It’s a great time to be a landlord in Australia. With rare exceptions, vacancies are ultra low, rents are rising and there’s massive momentum behind prices.
A nationwide property boom is under way (with the big city inner-ring unit markets the exception) and the curious thing is that investors haven’t been joining the party.
The growth we saw in most markets in 2020 was driven by owner-occupiers, with first-home buyers leading the charge and other home buyers, especially lifestyle-seekers, prominent as well.
Investors were sitting on the fence, worried firstly about the September Cliff which failed to materialise and now apparently concerned about a potential March Cliff.
They’ve been waiting to see what would happen, before making decisions. And here’s what has happened while they’ve been fence-sitting – the new data from Domain shows that all capital cities had house price growth ranging from solid to strong in 2020, as did most of regional Australia. There was particularly notable uplift in the December Quarter.
This confirms earlier data from CoreLogic and both confirm the anecdotal evidence from the coal-face of markets which shows properties receiving multiple offers and selling for more than the asking prices, often before being formally listed.
Other research shows that rents have been rising in many parts of Australia, on the back of vacancy rates so low that it constitutes a national rental crisis.
So the hesitant investors have missed the first phase of the national property boom.
If they’d bought a year ago in many parts of Australia, their properties would now be worth 10%, 15% or 20% more than they paid.
For those who bought in sexy lifestyle locations like Byron Bay and the upmarket areas of the Sunshine Coast, a $1 million investment a year ago would now be worth around $1.3 million.
If you’d bought a $400,000 property in Bendigo 12 months ago, it would likely now be worth around $460,000 (based on the median price data).
So it’s time for investors to stop procrastinating and get busy. And the latest ABS data on loans indicates that, at last, investors are starting to get involved.
This, in fact, is typical investor behaviour. Investors don’t lead property cycles, they react to them. They stampede into the market when they hear there’s a boom happening.
So I expect a big surge of activity from investors in 2021. There are too many good reasons to become buyers of well-located real estate and make it available to a hungry rental market.
The uplift in investor buyers will add further energy to the momentum already happening in markets across the nation.
It will make a national property boom that much more certain.
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