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Investors could be a prime target market for brokers as property prices soften and rental values soar.
Rental rates have surged by as much as 25 per cent in some locations over the past year, according to Australian Property Monitors, with further growth forecast.
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Rental price growth of as much as 50 per cent over the next four years was predicted by BIS Shrapnel in April. Building approvals have also fallen well short of demand according to ABS figures released this week.
Warren McCarthy, chief executive of LJ Hooker, says he had seen a steady move back to property investment spurred by two strong drivers.
“We have been seeing a swing back to investing since around this time last year and we expect this will continue as house prices soften and rental yields continue to improve,” he said.
Mr McCarthy also said many investors now preferred the stability of bricks and mortar as an investment compared to the “wobbly” stock market.
First time buyers as well as experienced investors are likely to be attracted to current market opportunities, he said.
“First home buyers can take advantage of stamp duty concessions to buy their first home and we are seeing a lot of them rent their properties out and stay at home with mum and dad,” he said.
“A lot of first home buyers are utilising their partners’ equity to good advantage; we are also seeing a lot of syndicated purchases.”
Warren O’Rourke, national corporate affairs manager of Mortgage Choice, said low vacancy rates, rising rental returns and the volatile nature of the equity market made property investment attractive for first time buyers as well as owner-occupiers.
“Property [investment] is presenting strong opportunities for borrowers – and therefore brokers as well,” he said. “House prices are coming off a bit in most markets; we’re also at the top of the interest rate cycle right now or very close to it.”
“It’s hard to speculate about who in particular might be interested in property investment, however I think it will be appealing to anyone who wants a balanced portfolio.”
Published: 31-07-08
