Yield opportunities are strong in the current market, and capital growth opportunities are on the horizon. One property expert weighs in on where the opportunities are as prices soften.
Property investors looking to make the most of the current market softening may consider finding properties with high yields, with many opportunities available in NSW right now, according to Penelope Valentine of Property Alchemy.
“We’re at the bottom of the market, so if investors are looking to buy, now is an amazing time to buy, because capital growth is going to start going – from the next 12 months onwards you’re going to start seeing a rise in capital growth,” Ms Valentine said to Smart Property Investment.
Despite this, Ms Valentine also said that there should be a balance between yield and raising equity through capital growth.
“I don’t think you should focus wholly on yield, I think you really need to look at getting capital growth in your investment property as well,” she said.
“All the banks are talking about potentially loosening their tight grip on their lending criteria, and when that happens, people will have more money, more buyers will come into the market, pushes up the prices, and then we go again.
“We can see historically these trends happen every seven years, and we’re basically bottoming out now, and then capital growth will start going up again.”
Further, Ms Valentine also said the traditional way yield has been thought about in recent years has evolved, and so to capitalise on it, investors need to change their way of thinking as well.
“There’s so many more people that are happy to coexist or co-share an environment, and I really think that the sharing market and the economy the way it is that there is a really good opportunity for investors to make the most out of their investment properties,” she said.
“Whether that’s Airbnb or Stayz or whether it’s having the boarding house situation, I really believe that investors need to start thinking differently about how their investment properties can return them the highest yield.
“It’s not just about having a residential property where you can rent it out year-on-year, it’s about looking at what can you do and evolve your thinking around that piece of land you’ve got, or if you're looking to buy something, just start thinking a bit differently about how you could manage that and just punching the numbers.”