Recently, Tim Graham from Reventon Property talked to Hotspotting founder Terry Ryder in a webinar about the Australian property market and how investors are seeking strategic opportunities to make the most of the key growth markets across Australia.
Graham combats the five key talking points investors are making:
- Do you believe everything you read?
- Is now a good time to invest?
- Are regional markets great for investing?
- What’s the most powerful tool an investor can use?
- Why you should use a buyer’s agent?
The Media and the Truth
Recent media reports on the property market are doom and gloom, which make the general public’s sentiment uneasy, with a willingness to hold back on any decision-making. When in reality, the property market is actually performing well. At most open for inspections, auctions and even private walk-throughs, the story is entirely different. Some homes are seeing 20-40 groups through at a weekend available, 4-5 bidders at auctions, and demand for contracts to snap up property quickly.
Unfortunately, the media tends to refer to the Australian property market as a whole, and the reality is, there are many different markets throughout the country,’ Graham said.
Investors should keep an eye on the fundamentals – unemployment rates are at their lowest for 50 years, inflation is growing at a rate of knots, international immigration is increasing, and interest rates are reflecting the growth. Yes, that’s growth.
Why Invest Now?
How does growth translate into investing? Supply is currently reduced and demand is high, driving vacancy rates to the lowest point we have ever seen. As the delivery of new housing continues to be delayed, thanks to material trade issues across Australia and throughout the globe, many existing properties are producing higher rents, which makes it better for investors.
The beauty of the current climate is that Australians have $260 billion worth of liquidity currently sitting in their mortgages. This means that if you have liquidity in your mortgage, you can go into other investments, and what investors tend to trust, is real estate.
There was a 20% increase in the national median price of the property last year, which means if you spent $500,000 on an investment property last year, you would have made $100,000.
“It’s always a good time to buy real estate,” Tim said, “The question is, where?” As not all locations are performing as well as others.
Regional areas still have a lack of supply in both sales and rental properties, which is driving price growth in both capital and rents. The key is to choose a property they can hold for the long term, with consistent business and infrastructure growth in the local area.
“If the market moves up, down, back, down or sideways, and you can hold a property for ten years, you will make money on a good property,” Graham said.
You need to look at the key fundamentals of the location – the low vacancy rates, the future spending on infrastructure and the attractiveness for businesses to be based in and around your regional town. Do your research.
Understand the power of vacancy rates
Most media reports focus on median house prices, but in reality, most price data becomes available after the settlement of the property – that could be months or even years in some cases. The median house price is not a true indicator of the current market.
Ideally, we should be looking at vacancy rates. If a suburb or town has very tight vacancy rates consistently, that creates leverage for price growth. “We typically look for anything under 3 per cent vacancy in a suburb or town to suggest it’s a ‘good market’” Graham said.
All around the country at the moment, and in most capital cities, the vacancy rates are under 1 per cent. Investors pay attention to these numbers, not media reports because they know that their properties will be income-producing immediately.
The Power of a Buyer’s Agent
It’s becoming more apparent for investors, that using a buyer’s agent saves money. Good buyer agents are constantly researching and analysing the market. They will either know the best areas to invest in their capital city or in various markets around Australia.
Good buyer’s agents will offer you diversification in your portfolio, not keep you local, opening you up to opportunities you never expected. They will negotiate on your behalf, knowing the fine line between price and terms, ensuring that the terms are in your best interest.
If you find a buyer’s agent who works throughout Australia, make sure they understand the different laws in every state and can know how to use those laws to their advantage. They can save you an enormous amount of money, and create opportunities to buy ‘off the market.’ It’s a win-win for all.
For most strategic investors, investing in property when the media puts fear into the public, means opportunity. Reventon can show you the way to maximise your investment dollar and the current market.
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