Seizing Opportunities: Why Now is a Good Time to be Investing in the Australian Property Market

The Australian property market continues to present enticing prospects for individuals considering a property purchase and investment. Despite recent developments such as interest rate increases and construction costs, there still lies a unique window of opportunity for those looking to enter or expand their presence in the Australian property market. In this news post, we will delve into the reasons why now is a good time to buy into the Australian property market, despite these challenges.

  1. Strengthening Australian Economy: Australia’s economy has shown resilience and is on a path to recovery, bolstered by factors such as increasing employment rates and improved consumer confidence. A robust economy translates into a favourable environment for  investing in property, as it often leads to increased demand for housing and commercial spaces. By investing in the property market now, buyers and investors can position themselves to benefit from the upward trajectory of the economy.
  2. Adjusting Interest Rates: While interest rates have seen a steady increase recently, it’s important to note that they are still relatively low compared to historical averages. Interest rate increases are often an indication of a thriving economy (used as a means to curb spending), and as a property buyer or investor, this can be advantageous. Although no-one can answer with certainty how high mortgage rates will go up in Australia, securing a mortgage or financing at a slightly higher interest rate can still provide access to the property market before rates potentially rise further. Perhaps a more optimistic way to view it is, if the current RBA interest rate is high, it can be an opportune time to purchase knowing that future decreases are more likely than increases. You can also take comfort in knowing that you can comfortably afford the loan you have taken out now and into the future.
  3. How much have Construction Costs Increased in Australia?
    While construction costs have risen steeply in recent years, it’s crucial to understand that these costs are influenced by various factors, including supply chain disruptions and increased demand for construction materials, which is what happened during the pandemic years. It’s important to note that rising construction costs are not a new phenomenon and generally speaking, increase year on year in line with inflation.
    CoreLogic’s Cordell Construction Cost Index (CCCI) report , tracks the cost to build a typical new dwelling. In its most recent report released on the 11th of October this year, the index showed a quarterly growth rate of 0.5% for the September quarter, the smallest lift since the preceding June 2019 quarter. This took the annual growth in the index to 4.0%. This is below the recent quarterly peak of 4.7% this time last year. If you are constructing a new home, speaking to a builder and locking in your build rate is usually the best way to save you money down the track.
  4. Demand for Rental Properties: Australia’s growing population, coupled with lifestyle preferences and demographic shifts, has created a high demand for rental properties. This presents an excellent opportunity for those thinking of getting an investment property, as rental demand continues to outpace supply in many areas. By investing in rental properties, individuals can generate a steady income stream through rental yields and potentially benefit from capital appreciation in the long run. The biggest question to ask yourself when buying your first investment property is whether to build and sell or build and rent the property out. Check out our news post here where we compare the pros and cons of both options.
  5. Long-Term Investment Perspective: The Australian property market has historically demonstrated long-term growth and resilience, despite short-term fluctuations. By adopting a long-term investment perspective, buyers and investors can navigate through temporary challenges and benefit from the wealth-building potential of property ownership. Property values have consistently appreciated over time in many desirable locations, making it an attractive investment avenue.
  6. Government grants for Homebuyers: The Australian government continues to introduce initiatives and support measures aimed at stimulating the property market. These may include grants, tax incentives for investment properties, and schemes targeting specific buyer segments. By staying informed about government policies and taking advantage of applicable incentives, buyers and investors can enhance their purchasing power and maximize the potential returns on their investments.
    After information on the newly introduced Home Guarantee Scheme (HGS)? Read our blog post here.
  7. Diversification and Wealth Preservation: Property investment provides a means of diversifying one’s investment portfolio and preserving wealth. As an asset class, property offers stability, a tangible value, and a hedge against inflation. By diversifying investments across multiple asset classes, including property, individuals can mitigate risk and build a resilient portfolio for long-term financial security.
  8. Taking your pick of the litter: Humans, by nature are pack animals and are used to doing things as a group. This ‘herd mentality’ or tendency of people in a group to think and behave in ways that conform with others is particularly evident when the property market is at a peak or trough in the cycle. When the market is up, everyone wants a slice of the action and when it is down most people opt to hibernate until more optimistic property days arrive. However, there is one final positive to entering the market when there is not a lot of competition around and that is, that it presents you the best opportunity to pick the best of the bunch! So, why wait to buy when everyone else is buying?

Despite challenges such as rising interest rates and construction costs, the Australian property market continues to present a promising opportunity to purchase and invest into. With a strengthening economy, adjusting interest rates, long-term investment potential, government support, and opportunities arising from construction cost considerations, buyers and investors can seize the advantages offered by the market. By taking a strategic and informed approach, individuals can navigate through temporary challenges and position themselves for success in the dynamic Australian property market.

Looking for an investment property in Melbourne? Here is where you should be looking!