Property values are increasing – Is it the right time to invest?


This article is proudly brought to you by Mortgage Choice

When we look at the statistics, it’s no secret that Australians love property. Almost seven out of 10 of us own our home, and more than 2.2 million people back it up with a rental property.

There are many reasons why an investment property is an appealing asset, such as saving on tax, negative gearing and an ongoing rental income that helps to pay the investment loan. Long-term capital gains can boost personal wealth.

At this current time in the market, the potential returns on a rental property could be extremely attractive.

Double digit returns

The latest figures from CoreLogic, a leading property data, information and analytics provider,

show that in February 2021, property values nationally rose at the fastest rate in 17 years, jumping 2.1% in a single month.

Rents are also climbing in Perth and Darwin, where annual rental growth is above 10%. And CoreLogic believes rental markets across Sydney and Melbourne look to be turning, with recent mild gains recorded for rents.

The result is that in some areas of Australia, investors have enjoyed double digit gains over the past 12 months – most notably in Darwin (19.4%), Canberra (14.6%), Hobart (14.0%) and Adelaide (11.8%).

Investment lending jumps 23%

With these sorts of returns, it’s no wonder we’re seeing a resurgence of investor activity.

ME Bank’s latest Quarterly Property Sentiment Report suggests property investors will be back in full force this year. And it seems they’re wasting no time getting started. Lending for investment properties leapt ahead 9.4% in January, rising 23% over the previous 12 months.

What’s driving investor interest?

‘Dirt cheap’ borrowing costs is a key factor bringing property investors back to the market. But it’s not just about low rates. Returns on savings accounts are at rock bottom levels. The share market has experienced significant volatility in the last year, and a number of blue chip companies put a freeze on dividend payments. It all adds up to make property an even more compelling investment.

There are pitfalls to avoid

If you’re thinking about investing in residential property, it’s worth stressing that the best returns are often earned over the long term.

As a guide, CoreLogic’s latest Pain & Gain Report found that among properties resold for a profit in the September 2020 quarter, the median holding period was nine years. Properties re-sold for a loss were held for just six years.

Remember too, rental properties aren’t always smooth sailing. There may be periods when the property is vacant or you could face unexpected repair and maintenance bills. Your personal cashflow needs to be able to handle these possibilities.

Property values are increasing – Is it the right time to invest?

Mortgage Choice’s free, downloadable guide explains the costs and steps associated with the purchase of an investment property, positive/negative gearing as well as pros and cons of houses vs. units.

When it comes to investing in property, expert advice matters

The good news is that if you’ve owned your home for a few years, you may have built up some solid home equity.  Mortgage Choice can help you know for sure how much home equity you have, and how you might be able to use it to buy an investment property. It can be an opportunity to preserve cash savings for other purposes.

Knowing your borrowing power is an essential step that lets you hone in on the suburbs and properties that fall within your buying budget. In a seller’s market, this can help you move quickly when you’ve found the ideal property. Take the guesswork out of your borrowing capacity and plan with certainty.

While interest rates are at historic lows, you still need to be confident that your investment loan ticks all the boxes for the features you need as well as having a competitive rate.

Mortgage Choice can pinpoint the loan that’s best-suited to your situation, so you can make the most of an investment property.


Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regard to your circumstances.



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