Property investors tipped to return to the market

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Is now the time to buy before the rest of the pack jump in? Property investors have been tipped to return to the market in larger numbers as the slowing rate of house price declines hits home.

According to PRDnationwide, while quick recovery of the property market to a pre-GFC boom is “unthinkable”, the rate of decline in values has slowed – and may even be stagnant.

The real estate agency said that this is primarily due to what global markets face in the near future.

"Investors could now be tempted back into the property market as the rate of decline in values erodes away," said PRDnationwide research director Aaron Maskrey. He added that 33.9% of the property market is now investor financed, and is expected to increase as rental yields across the nation continue to become more attractive.

Looking at the figures from February, for example, investor financial commitment increased by $400m to hit $6.9bn.

This performance of the equity market, which Maskrey said "remains not only turbulent, but has provided returns inferior to fixed bonds over the past five years", will also improve property’s standing as a solid investment. But that’s not to say that the property market won’t face some significant challenges in the coming months and years.

"The property market continues to contract, as shown by housing finance approval's data, while bank rate increases and a tight fiscal federal budget will likely prevent any substantial green shoots in the market from gaining significant traction," the report said.

"So far unemployment has been fairly contained, but any significant change will hurt the property market."

For the time being, however, home loan affordability has increased – giving home hunters a reprieve.

"On average, Australian households now need approximately 32.9% of the family income to service their home loan,'' said Maskrey.

Have you been encouraged by recent growth figures? Have your say below, or join the debate in our property investment forum.

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