What goes up, must crash back down to earth … it might be true for gravity, but not, it seems, for owning an investment property.
Yes the property boom is over and prices are still correcting, but that doesn’t mean you should shy away from property investment. In fact if you do your homework, it’s a perfect time to buy your first investment property.
National capital city house prices are expected to fall another 5 per cent or so this year led again by 10 per cent or so price falls in Sydney and Melbourne on the back of tight credit, rising supply particularly in apartments, reduced foreign demand and uncertainty around the impact of expected negative gearing tax changes should Labor win the federal election.
Here’s somethings you need to know about the current market:
- The heat has left the market and prices in some areas are at the lowest point of the cycle
- Population numbers in the east-coast capitals are surging, driving the rental markets in Sydney, Brisbane and Melbourne.
- The Reserve Bank of Australia looks set to keep interest rates at their current lows in 2019.
But before making any major financial decisions, consider the following tips:
Do your research
Houses in desirable areas will always be in hot demand and, as a result, carry a premium price. That’s why people have being snapping up cheaper new apartments. But they come with a caveat.
The glut of new builds has led to a rise in unscrupulous spruikers. Companies selling the properties on behalf of developers often market themselves as property investment companies, pushing lower quality units at premium prices.
That’s why it’s essential to do your due diligence. Ask local real estate agents for their opinions on values and rental prices. Never rely on solely one source of information.
Have a plan
Before you start, define your investment goal, timeframe and what you hope to achieve along the way. Why are you investing? Is it for your retirement or your children’s education? Are you looking for long-term rental returns, and are you aware of a landlord’s responsibilities? Also, do you have an exit strategy? Without a clear view of your objectives, you won’t be able to plan ahead.
Do your sums
Lending standards are tight, so consider talking with a mortgage broker to find out more about products from first and second-tier lenders.