Good times tipped for real estate investors amid low-rate nirvana
A majority of capital cities delivered property price growth in 2019, and forecasters see real estate values improving again. Here’s why.
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Record low interest rates look set to underpin a positive year ahead for real estate buyers, owners and investors.
While thousands of first home buyers will benefit from a new government deposit scheme, Australia’s 2.2 million real estate investors are enjoying the cheapest money in memory to help build their wealth.
The Reserve Bank of Australia is tipped to cut its official interest rate at least once more, and economists expect rates to stay low for a long time.
Five of the nation’s capital cities experienced house price growth in 2019 – Sydney, Melbourne, Brisbane, Hobart and Canberra – and forecasters expect an improved 2020.
Investors had record-low participation in the housing market last year, according to research group CoreLogic.
However, Prime Property Strategies director Sasha Holland expects investors to bounce back amid higher prices, declining housing supply and booming population growth of about 400,000 people.
“The ability for investors to access mortgage rates that are lower than the yield they receive from their investment property means that we are seeing the best investment conditions in over 10 years,” she said.
Ms Holland said smaller cities such as Brisbane, Adelaide and Canberra were likely to do better because of their improved affordability and buyer worries about sharp swings in Sydney and Melbourne in recent years.
Many investors will look further afield, with research from Property Investment Professionals Australian finding that 45 per cent intend to buy interstate this year.
PIPA chairman Peter Koulizos said investing beyond state borders had blossomed in recent years.
“More and more investors are recognising that there are myriad investment opportunities around the country, rather than being blindsided by what’s happening in their own backyards,” he said.
CoreLogic International CEO Lisa Claes said Australia’s property market was “now full steam ahead towards recovery” but affordability was a big issue for many, with the group’s research finding an average person needs to save for more than eight years for a 20 per cent deposit.
“Despite these barriers, property ownership remains the Great Australian Dream, with 86 per cent of Millennials surveyed stating it’s important to be on the property ladder,” she said.
The Federal Government’s First Home Loan Deposit scheme opened on January 1 and will allow 10,000 buyers to save on fees and secure a mortgage with just a 5 per cent deposit, with the government guaranteeing the remaining 15 per cent deposit.
Turner Real Estate general manager Emma Slape said both landlords and tenants shouldn’t switch off at this time of year, which was one of the “busiest times for rentals as people move interstate, change jobs or study or decide that the next year will be a new beginning”.
Prospective tenants should submit applications quickly and in detail to show they were organised and ready to rent, she said.
Originally published as Good times tipped for real estate investors amid low-rate nirvana