Top tips for property investors


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It has been a crazy year for the property market.

The affordability debate heated up as prices soared in Sydney and Melbourne.

Experts began to question the future of negative gearing and stamp duty as first-home buyers were pushed further out of the market. Home loan costs increased, construction numbers for apartments exploded and foreign investors were hit with big taxes.

So what's in store this year?

Ben Kingsley, chair of Property Investment Professionals of Australia (PIPA), says investors will need to get creative to overcome affordability problems and to steer clear of areas inundated with apartments.

"With more potential downside risk in our major markets, investors need to be strategic about their investment approach," he says.

Here are Kingsley's six tips for tackling this year's property investment.

  1. Look out for higher borrowing costs

Home loan costs are starting to rise. Six lenders have recently lifted their variable rates, including all the major banks. With principle borrowing costs already high in Sydney and Melbourne, growing interest rates won't come as good news. If you're looking at the investment market, Kingsley says this is certainly something you should consider.

  1. Consider co-ownership

If you can't get into the market yourself, or you're uncomfortable taking on so much debt, you could consider going co-borrower with someone you trust. That means you give that person equal share in the equity of the home, and as such you both have equal responsibility to repay the loan.

  1. Go "borderless"

Kingsley recommends thinking outside the box. He encourages investors to consider opportunities interstate, outside areas they know, and investing in cheaper, more competitive markets.

  1. Beware the apartment glut

The outlook isn't so good for apartments. Sydney, Melbourne and Brisbane have recorded sky-high construction levels for CBD and inner-city apartments. With apartments heading towards oversupply, Kingsley recommends investors tread with caution. Bargain hunters might be able to take advantage of distressed sales further down the track.

  1. Focus on the long term

Speculation can be bad for markets, so keep your long-term goals in mind when making decisions. Kingsley says investors should remain cool, calm and collected and avoid making irrational decisions based on fear.

  1. Seek help

When there's a lot at stake, it's wise to get a professional opinion before you jump in. You should consider hiring a buyer's agent, mortgage broker or qualified property investment adviser who can help you to find the best property at the best price.

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Steph Nash was a staff writer at Money until 2017.
January 17, 2017 3.55am

Great Article Steph, I would like to add some notes on the oversupply looming especially in the Sydney market. I think overall there will not be a huge oversupply problem, however there are pockets within the city which are oversupplied.

According to the pockets oversupplied are Parramatta, Liverpool, Botany/Mascot, Wentworth Point, Ryde/Meadowbank & Homebush. If you are owner occupier then some bargains will pop up in late 2017 through to 2018 as distressed sellers will be plentiful in the market.

Also seeking help is a very undervalued yet crucial step, talking to experts in the industry and especially experts into a suburb can definitely shed light onto the best investments which you may overlook on your own.

Dylan Jones
July 5, 2017 1.57pm

An investment in property should increase the wealth and also decreased the stress of the future. But it's a misunderstanding that always investment in property should return the positive results might be some time it will gives the negative results too. But one thing keep in mind before investing in property that invests in property will give the benefit financially in future or not.