Did you know : “History shows that over the past 80 years where stock markets have behaved as they are today … a property boom usually follows.” After the initial financial shocks money moves in droves, firstly into gold and similar liquid cash assets, then over to solid brick and mortar assets! The reason for more investors starting to flood back into the property market is to secure the underlying asset of their medium to long term investments. The resultant rush on property equates to a strengthening of property prices. Making sense to investing in property.
Annual Property Briefing summary
We recently attended an Annual Property Briefing held in Melbourne and by all accounts the event was a great success for those who attended who gained some invaluable insight into the Melbourne Property Market.
The Key Note speaker was the acclaimed Sam Nathan, Director of Charter Keck Cramer, who spoke passionately about the changing demographics of Melbourne, the driving force behind the Melbourne apartment market and how the city sustained it’s momentum coming out of the Global Financial Crisis.
The key points Sam spoke about include :
Melbourne’s Evolving Property Market
- There is an Undersupply of property in Melbourne, with currently only 5 months supply available, which is extremely low, compared to the previous 10 years of property supply rates. There is an upward pressure of a substantial stock deficiency that will facilitate further rises in pricing
- Movement towards an acceptance of higher density living is strengthening. Which is supported by affordability and demand + a recovery in immigration intake, increased by people wanting to live close to the CBD or inner fringe suburbs
- An increase in construction costs is driving the cost base of property prices up with a current increase in costs on new developments of at least 7% – pricing – supported by high demand and a low supply
- Government policy is supporting inner urban development to cater for the high demand. Plus new style apartments are smaller internally yet far more user friendly of space available, improving affordability to a wider market of owner occupiers and investors alike
- Vacancy rates in inner urban Melbourne have consistently been under 2% since 2005 due to substantial demand for rental accommodation – this trend continues to grow due to the high demand + undersupply of rental accommodation
- The benefit and growth potential of Melbourne as a city is massive. Melbourne could out grow Sydney and become one of the top (highly sought after) cities worldwide. Very much suited to apartment style living in a cosmopolitan society, supported by highly efficient infrastructure meeting our chosen lifestyle
- Given the city is only 170 years old, Melbourne lends itself to controlled and planned growth along planned public transport arterials and infrastructure allowing for quicker commute times
- Our property markets being supported by Melbourne’s insurgent population growth, which is expected to reach 5.22 million by 2030. Causing the underlying dwelling deficiency to increase in most markets and place renewed pressure on Rental Markets!
- There are currently property hotspots that the government are literally pouring millions into, in order to create self sufficient satellite cities of Melbourne providing dwellings, employment, entertainment, sport and public transport and other supporting infrastructure that in the medium term will grow in capital value by the nature of the government investment and your buy in
Melbourne’s Thriving Apartment Market
- The affordability threshold has driven Melbourne’s apartment market forward over the past 5 years with immense scope for increased demand on Apartments now and into the future.
- At this time 76% of all off the plan developments are already sold and over 88% of apartments under construction have been sold.
- In 1990 the Melbourne Central City Region had 1,250 apartments and a population of 2,100 people and in 2011, the Melbourne Central City Region has 26,690 apartments (growth of 15.7%pa) and a population of 41,500 (growth of 15.3%pa). A trend that continues to grow in numbers of apartments and residents to meet demand.
- Melbourne 2020 and Melbourne 2030 government initiative planned for a Population Growth and Infrastructure improvement to meet this growth which represents an opportunity for Investors who identify the potential of what an increas in our population will have on the value of property now and into the future
- Historical apartment supply has been relatively flat for a decade, however there is an evolving long term demand for apartments being driven by a function of necessity and affordability resulting in higher density living which is becoming the norm
- Apartments are getting smaller but their designs are becoming far superior in their efficient layout and clever use of space. Lower internal sizing equates to keeping pricing affordable to both owner occupier and tenant
- Higher demand for rental accommodation, exacerbated by an undersupply, continues to ensure a growth in rental income
- For those that cannot afford to buy a house, townhouse or inner suburb apartment … renting an apartment is the solution to maintaining a chosen lifestyle and living in a location of their choosing, close to the action and social circles to save on wasted commute times
- Tenants are now becoming property investors, utilising the benefit of negative gearing, which ensures affordability to get into the property market today, whilst being a tenant to another property owner
A recent article presented provides interesting insight into ‘Investing in Property’ delivered by a very well known and respected Australian Property Investment Educator with over 30 years experience in this field.
Answering the question as to when is the right time to buy, his response “If you are waiting for the market to bottom out you are not an investor you are a speculator and making one of the worst investment mistakes!” “Timing the market is what unsuccessful investors do.”
He continues by saying “most people take what the media is saying as truth and thus they miss out on opportunities because they do not really understand what is going on. The debate on timing is irrelevant … this does not matter to sophisticated investors!”
It has been predicted that there will be a housing upturn in the next 12 to 18 months, where investors will utilise existing equity, refinance home loans and begin investing in property. Why wait until then, prices will remain a constant … by investing now at least you are in the market and getting a rental income – whilst utilising negative gearing to your advantage and minimising your personal income tax you would otherwise be paying across to the ATO!
“Smart investors create long term wealth by first becoming educated and choosing an investment strategy that suits their objectives and needs.” “There is no such thing as a perfect investment strategy, yet working within a strategy makes for educated choices.”
“If you are waiting for the market to bottom out you have Missed the Point”, he goes on to say “and hindsight is the only way you will know if you got it right or wrong!” “Timing is one of the most misunderstood concepts in the investment world, with the best strategy being getting educated and finding out what is truly working in today’s markets.” “Successful investors know how to create wealth in any Property Cycle.” “Have you noticed how some investors do well in good and bad times?” “The interesting thing is that market timing has very little effect on them!” “Fundamentals of property has every effect!”
“While some investors are getting in the market making informed investment decisions others are sitting on the sidelines and will soon repeat the same thing they said to themselves the last time round ‘I should have!’ – whilst watching those that did!”
“How long have you been waiting to get the timing right whilst you continue to pay your Income Tax diligently, lose out on rental income and capital growth and thus the opportunity to have grown your wealth?” … when all during this time thousands of people were securing their wealth in property!
“Fundamentals in Australia have never presented so strong a case to Invest in Property as they do today! Incredibly high demand for property compounded by a major undersupply of property … exacerbated by a planned increase in population through birth and immigration into Australia.”
“Successful investors do while others ponder; it takes a calculated decision and commitment to grow wealth!” “Whilst timing to you now seems unfavourable, to some property investors it is the Right Time and they are going to do very well over the next few years … this is how it has been throughout history.”
We are here to help you make sense of the media hype, help you understand how you can protect yourself and make informed decisions as a property investor, through discussion and the sharing of vital information many investors are totally oblivious to.
NRAS property Focus
We have listed 3 propertunities that qualify for the National Rental Affordability Scheme meaning that these properties will be positively geared in your hands or come very close to being positively geared
Completed Stock ready for Investment today in your name or in your Self Managed Super Fund
- Apartments in Docklands
- Apartments in Footscray
- Apartments in Dandenong
view NRAS Properties here
National Rental Affordability Scheme | NRAS explained here
Offering value today destined for future Capital Growth potential includes :
Comments or questions are welcome.