2014 is shaping up to be a ‘break out’ year for property investment market with surveys indicating that property investors plan to flood the property market during the coming year.
Blogger: Paul Bennion, Managing Director, DEPPRO tax depreciation specialists
One recent survey of 1,000 home owner found that almost half (47%) of these home owners recently purchased, or intend to purchase, an investment property.
Of these, 65% are home owners purchasing a new investment property, 17% will turn their current property into an investment and 15% are renters who will purchase a property solely for investment purposes.
The survey found that also 54 percent of these new investors believe property is the best way to invest money, 30% did so to take advantage of low interest rates, and 27% did it to plan for retirement.
Rising property prices throughout Australian combined with very low interest rates are driving this renewed confidence in the property investment market.
The latest figures produced by Australian Property Monitors, for example, shows that houses prices in Australia rose by nearly 10% last year while in Sydney they surged by 15.1%.
When you combine these strong capital growth rates with rental returns in excess of 5% in many capital cities, then buying an investment property is now a very attractive proposition from ordinary Australians.
This is particularly the case when you consider that current returns on bank savings are hardly enough to cover inflation.
In particular, DEPPRO is finding that baby boomers are driving this surge in property investor activity throughout Australia.
Many baby boomers now see property investment rather than superannuation as the best way to create wealth for their retirement.
Superannuation returns have been mixed over recent years while bank interest rates on savings have collapsed due to falling interest rates.
That leaves property as the most reliable and proven way for baby boomers to invest in.
A growing number of these baby boomers will be entering retirement in the near future and they are therefore keen to take advantage of the current upswing in the national property market.
Currently, more than 50% of all tax deprecation reports undertaken by DEPPRO for our clients are baby boomers.
Many of these baby boomers are well educated about the property investment market and especially the generous tax benefits that can be derived through depreciation which can be equivalent to 60% of the total purchase price an investment property.