Should investors stay on the sidelines?

The state of the current property market has many investors ducking for cover. But, are they right to be scared? Should you be sitting on the sidelines and waiting until the market picks up or, in doing so, could you be missing out on a potential goldmine?

After years of boom conditions, a number of factors have combined to result in price declines. It’s resulted in a lot of negativity in the media.

But, while it’s true that prices in big cities such as Melbourne and Sydney have peaked, the same can’t be said for regional Australia and some of the smaller capitals, such as Hobart. The localised corrections we’re seeing in the major markets are skewing national results, but there are still great investment opportunities to be had outside of these cities.

But can you get credit?

Another issue for investors has been the availability of credit – even if you want to invest, getting loan approval at the moment can be challenging. Between the Royal Commission and APRA’s macro-prudential measures, credit has become a lot harder to come by in recent months, but this isn’t necessarily a bad thing.

An influx of buyers priced out of the inner-city market as a result of restricted borrowing power means upward pressure on prices in the outskirts so, as an investor, this could be an excellent place to start looking for your next property before prices really take off.

Be sure to check vacancy rates and median rents in the area, and familiarise yourself with the type of tenants you are likely to attract, so you can choose a property accordingly – families, professionals, or students, for example, will all have different wants or needs from a rental property.

Tune into changing markets

When it comes to buying an investment property in an outer suburb or regional area, transport is key. Provided they can commute to the CBD, suburbs on the margins of the major cities are a workable solution for many renters.

It also provides a “greener” lifestyle, a trend that is gaining in popularity thanks to increased awareness of environmental issues. The Central Coast in NSW is a good example – Sydneysiders are flocking there to escape the rat race and raise their families in relative tranquillity, while still being able to get into the CBD should their job demand it.

Governments are really beginning to jump on board the decentralisation train, and recognise that public transport is key. Large sums are being spent on the infrastructure needed to accommodate longer-distance travel in places like Geelong and Ballarat, to reduce the travel time to the Melbourne CBD to less than one hour.

Where to from here?

If you’ve been wringing your hands wondering how on earth an investor should proceed in the current market, here’s the bottom line: take action. Don't sit on the sidelines. Instead, create a strategy today.

Your strategy might show that you don’t buy anything for the next 12-24 months, or it might suggest that you acquire more assets over this period. A plan tailored to your budget and your goals will help you make decisions that put you on a path towards financial freedom, regardless of external market conditions.

If you need assistance with creating a personalised strategy, contact us today.