5 reasons why you should be investing in property today
There’s a lot of good news coming out of the property market right now regarding property investing, so if you are considering a property purchase, then now is a great time to take the plunge.
With the heat having calmed down in the Sydney and Melbourne markets and confidence levels starting to rise, both capital cities still present great opportunities to get into the market, if you know where to look, whilst Brisbane remains the most affordable of them all.
So, what other reasons are there to support an increased level of investor activity? Here are five reasons why you should be investing in property today:
1) Lower Interest rates
Earlier this month the Reserve Bank of Australia lowered the cash rate by 25 basis points to 1.75 per cent – an all-time historic low. This is great news for home owners and investors with the big banks (NAB, Commonwealth Bank and Westpac) immediately passing on the full 25-basis-point rate cut to its customers, whilst ANZ passed on a 19-basis-point cut.
Lower interest rates make it more affordable to get into the property market and invest in property; however, it is important to keep in mind that interest rates are uncontrollable and can rise. You should therefore ensure that you can afford higher repayments, if interest rates were to rapidly rise in the future. Higher interest rates are not a bad thing though, as it shows that the economy is performing well and there is greater confidence in the market, so you should not be afraid of a hike in interest rates, just as long as you have done the maths beforehand and do not strain your finances.
2) First home buyers’ share of new loans falls to the lowest levels in 12 years
The number of first-home buyers seeking new-home loan approvals has fallen since 2011 from 20 per cent to 14.6 per cent in February and has recently fallen further still to 14.2 per cent. Many of these first home buyers are becoming first time investors first due to the greater benefits available through property investment.
3) Value of investor loans rise
In spite of first home buyer loans falling, investor home loans have increased five months in a row to $550bn in March, according to data from the RBA. However, investor home loans are still down on last year which saw a peak of more than $569bn, due to the APRA imposing a 10 per cent growth ceiling on the total value of investor credit.
4) Negative gearing changes ruled out
The budget showcased that changes to negative gearing and capital gains tax will not go ahead which is great news for investors looking to invest in property. However, with the potential for negative gearing laws in 2017 to be altered if Labor comes into power, this is spurring on more investor activity to get into the property market today. However, it is important to note that even if Labor does get elected and changes to negative gearing do occur, they say that new property including off the plan property will not be affected and investors of new property will still be able to benefit from the perks of negative gearing.
5) Superannuation changes to spur on investment property purchases
The recent Federal Budget has also announced that there will be changes to superannuation. From July 1, 2017, there will be a $1.6 million cap on the amount of money that can be transferred from a super accumulation account into a retirement account, where earnings are tax-free. However, for those who have more than $1.6 million inside super, you will still be able to keep your excess savings here; it just means that this money will become taxable.
Commentators are suggesting there will be a flood of new money coming out of SMSF's into the property investment market again fuelling property prices in quality investment locations.
These super changes will certainly make people readjust what investment assets they buy and purchasing a negative geared property also offers an attractive tax offset, allowing investors to reduce their taxable income even more.
If you have the funds behind you to make a property purchase today, but are sitting back and waiting, chances are you will continue to miss out. Investing in property is one of the safest types of investment options out there and at iBuyNew we can steer you in the right direction of good growth and solid investment properties that will reward you both now and in the future.
To learn more about property investing and what properties are available to buy today, call us on 1300 123 463 to book a meeting with one of our expert Property Consultants.
Published on 13th of May 2016 by Marty Stanowich