to $81,438, in Queensland it is now $95,784 and up to $92,784 in Western Australia.
South Australia remains the only capital city offering stable conditions for first home buyers with the time to save for a deposit for a house or unit remaining the lowest in the country.
First-time buyers’ new loan commitments made up 35.1 per cent of February’s near-55,000 monthly loans, more than investors’ 22 per cent, and have continued to grow.
While first home buyer loan commitments fell 3.3 per cent in February, they remain near 12-year highs, up 65.8 per cent year on year.
Average first home buyer loan, deposit
The pandemic-induced downturn that gripped the nation for much of 2020 cut nearly half a year off the time needed to save for a deposit, according to figures published by the Australian Institute for Progress earlier this year.
The national figures showed an improvement due to the price falls in Australia’s two biggest cities during the quarter, even as the situation in individual cities varied.
Repayments and deposits fell in Sydney, Melbourne, and Hobart but rose in Brisbane, Adelaide, Darwin, Canberra, and Perth.
Finder spokeswoman Sarah Megginson said that saving for a house deposit is a big financial hurdle for first home buyers, with more than half of first home buyers—53 per cent—spending more than 30 per cent of their income in order to meet mortgage repayments.
“Prospective buyers are being stumped by a supercharged property market, which isn’t showing any signs of slowing down just yet,” Megginson said.
“Low interest rates have made it cheaper to pay down a mortgage, but this has pushed up property prices, making it even harder to save for a deposit.”
Record low interest rates—RBA governor Philip Lowe has said the benchmark cash rate would likely stay at 0.1 per cent for the next four years—are keeping repayments low.
Current interest rates have also pushed home values to new highs while making the return on any savings minimal.
The surging prices that last month pushed the housing market up 2.8 per cent, the fastest pace of appreciation in 32 years, have created several inflection points across the market with Sydney and Melbourne staging a full recovery from earlier downturns.
At the same time, data released by the REIA showed housing prices had soared by more than 500 per cent during the past 25 years, with the median price surging from $160,000 in 1996 to $825,000 in 2020.
Article Source: theurbandeveloper.com
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