A rental crisis that has struck post-lockdown Australia is allowing investors an opportunity to re-enter the market with an almost iron-clad guarantee of finding tenants.
Rents have risen almost 12% in the past 12 months and the vacancy rate stands at an incredible 1%, according to new data from SQM Research.
These factors, combined with subdued pricing as our interest rates move north, have made property investment an attractive proposition.
As an experienced agency in your area, we can see an array of statistics favouring experienced investors and those seeking to start a portfolio of properties.
REA Group’s PropTrack rental report suggests new rental listings have fallen 12.2% to their lowest point in almost a decade.
One reason has been an exodus of investors who sold properties to capitalise on the record-high prices of the past 18 months. REA believes their buyers were not other landlords but owner-occupiers, creating the shortage of rental accommodation.
Figures from the Urban Development Institute of Australia also highlighted the opportunity. It said its recent modelling showed that 75% of young Australians will be life-long renters simply because property prices were now beyond their reach.
Locally, there are many properties suitable for the rental market. Below, we’ve listed some tips for potential property investors. We hope you find them useful.
Call the professionals
If you’re not an expert in property investment, you should seek advice from an accountant or licensed financial adviser.
Goal-setting
Any investor should establish their financial goals before making a purchase. Have a strategy for your wealth creation. Playing the stock market can be a short-term play, but you’ll only make money as a landlord if you’re in for the long haul.
Do research
Don’t go blindly into the property market. When considering a property, think about the type of tenant it will attract. Young renters tend to gravitate to areas with cafes, restaurants and other entertainment facilities. Families generally prefer a more suburban existence with lots of room for the kids.
Yield equation
A benchmark annual yield from a property is around 5-6% of its value. The price growth of the past 18 months has made this difficult to achieve. However, the higher rents being asked will play in your favour now. Discuss this issue with your financial adviser or accountant.
Negative gearing
Seek advice on whether negative gearing is a good option in your circumstances. Setting a loss from your investment property against your taxable income sounds great, but you could be better off making a profit.
NOTE: The information in this article is general in nature and provided as a general overview only. Always consult your financial advisor or accountant for advice specific to your personal circumstances.