Confidence in property investment is on the up
After a year of rising interest rates, the latest Australian Bureau of Statistics (ABS) lending statistics show investors are slowly returning to Australia’s housing market.
The value of total new investor loan commitments rose 1.9 % in November and was 18.0 % higher compared to a year ago.
Mish Tan, ABS head of finance statistics said the growth in owner-occupier and investor lending seen through 2023 was driven by the three states with the largest populations.
According to Dr Tan, for both owner-occupiers and investors, NSW saw the most growth.
Why are investors turning to property?
There are many reasons why people look at property to grow wealth. A common reason is that it’s easier to understand than other investment opportunities, such as shares, and some argue it is less of a risk. Other reasons include:
- Create a passive income
Property investment isn’t just for the wealthy, and many ‘mum and dad’ investors use property to create a passive income.
Furthermore, improving the property could increase the rental value, and hence income. Later down the track, the property can be used to secure finance for another investment property, or other investment opportunity, and thus increase wealth.
Owning an investment property does come with responsibilities, and added paperwork, however, using a property manager can reduce this load.
- Capital growth
Property is not a get rich quick scheme, and while there are ups and downs in the market, generally the value of a property does increase over a few years. The canny investor buys when the market is at a low, and sell when it is at a high.
But the cannier investor doesn’t always sell; they use this capital growth to increase wealth, by refinancing, and buying another property, or using the finance to invest in other ways.
- Tax Benefits
Like any other business, property does have numerous deductions that can be off-set against tax. Generally, you can claim back any costs associated with operating, and managing a property. Indeed, some investors use negative gearing as a strategy to lower their tax.
Speak to a financial specialist who can discuss how investing in property can work for your individual situation.
- Retirement Planning
Bricks and mortar can be used as part of a retirement funding strategy. Income from property can be used to supplement any super income; for some property investors, this additional income has even allowed them to retire early, or at least cut down their working hours as they approach retirement age.
Super funds can in some cases be used to purchase property; we strongly recommend seeking advice from a financial specialist as using super for property does come with rules and regulations as to how it can be used.
Drawbacks of investing in property
Like any investment, there are drawbacks and risks. The property market does go up and down, and without a tenant, there is no income. Using a property manager can reduce the risk of vacancy; they know how and where to promote a property for rent to the right audience, and often have a database of people looking for rentals.
We’ve in property for nearly 50 years, so we think property is a good way to invest for your future.
Get in touch with us and we’ll tell you how our property management services can make your life easier, and increase your return on investment.
Call us a ring on 02 4956 9777, send us an email to mail@newcastlepropertymanagement.com.au or pop into our Cardiff office for a chat to see how our property management services can help.
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