Australian Investment Property Updates

The property market enjoyed a bumper season in 2013. There was a significant rise in house price in larger cities of Australia. The Sydney market was bolstered to new heights by investors while clearance rates in Sydney and Melbourne returned to 3-year highs.

The median prices of houses in Sydney went up by 15.1% and in Melbourne it was up by 8.6%, according to figures from Australian Property Monitors. As house prices become only steeper and analysts saying first home buyers locked out by skyrocketing values, what are the trends in 2014? Read our investment property update to know where the property market in Australia currently stands.

House price growth in Sydney and Melbourne

investment properties sydneyAccording to Figures released by RP Data on 29th September 2014, City housing markets reported their best ever winter since the global financial crisis. RP Data’s Home Value Index reports that capital city dwelling prices rose by 4.2% over three months ending August compared to the same period on 2007.

Once again, the surge in house prices were driven by Melbourne and Sydney markets, which registered increases of 6.4% and 5% respectively, according to RP Data.

Tim Lawless, research director of RP Data, says that the surging property values in the two biggest Australian cities have become the feature of property landscape in the last 5 years.

He says that Sydney dwelling values have increased by 27.2% and Melbourne registering a rise of 19.5% in the latest growth cycle.
Melbourne and Sydney were also the best performing cities during 2009-2010 growth cycles, according to Mr. Lawless.

What are the Suburbs to watch?

In 2013 and before, Sydney’s prestige market had been lagging behind but it begin rising in 2014.
Sydney’s eastern suburbs and northern shore have particularly done well. These areas saw modest growth levels in 2013 but there is much room for growth. If the sharemarket shows strong growth, the prestige market is expected to keep bubbling along.

In Melbourne, the eastern suburbs, which are the expensive areas, also recorded the best performance in 2013.
Although the eastern suburbs have been the best performers of 2013, questions still linger as to whether they have reached affordability levels.

header_bpinvest2.jpgAlthough are still some upsides like the premium markets of Sydney, it is expected that there will generally be price growth moderation. Reducing numbers of first time homebuyers will also impact on the outer eastern suburbs.

Every capital city has its inner ring areas which offer strong investment opportunities. Sydney has Bellevue Hill, Melbourne has Malvern, Perth has City Beach and Bulimba in Brisbane.

Melbourne has the most number of top 5 hottest suburbs with Elwood, Richmond, Rhodes and St. Kilda all featuring. At the same time, units in North Bondi (Sydney), Subiaco (Perth) and West End (Brisbane) have been predicted to deliver good inner ring growth performances in their respective cities.

Melbourne, particularly, is defying past forecasts. It appears as if it has been oversupplied with property, especially units. However, demand is presently being driven by three main factors. These are international buyers supporting new unit sale, developers managing their properties well and higher public confidence which is in turn being driven by things like good clearance rates at auctions.

If you want to buy property in the coming 12 months, it is important that you be aware of growth patterns. It is very important to carry out proper research on the market and back up your decision with insight and data.

Will house prices to continue to rise?

The June quarter report shows that strong market conditions continue to prevail in many capitals. Price houses in Australia continued their meteoric rise in the June quarter report with many capitals reporting similar or higher growth levels compared to the March Quarter results.

The national median prices of houses increased by 1.9% compared to the rise of 1.7% that was observed in the March quarter. There was also a sturdy rise in the median unit price which grew by 2.7% compared to the 2.0% growth of the March quarter.

Sydney is the standout performer

Sydney housing market still remains the standout performer after posting another god result in the June quarter. It recorded an increase of 3% in its median house price to stand at $807,880 and in the process smash the previous$800,000 barrier. It increased by 14% or $114,000 in the 2014 financial year. Sydney recorded the best quarterly and annual results of all capitals.

The growth of house prices in Sydney over June quarter outstripped the March quarter performance of 2.6% although it remained below the 5.6% that was recorded in the December quarter in 2013. Also, Sydney unit prices recorded strong growth of 3.5% over the June quarter to 12.2 per cent.

Melbourne housing market also reported an impressive growth over June as median house prices rose by 1.8%. Again, this was higher than the previous March quarter results. In the period ending June, Melbourne house prices went up by 10.3% while unit prices increased by 2.7% to stand at 8.8% over the year.

What are the fundamentals of housing price markets?

Experts agree that housing market fundamentals are still very strong. Not only have house prices done well but activities have also picked up. It is only renovations to old homes that remain weak. This is attributed to strong population growth which is in turn driven by immigration and low mortgage rates. These factors are likely to continue pushing up the expanding market.
Economists had projected that new building approvals would ease by 0.3% in December following a fall of 1.5 percent in November and 1.8% drop in October. These falls partially reversed the acute September jump.

Many people had thought that the Australian property bubble would burst but if these figures are anything to go buy, then the market is still pretty very strong. The house prices in major Australian capitals like Sydney, Melbourne, Brisbane and Perth continue to rise encouragingly. Low mortgage lending rates have also driven the market. However, the single biggest losers are the first time buyers who are literally being priced out of homes. Experts however see the Australian property market holding its own for some time to come. The property market in Australia has been in buoyant mood in the last 5 years recording its best performance in decade. As expected, Sydney and Melbourne remain the biggest drivers of Australian property growth.

Tips On Buying Your First Investment Property

Buying investment properties is an exciting and rewarding venture for many looking to build a well-rounded financial portfolio. For those who are just starting out investing in real estate, or who have questions, read the Q&A below to learn more.

Am I ready to buy investment property?

There are many different ways to invest your money, and one of them is in property. While the idea of owning several other residential buildings and renting them out to tenants may initially appeal to you, it is essential to understand that real estate is simply not for everyone.

It is not a get rich quick scheme and requires careful planning and some time. You will need to decide if you are hiring a landlord or if you will manage the properties yourself. Additionally, you need to ensure that you have all of your legal areas covered and understand all of the possible ramifications that can occur should renters not pay, or if there is damage or injuries in your building. Speaking with your lawyer or financial advisor will give you a good understanding of the potential hazards and will also help you get a better grasp on whether you are ready to invest in real estate or not.

Why buy first home or investment property?

The decision to buy investment properties is definitely a difficult one, especially in today’s uncertain market. Many people may fear investing in properties simply because of the recent drops in real estate, however setting up rental properties is a surprisingly lucrative business.

Purchasing a property in a growing neighborhood or in an area near schools and city centers can easily generate hundreds of extra dollars each month in revenue. While there is an initial set up cost for buying an investment property, once you have a property that people want to rent, and a landlord capable of tending to the tenants, then you can sit back and collect a steady stream of revenue on a regular basis.

How do I buy an investment property?

If you are wondering how to buy your first investment property, then you’re not alone. Many novice buyers are overwhelmed and can often make critical mistakes. This is why it is crucial for you to take your time and understand that buying your first investment property is something that is not done overnight.

First, you need to make sure that you have enough of a down payment for the property, and that you can secure a mortgage at a feasible rate. Next, you should begin scoping out properties. Before choosing any particular property you will need to perform a myriad of checks on them. These checks include checking the age of the house, the type of insulation, having an inspector go around and look for water damage or potential pests, and also ensuring that all of the electrical, heating, and plumbing systems are up to par. Once you’ve got a property that meets all of your requirements, you can then begin bidding on the property and go from there.

Where to buy investment property?

Buying an investment property in Australia, or anywhere in the world for that matter, is a huge step in building long term wealth. After assessing your finances and determining that you can now consider buying the first investment property in your portfolio, you need to now look at where to buy an investment property.

The key features that will ensure a very successful investment property is finding it in a location that is close to public transportation, near good school systems, and is in a decent area that is sought after by residents. While you may pay a bit more to get a property in one of the “hot” locations in town, you will find that there is almost a never ending supply of tenants willing to rent your property.

What mistakes should I avoid making when buying investment properties?

Aside from learning how to buy investment property, it is crucial to learn how “not” to buy investment property. Novice investors can make mistakes that can end up costing them tens of thousands of dollars in legal fees and property losses. Here are three big mistakes that real estate investors commonly make;

1. Not enough research – this is key to ensuring that the property is in a good location, will not have any problems, and has no permit issues that can become an issue later on.

2. Not hiring others when needed – getting an investment property is hard work and requires you to hire others for additional resources. Getting experts in to help set up the property, as well as lawyers to look over contracts and papers is essential to preventing major problems down the road.

3. Poor financing – getting a good and reliable loan is essential because the amount you end up paying in interest on a more exotic loan can mean you actually are paying thousands upon thousands more!

Can I use my current equity to fund buying investment property?

If you have owned your current home for several years, then you likely have a significant amount of equity built up into it that can be tapped as a potential financial resource. Using your current equity can be a way to avoid any out of pocket expenses for the investment property and still allow you to secure a loan at a great interest rate. Contact your mortgage company to see about adding in an additional loan and you may be surprised at the great rates that can be offered!

How do I secure a good loan for my investment property?

Securing a good loan at a great rate is essential, especially for first time investors. Unfortunately, unlike with normal mortgage rates on primary homes, investment properties tend to incur rates that are slightly higher. This is why many first time investors initially start out using their current home equity as a way to help lower the rates on the investment property.

Securing a good loan will take a bit of time and research. You may find that the best rates are with your current mortgage lender, or you may find that you find better rates with a different bank. The key is to do some research, understand the qualifying standards that are set in place, and make sure that you provide ample support to show your current income, your equity, and research to help get a better rate!

 

Home Port Property The Investment Specialists

500 When it comes to investment properties that are going to deliver high returns for years to come, Home Port Property are the expert team to consult your needs.

This blog will be a source of high quality “off the plan” investment property opportunities and we would love to be able to help you secure your financial future.

We will be publishing articles that you can use as guides in conducting your due diligence, when it comes to choosing the right investment property to buy.

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