How to rise above the volatile property market

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The Housing Finance data over the past two months has seen the decline of investment loans, and while this might have left some investors doubting whether this was the right time to acquire property or inject more funds, one thing is certain: the market is not any more inaccessible.

Your Investment Property had the chance to connect with Gateway Bank Chief Customer Officer Alexis Airey and get her insights on the condition of the investment property sector, the opportunities available in the market and how these can be maximised.

Airey emphasised that the investment property market is in a “state of flux.” Citing the lending regulatory environment and tighter restrictions as key factors affecting the situation of the sector, she said that the market should stabilise within the next year – after the market has completely adjusted to the guideline changes.

When asked about the implication of the Housing Finance data from May, which showed the number of investment loans had dropped to its lowest level in over two years, Airey did not deny that this indicated a slowdown. However, she also held on to a positive outlook for the days to come.

“Whilst it may not be as lucrative as it has been in recent years, especially for those looking for quick payouts on their investments, investing in property will remain a steady way to build your capital growth – as long as you’re happy to focus on a long-term strategy,” she said.

To support this claim, Airey shared some investment prospects that are ideal at present.

“Savvy investors seeking to enter the property market or grow their portfolio with equity from existing assets can take advantage of the current buyer-driven market, which is providing ideal conditions to buy, as growth in house prices is low in most metropolitan areas in Australia in recent times.”

Airey also underscored the value in renovating and repairing homes. “Even the smallest improvements – like repainting your property or replacing the carpets – can add tens of thousands of dollars to your property value,” she said.

Airey did warn that, if one opts to invest in renovations and improvements, he or she must assess the values of the property and find out the price ceiling. From there, one can decide how much should be spent in renovations. “[This is] to ensure you don’t end up spending too much on renovations that won’t provide you with a comparable return on your investment.”

There is also the option to invest in larger construction projects such as “building a self-contained granny flat.” Airey said that that it is possible to increase a property’s value by hundreds of thousands of dollars provided that the investor is mindful of overcapitalization.

In the end, Airey highlighted some common but very important advice when it comes to investments. “Get informed,” she quipped.

“If you’re going down the buying route, make sure to do ample research to avoid getting stuck in a buying trap. Don’t be fooled into thinking that the cheap property that seems too good to be true will pay off for you in a few years down the track – oftentimes it will be too good to be true and will be well-priced because the seller knows that it’s a low-value asset. “

 

Related stories:
Housing Investor Loans Drop To The Lowest Rate Since 2009
Housing Investors' Loan Approvals Still Down

 

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