You’ve likely seen a few headlines lately about property investment. Here’s my take on the key topics:
Interest rates
I don’t think anyone is seeing interest rates moving upwards anytime soon. Currently, fixed rates are at their lowest ever (low 2%’s).
This is a great opportunity for you as an investor if you have either:
- Maxed out your capacity to reduce your outgoings for the medium term; or
- Have a big enough portfolio to put a couple on fixed and leave others variable so your equity is accessible.
The old rule applies though:
Exiting at a fixed rate will cost you – for instance, if you have any changes to living arrangements, or are restructuring your portfolios. It’s not a one-size-fits-all.
International migration
This will be subdued while restrictions are in force but will come back with a bang as soon as they are lifted. The way we have handled the pandemic will add to the desirability of relocating to Australia.
One group of people that weren’t initially forecast was our ex-pats returning home from living abroad. There is a high volume of cashed-up Aussies returning every week which is having an influence in certain markets.
Internal migration
As more work-from-home roles are likely to last, this will create a “lifestyle move” for many as they make the most of the extra freedom offered by employers. The trend looks likely to continue where people are flocking to the coast, for a tree change, and warmer climates. This is a paradigm shift in our generation — if not in Australian history.
Construction boom
The Home Builder Grant was a big success. This, coupled with the lowest interest rates we have ever seen — and generous First Home Owner incentives — has caused mayhem in the land and construction industry.
This will get all the major trades employers moving again and create a scarcity of the smaller operators and subcontractors. We are already seeing this affect costs and build timeframes.
“fixed rates are at their lowest ever (low 2%’s)”
Commercial office space
This area will be in for a disruptive time. Employers will be offering work-from-home opportunities so won’t need large spaces, and minimise upsizing plans.
Businesses will reassess their floorspace requirements knowing they can significantly reduce their leasing expenses.
Rental market is being squeezed
With the changes in internal migration, we’re seeing a big tightening in ‘lifestyle’ areas. We’re also seeing an unprecedented, high volume of vacancies for apartments in cbds.
There is a high volume of cashed-up Aussies returning every week which is having an influence in certain markets.
In a nutshell
It certainly is an interesting time for property in Australia. As with any change, there is opportunity. So if you are in the position, make sure you take full advantage.
If you’ve got any questions or want to find out what you can do at this time, contact us for your 15-minute free, no-obligation discovery chat.
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Email: strategy@simplepropertyinvestment.com.au OR
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