Despite signs of the market turning around, property experts warned that investors still need to be cautious.
“2013 is no different to any other year for an investor in the sense that investors must still weigh up their costs and calculate risks when doing their investments,” propertybuyer.com.au’s founder and buyers’ agent Rich Harvey told Smart Property Investment.
“Investors must do significant due diligence before buying any property and before committing to any investment loan.”
Tracey Lunniss, director of TSL Project Services, agreed, adding that now is “a very good time to be buying” because of interest rate cuts and a general rise in the buying and selling activity across Australia.
“The signs are that things are improving and that we’ve hit rock bottom,” Ms Lunniss said. “Investors can pick up properties a lot cheaper than a few years ago."
While there are some good deals, Mr Harvey advised that investors should stay true to the fundamentals of property investment and spread their risk by buying a number of afforable medium priced properties.
“[Investors] should buy a high quality property in a high demand area, where lots of people want to live, and where there is consistent demand, close to great amenities, schools, transport and recreational facilities,” Mr Harvey said.
“Investors need to be very selective to buy an area to achieve strong capital growth.”
He highlighted some strategies investors may consider:
+ Buying capital growth properties in inner and middle ring suburbs of capital cities or good quality apartments and townhouses close to the city.
+ Building a granny flat - Buying a home in an affordable area and adding a granny flat will allow investors to achieve two sources of income.
+ Looking at furnished rentals – Buying a property in a regional area – or where there is demand for furnished properties – and adding a furniture pack will allow investors to achieve yields of seven to eight per cent or more.
While investors may still expect capital growth, Mr Harvey said it won’t be one of the main reasons that investors will be investing this year. Instead he points to rental yields as one of the main attractions.
“We’re expecting one or two interest rate cuts to further stimulate the economy,” he said. “So we’re finding that yields will definitely be one of the main drivers for investors.”
And while some markets are showing signs of improvement, the market isn’t turning around everywhere.
“There are a couple of green shoots that are showing that the market is improving but I wouldn’t say it’s brilliant,” Mr Harvey said.
The market in New South Wales, in Sydney in particular, and some pockets of regional Queensland are going to be strong, Mr Harvey said, adding that there will continue to be significant demand in Brisbane and on the back of the resources boom.
“For investors, the lack of supply in the market is going to continue to drive capital growth, and that’s one of the key reasons why I would invest in the ongoing market, because we’re just not building enough homes to supply the full market,” Mr Harvey said. “So that’s going to have an upward pressure on prices.”