You’ve bought a home. And now you might be considering adding an investment property to your portfolio. But have recent interest rate hikes cooled your heels? We’ve outlined reasons why now may still be a good time to buy.
To buy or not to buy, that is the question.
There’s no denying that rolling rate rises might have some sections of the media spouting doom and gloom.
After all, national property prices have dipped and higher interest rates can lower your borrowing power.
However, if you’re in a position to buy now, the current climate can provide less competition and more power to negotiate a good price.
Also, rental tenancy vacancy rates have reached record lows, meaning the demand for rentals is high.
So if you’re ready to dip your toe into property investment, we’ve outlined below why it could be a good time to do so.
It’s a buyer’s market
With rising interest rates and inflation, there’s been a softening of the market and this may reward those who are ready to buy now.
CoreLogic data shows there are fewer buyers at present, and properties are increasingly sitting on the market.
In the three months to September, median days on the market increased to 35 days. That’s a big increase from a median of 20 days in November 2021.
Fewer buyers can mean more property options for you to choose from and less competition when putting in an offer.
And by targeting properties that have been on the market for a while, you could potentially have more bargaining power (just be sure to do your due diligence!).
Low rental tenancy vacancy rates
Currently, there is a high demand for rental properties across Australia.
At 0.9%, the current national rental tenancy vacancy rate is the lowest it has been since 2006, according to SQM Research.
That means the likelihood of your investment property sitting empty now is low.
People are looking for solid rental properties. And if you’ve got just the thing, your investment property could have a number of good tenants putting in applications.
Flexibility around location
When purchasing an investment property, you’re not locked into buying in your home state or city.
You can set your sights further afield to make the most of what the current property market has to offer.
You can look to buy in areas where property prices have already dipped and leverage the current buyer’s market to negotiate. Also, consider purchasing in an area with a healthy demand for rental properties.
That way, you can make a financially sound purchase and increase the chances of having a good tenant in your property sooner.
Possible lower cost of entry than for owner-occupiers
You’re most likely more discerning when shopping for a property you want to live in – we all have personal preferences we want met.
And unfortunately, lists of non-negotiable bells and whistles usually come with primo pricing.
But when buying an investment property, you can be more flexible, which can open up more affordable options.
Look for the essentials that tenants want, such as a safe, comfortable, and low-maintenance property. And with lower competition now, there could be more viable properties to choose from.
The french door, olympic-sized pool, and ocean-view wish list that usually blows up budgets need not apply.