With the continuing record low interest rates of just 2.5%, it is anticipated that the spring property market will be as busy as ever. At the last Reserve Bank of Australia (RBA) meeting there was an indication that the official cash rate was unlikely to move either up or down in the near future, leading to a stable outlook for anyone considering residential property investment in 2014 and into 2015.
The positive conditions for investors are being reflected in the increasing demand for investment properties, especially in the inner city locations of major capital cities such as Sydney, Melbourne and Brisbane. This demand for brand new and off the plan apartments from investors and the higher demand for rental properties is spurring a construction and building boom, with almost 6,000 apartments being built within inner city Sydney areas and the same number going through the planning process for the next few years. Companies such as property developer Mirvac have suggested that they will be focusing their efforts on apartment construction in Sydney during the next three or four years.
Interestingly there has recently been discussion about the value of sheer volume of short term data and analysis in relation to the property market from companies such as RP Data. One of the criticisms of monthly property data or analysis on every minute movement in property values – either up or down – is that it can cloud judgement. It simply complicates what should be, for the majority of people looking at residential property investment, a long term decision based on a sound investment strategy.
Whenever there are knee-jerk reactions and “the sky is falling” pronouncements about local property markets, wiser and more experienced experts always point out that an investment in property will deliver real returns over the long term, and that anyone who hasn’t planned a 10 to 15 year strategy will be most at risk of making poor decisions and missing important opportunities. The analysts themselves agree that too much short-term micro-detail on property movement is not necessarily informative without a wider perspective and in context of market evidence such as finance demand transaction volumes and vendor data. Whatever the month-to-month data, the outlook for the property sector is stable with the continuing record low interest rates and high rental demand within the capital cities.
The key for investors sifting through such information is to understand a range of basic factors driving the property market, including changing demographics, increased investor demand from overseas and especially China, as well as supply and demand within the major capital cities. Getting professional research and assistance from property investment experts on the local market conditions as well as potentially sound investments in other states can make the difference between taking advantage of opportunities in the residential property investment market and missing out altogether. They will also be able to help you to create a sustainable long-term plan to help you manage and build a successful property portfolio well into the future.