Numerous barriers (whether real or perceived to be real by the general public) are apparently proving effective at slowing housing market activity right now. At least this is the case if you believe all the recent media reporting. And let’s face it, many people do.
But one of the problems with the type of microanalysis we’re seeing in a market very much impacted by a raft of local and global fundamentals, including seasonal supply and demand fluctuations, is that it’s far too one-dimensional to paint an accurate image of what’s really going on.
You see…property is a big picture proposition. It requires the capacity to avoid getting lost in the details, where the devil lies, but also to see how your strategy and structure will unfold in order to reach your end objective(s).
As such, one or two changes in how the fundamentals intersect at any given time to create the good, the indifferent or the bad tidings of the day, should mean little more than a bit of interesting reading for the savvy, strategic property investor.
Unlike the majority of people transacting in our housing markets, investors read about seasonal type slowdowns and think ‘opportunity’.
But much like the reports they take their market information from, most Australians think in the short term, not necessarily considering how well some of our better-loved locations have performed historically.
They hear nit picking around affordability barriers and read into a relatively overdue general market slowdown as the demise of house values, now and forever.
So for the investor who knows better, how is the current market genuinely looking in terms of opportunities to acquire further housing assets and grow your portfolio?
Well, if you’ve got your strategies and structures in place, and sought sound advice from a specialist mortgage broker regarding how to overcome the increasing serviceability barriers of a new look lending landscape, 2016 could prove favourable for your next property acquisition.
Where do the experts say makes for good buying?
Given short-term cashflow is now recognised to be as critical to the sustainability of your portfolio as long-term capital growth, many experts suggest regional buying opportunities could be a good way to shore up additional yields in 2016, particularly as inner city rent returns start to come off the boil.
A rising tide of reinvented tree and sea changers – essentially Gen Xers and Ys who’ve been priced out of the inner suburbs – have begun looking for affordable first time buying opportunities further afield.
As such, it’s anticipated that so-called satellite towns, such as Bendigo and Geelong in Victoria and Liverpool in NSW, will continue to generate interest among those seeking an attainable foothold on the property ladder.
These regional towns, which often boast a multi-faceted employment base around a number of different industries, always tend to benefit off the back of inner city booms. And it seems this time is no exception.
Advice from industry insiders is that regional locations, within easy commuting distance to the CBD, where jobs are being created due to private and public infrastructure spending, could prove profitable for risk adverse buyers wanting the surety of strong rent returns.
Pin drop
In a bid to pin point specific locations that represent value buying, thenewdaily.com.au spoke to a number of different industry advisers. Here’s what they had to say…
CoreLogic RP Data senior research analyst Cameron Kusher says those focused primarily on rent returns should look beyond Sydney and Melbourne.
He notes Canberra’s property market is starting to perk up and down south, Hobart could be one to watch. While prices in Perth and Darwin will likely continue to decline.
Property expert at financial comparison site Mozo, Steve Jovcevski, says Liverpool in Sydney’s west and neighbouring suburbs such as Casula represent great investment prospects.
“Current low clearance rates in Western Sydney compared to the CBD could potentially amount to big cash savings for property investors even in the face of tighter investing borrowing guidelines,” says Jovcevski.
While Ben Handler, CEO of buyer’s agency Cohen Handler, says investors can snap up a very good entry level apartment investment in Sydney’s Mt Druitt, Blacktown and St Mary’s for around $320,000.
Smarter Property Investing principal Christine Williams claims the western suburbs of Melbourne, much like Sydney, are where some of the best investment prospects lie for Victorian investors this year.
She says for beginning investors whose strategy is to buy and hold for the long term – anywhere beyond ten to fifteen years – Werribee is the place to secure a quality, well-priced, entry level detached house for approximately $320,000.
And Handler is steering Melbourne clients towards houses in Preston, Coburg and South Kingsville.
If you’ve been considering the expansion of your property investment portfolio over the next twelve months, it’s definitely advisable to keep in mind the current changes occurring around lender serviceability. Not to mention the potential for interest rates to start rising again before the year’s end.
While you’re ultimate goal as a serious investor should always be long-term capital growth, it’s perhaps more important now than it’s ever been to maintain a strong cashflow position too.
With this in mind, diversifying into regional locations that have the potential to offer the best of both worlds, with consistently good average price growth and very strong rent returns, is certainly an approach well worth considering.
About the Author
Since 2008, David Thomas has built a business aimed at servicing the needs of property investors, owner occupiers and small business owners. David is recognised as one of the top 10 independent mortgage brokerages in the country, David and his team have settled almost billions of dollars worth of residential and investment loans over the last decade.
Known for his straightforward, relatable style, David believes by educating people about property funding; they fare better in the market. By sharing his expertise openly, some of the people he educates will likely become his clients. It's a win-win approach.
David Thomas is a credit representative (Representative Number 506153) of BLSSA Pty Ltd, ACN 117 651 760 (Australian Credit Licence 391237).