Why now is time to buy an investment property
According to the recent REIQ reports, house prices softened in 2019 but are beginning to make a resurgence in 2020 as markets rebound from the scare of having negative gearing removed in the mid year election. If you have been thinking about purchasing an investment property, now has never been a better time than ever. Here are 10 reason why you should pull the trigger now and jump on that investment property that you have always talked about.
RECORD LOW INTEREST RATES
With the RBA’s official cash rate being 0.50% - the lowest ever in Australian history. Cash has never been cheaper to borrow which is lowering mortgage repayments, ultimately lowering your bottom line.
2. PROPERTY INVESTOR EXPERTS SAY THERE’S NO BETTER TIME
Peak property investment body Property Investment Professionals of Australia (PIPA) in their Annual Investor Sentiment Survey, says that 82% of investors believe now is a good time to invest in residential property, up from 77% in the previous year.
3. NO CAP ON INVESTMENT LOANS
In July 2019, The Australian Prudential Regulation Authority which has a hand in regulating the lending industry removed the cap on the number of investment loans an individual can take out. If you’re looking to go for more than one property, now is a great time.
4. WAITING LONGER CAN COST YOU MONEY
If you’re waiting for the perfect ‘time’ – don’t. It can actually cost you in the long run. PIPA research in September 2019 showed that investors who attempt to ‘time’ the market could lose an average of $140,000. So don’t wait, move!
5. A BUYER’S MARKET - WHIE IT LASTS
Since house prices have fallen slightly over 2019 (but may climb back to the record peaks this year!) you should put on your negotiation cap and look for an absolute property bargain.
6. LOWER OUTLAY = HIGHER RETURNS
It also stands to reason that if house prices rise back to their peaks this year, you’ll reap a greater return on investment than if you waited. So, if you have the capital lined up, move now or regret it later.
7. MORE COMPETITION IN INVESTMENT LOANS
In the wake of the Royal Commission into the Banking Sector last year, Savvy CEO Bill Tsouvalas says non-bank lenders and brokers have driven more competition in the sector: ‘Applications with the Big Four banks could slide by as much as a third, which may indicate non-bank lenders are driving home more competitive rates. If you’re going to buy an investment property, it’s worth looking into.’
8. NEGATIVE GEARING
Since the Coalition was returned at the last Federal Election, changes to negative gearing proposed by the Labor party will not come to fruition. That way you can still take advantage of tax breaks through negative gearing if you decide to buy an investment.
9. SECURE YOUR RETIREMENT
If your superannuation isn’t anything to write home about, an investment property now can help you secure a comfortable retirement. The extra cash flow or an eventual sale of an investment property could net you extra cash when you’re not working.
10. SUPPLEMENT OTHER INVESTMENTS
If you already have investments in shares or money markets, diversifying your portfolio with an investment property is one way to spread risk and create another stream of income. That way, you can pocket the rest or use it to fund further investment.
Weighing up these ten reasons can help to inform your decision on whether investing in property is the right move for you in 2020. So why not start hunting for the perfect investment property today?