Why property investing in Australia is a great financial move
Searching for your next big property investment to add to your portfolio can be a massive undertaking, so how could you make the process easier?
Looking for the right piece of real estate to purchase encompasses a number of considerations, but rest assured that property is your best bet for your hard-earned finances.
Property booming in Australia
When finding the right areas to invest in, looking for stability and great returns are just two of the many factors that can help you make a decision about what to buy.
The CoreLogic Housing Market and Economic Report for February 2016 states that residential real estate is a cornerstone of the Australian economy. In fact it accounts for $6.4 trillion, while listed stocks sees only $1.6 trillion and commercial real estate makes up $700 billion. Figures point towards investing in property, and adding to a significant sector of the national economy could set you on a very successful path.
CoreLogic also reports that residential real estate actually makes up more than half of all household wealth in Australia, at 52.1 per cent. Superannuation is the second-biggest contributor at 21 per cent.
New residential properties could be great news for investors looking to the future.
Domain Group finds that the median house price in Sydney for December 2015 was $1,013,258, an increase over the previous 12 months of 14.8 per cent. The same data for unit prices lists them at $655,845, which grew 8.7 per cent.
"Most capital cities are building apartments at record rates, driven by investor demand," said Angie Zigomanis, BIS Shrapnel senior manager.
"As these projects are progressively completed, strong tenant demand will be required to support rents and consequently values upon completion."
BIS Shrapnel projects that there will be 410,000 new residential properties commenced between 2014 and 2016, which could be great news for property investors looking towards the future.
An encouraging national market
Around the country are people looking to invest everyday, and in many cases competing for similar properties.
The Digital Finance Analytics (DFA) Property Imperative Report from September 2015 states that there were more than 1.3 million households around the country in September 2015 that are looking to buy a house. Only 15 per cent are reportedly looking for investment, while 84 per cent are searching for owner-occupied properties.
Investors after a property that will provide strong returns should be keeping their eyes peeled on the capital cities. According to CoreLogic, annual capital gains growth in Sydney is projected to reach 6 per cent, while in Melbourne that figure hits 7.4 per cent.
DFA suggests that there are 319,000 households in the country that are first home buyers, and only 20 per cent of those were looking to invest rather than move into a residence. However 21 per cent of all first timers were unsure what properties to look at. That could be great news for seasoned investors who may be seeing inexperience around the market.
At auction, however, that inexperience may be disconcerting as emotionally charged bids could ramp up the prices of potential real estate purchases hugely. One way to avoid paying too much for a property because of rash first-time attendees is to utilise the services of a buyer's agent. These experts have vast experience in the auction room and can read the behaviour of bidders to ensure you get the home you want, at the price tag you want it at.
Cities on the brink
Location is a major key in determining whether or not a property will gain value strongly over a period of time, in turn increasing the worth of your investment portfolio.
With such an important decision, it pays to get professional advice. Property agents will know exactly when to purchase a property for your exact specifications. For example, looking at Melbourne, house prices are not predicted to grow significantly in the near future, meaning that waiting for more affordable prices could see a better return as capital gains still increase.
"The rate of price growth is forecast to progressively slow over the next three years, particularly as interest rate policy begins to be tightened," said Mr Zigomanis.
"Median house price growth in Melbourne is forecast to total only 4 per cent over the 2015 to 2018 forecast period, with a 5 per cent rise in 2015/16 offset by a small fall in the following two years."
The team of specialists at Cohen Handler have the market nous to know when and where the best investments are to suit your needs exactly. Market movement is not always so easily predictable, and seeking the services of a buyer's agent could help you significantly.
Even at auction, your agent will ensure that your price ceiling is not exceeded, the value of the property you have your eye on is correct and the bids are made strategically to help you get the perfect property for the best price.