As first home buyers withdraw from the market, and interest rates stabilise, timing is right for investors to enter the scene. With many positive indicators across the economy, 2013 looks to be a great year to secure an investment property.
Across Australia, first home purchasers decreased in numbers significantly. The reduction of first home grants has been the main catalyst for this change. Recent ABS statistics show that the number of loans approved for first home buyers is only a quarter of what is what the same time a year ago. The Daily Telegraph estimates that there will be 40,000 less first home buyers looking to buy in 2013 in NSW alone.
The benefit of this to investors is twofold. First of all, less competition within the market place means a better position to negotiate from, and secondly, greater choice of homes that are available. ;Previously, property commentators suggested the the FHOG has simply led to an overinflated market, rather than a discount that offsets the impact of GST, as it was intended.
With a greater number of homes on the market towards the lower price brackets, investors can get more bang for their buck, so to speak. They may be able to secure a home with more of the qualities they are seeking, without having to pay a premium price against emotionally-charged first home buyers.
A nation wide housing shortage does not look set to dissipate any time soon, which will see rents remain strong, and vacancy rates at a low level. Keeping local vacancy rates and rental demand in mind is wise when looking to invest.
Another reason to invest is that interest rates are at the lowest they have been in some time. The most recent RBA announcement kept the cash rate steady at three per cent, a move which was anticipated by market commentators. Opinion remains split as to whether there will be further cuts this year, or if they will stay stable. Either way, the cost of borrowing money is set to stay more affordable than it has been in many years.
The other side of this coin is that low interest rates mean cash and term deposits are a far less attractive prospect than they have been in the past. Rates of return on these types of investment are at the lowest they have been for some years. For those that have been keeping their money in the bank, now is a good time to consider moving it back into property.
Taking a broader look at the economy, there are other signs that economic improvement will continue. With it too, consumer confidence will increase.The Australian share market is showing indicators of growth, with predictions that 2013 would see it exceed 5000 points coming into reality on February 13.
Westpac's monthly consumer confidence index increased in February to 108.30, with a number higher than 100 indicating that consumer sentiment is more optimistic than pessimistic. This was the largest jump since September, 2011.
If you're interested in purchasing an investment home, a good place to start is with a chat to your broker about your financial options. ;