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New opportunities for long term investors
While the slowing of the Sydney’s residential property market has seen an exodus of speculative investors, it has created opportunities for those investors with a more realistic approach to property, according to the Real Estate Institute of New South Wales.
REINSW President, Cristine Castle, says the opportunities at present should lure back long-term investors, who are the back-bone of the residential rental market.
“People who are buying now are owner occupiers and those with a need and a long-term plan for their property investment”, Castle says.
Australian Bureau of Statistic data show that during October, lending to investors in NSW dropped by more four (4) per cent over the previous month and was more than 40 percent lower than during the October 2003 peak of the property market cycle.
Castle says this market correction, caused by the departure of mainly short-term investors, showed that the market was again experiencing a correction after the unsustainable investment levels of previous years.
She says this has created a gap in the market for those investors who are focused on the fundamentals of good rental income and the potential for long-term capital growth.
“This is a steady market which currently offers great opportunities for astute investors.”
“The REINSW vacancy rate survey for Sydney in November has remained low at 2.4 per cent, the same as in October, which is good news for investors.
“Fewer investors in the market have seen vacancy rates in Sydney fall, while rents in many suburbs have stabilised and are expected to increase due to a local shortage of rental properties.
“Also, many potential investors have adopted a wait and see attitude in the current market.
“However, these vacancy rates continue to be good news for property investors and indicate that there are opportunities in the residential investment market that haven’t existed for the last two or three years,” Castle says.
For first time investors, Castle recommends approaching the market with current market conditions in mind, doing your research and being aware of your budget.
She says investors will get best returns over the long-term of between 7 and 10 years, and therefore need to be more selective about properties they purchase than investors had been in previous years.
“When the market was at its peak the rush to buy any property was obvious.
“With this type of market thankfully behind us, serious investors now need to remember the basic property selection principle of position, position, position!”
“Buying in a good location means investors have a better chance of strong rental yields in the short-term and stronger capital growth in the long term.
“The residential investment market can always expect solid return and growth in Sydney as the population grows by about 1000 people each week.
“For the longer-term investor it is a great time to enter the property market”, Castle says.
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