Property values are skyrocketing... Is now the time for investors to be buying in?
Updated: Nov 18
In the ten months to October 2021 the cost of buying a typical Melbourne house increased by almost $600 a day… Meanwhile the cost of buying a typical Melbourne apartment increased by $150 a day.
This is great news for property owners. However, those looking to invest in property, either for the first time or to build their portfolio, may be starting to wonder if now is the right time to be buying in…. And can you blame them? $600 a day growth is mind boggling – it equates to paying an extra $4,200 each week that you miss out.
We asked Justin Dunne, Director of Independent Property Brokers, to tell us more about what is really happening on the ground in the Melbourne property market.
According to Justin ‘there are still plenty of good investment properties out there – you just need to know what to look for’. He explained that ‘often first time investors make the mistake of wanting to spend as little as possible on their first property investment which means they can end up buying a property that has a higher hold cost and doesn’t grow in value as quickly as other properties’.
To avoid this, he advises his clients to focus on buying properties that:
Are in locations that are desirable for renters but are yet to ‘boom’ – near water or shops, cafes and public transport.
Provide comparatively higher rental returns, to that of similar priced properties in other areas.
Have relatively low hold cost – the rental return covers most (or all) of the cost of holding the property (loan repayments, outgoings and property management).
‘Even though property values are increasing at record rates, there are still plenty of properties on the market that meet these criteria’. To find them, Justin recommends you:
1. Do your research and crunch the numbers. ‘Often you will find that investing in a more expensive property in the right area will provide a higher rental return and result in a lower hold cost, than a less expensive property. You need to know the value and rental returns of different properties in different areas across Melbourne to find the opportunities and make sure you don’t pay too much’.
2. Build relationships with agents ‘If local agents know you and know what you’re looking for they will keep an eye out for you. Take the time to build relationships with the agents in the areas you’re looking to buy and check in with them each week or two, as often they will have new or off market opportunities that suit your needs’.
3. Put in the time. ‘The massive growth we’re seeing in the Melbourne market is largely a result of demand – lots of buyers and not enough properties to go round. When you’re in the market you can’t afford to take your foot off the accelerator. All too often investors miss really good opportunities because they decide to take a break from searching or don’t jump on an opportunity fast enough. If you are serious about buying an investment property you really do need to treat the search like a full time job. If you can’t, then it is wise to engage someone who can and will. Buyers advocates can be an incredible asset, especially for time poor investors. If they’re good, they will save you far more than they cost you’.
As with any investment or financial decision, it is important to seek advice from a financial adviser based on your unique needs and circumstances. If you are thinking about investing in property, or looking for ways to build your wealth, Angel Advisory is here to help.
Justin Dunne | Independent Property Brokers
As a Buyers Advocate with more the 25 years experience in the Justin works with property investors to the help them secure the right property, in the right area, at the right price.
The information contained on this article is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser.