Issues to ponder…

The tide is changing in the property market. Some investors are wondering whether to sell at a time when values are high, the cost of loans may increase, and the government is by increments introducing measures that impact on Australians’ capacity to invest.

Since the May budget, for example, when the government introduced penalty loading for international investors who left their apartments vacant, many foreign investors have changed tack by letting their properties. We are now experiencing a ripple effect on yields across the market. In the past year, for instance, Docklands vacancy rates have reduced substantially, with the release of these properties which had not been part of the overall supply component.

But rare opportunities arise when the market mood is trepidation. Spooked by current conditions, less-experienced investors are looking to sell, but selling at peak market-value can be a losing game, squandering leverage potential and leaving investors vulnerable to capital losses and diminished purchasing power.

More prudent investors are reinvesting in their existing properties, upgrading them for higher rental. And clearance rates in some markets have reduced significantly as investors sell and owner-occupiers move to up- or down-size. These changed conditions open up further opportunities in the market.

So, although current conditions make the wealth accumulation game more difficult, prudent players can always find opportunities that market uncertainties create.

 

Jock Bing