Is it the right time to buy an investment property?

Well no if you’re still hanging with a strategy that was appropriate 6 to 8 months back for instance buying a house & land package / new apartments as it may not be a viable option anymore.

Apartments may be suitable for someone who has challenges in borrowing capacity or they have decided to buy only in Sydney and is not open for renvesting.

I do sell apartments as a real estate agent mainly for first-home buyers who are either below 30 years or above 55 years.

There are two things happening one interest rates have increased and hoovering around mid 5’s to 6% and inflation at 6% to 7%.

The interest rates are putting pressure on individual borrowing capacity and inflation is eating up capital.

For instance, if you have $100,000 in a bank account, at 7% inflation this means it is worth $97,000K twelve months from now considering it earns a 4% interest rate.

Probably wait and watch may not be the right approach.

There are a couple of things you could look at if chosen property investment as a vehicle to achieve financial freedom.

1) Buying affordable property: Recently PropTrack published data which looked at the share of newly listed properties hitting the market under $600,000.

In March 2020 when we first entered a lockdown, 52.5% of all new listings that month were properties for sale below $600,000 by last month that had fallen to 35.8%.

Secondly, historically affordable properties are more resilient to higher interest rates with steady growth and the potential buyers need to borrow less as well.

Having said that just because a property is affordable doesn’t mean they have a good capital growth potential. You got to do a supply-demand analysis.

2) Manufacture equity through cosmetic renovation: Generally, the thumb rule is if the renovations are done correctly you would create $2 equity for every $1 spent.

Yes, this can be done remotely through property managers even with interstate investment properties.

3) Buying a property which has a development potential: This could be a property that can be subdivided 1 into 2 or build townhouses etc in future but complies with the current council requirements to do that given development.

The idea here is not to do development but will create additional protection in creating further equity.

Yes, I have seen people getting DA approvals remotely to uplift the value of the property before selling the property.

4) Vendor discounts: Many vendors are reducing their prices to attract interest. As per CoreLogic, the current average vendor discount stands at 4.3% as compared to 2.9% the year before. This is the sharpest level of vendor discounting since 2018.

As property investment is always from a long-term perspective of 8 to 10 years it’s a good time to enter the market.

5) New Listings are drying up: CoreLogic reported for the month of Nov 2022 that the new listings have reduced drastically. There has been a reduction of 25.9% Australia-wide, 22.5% combined regionals and 27.6% in combined capitals.

If you’re thinking to buy a house & land package / new apartment as an investment property think twice as the boom is long gone and doing your due diligence is very crucial to achieve reasonable appreciation. Secondly, there is no room to manufacture equity-like what you can achieve with established properties.

This is not financial advice and only my opinion. You may please speak with the relevant professionals.

If you’re having challenges in terms of time, effort and skills happy to assist in your property investment journey.

I can assist in acquiring investment properties starting from $350,000 ( buy & hold detached houses) across Australia.

If interested you may please provide your details to schedule a zoom call.

Leave this field blank

Open chat
Hey! Get Your Free Property Consultation, Whatsapp Now!