Is now a good time to invest in real estate?
There are lots of black clouds circling the real estate industry at the moment, if you want to believe everything printed in the newspapers or shared on social media.
From what we’ve all heard, an apparent stagnant economy, low interest rates and declining house prices do not fill investors with a lot of confidence. And while doom and gloom may sell, it is not an accurate representation of the housing market right now.
There are actually many reasons why right now is the best time to invest in property. In fact, waiting may cause you to pay more and have less leverage when it comes to further investing in the future.
So, here are some of the top reasons why now is actually a great time to invest in real estate in Australia.
You can beat the election changes
Despite the presence of news polls, elections can sometimes be impossible to predict, especially the upcoming Federal Election on May 18.
Labor and the Coalition appear neck-and-neck while minor parties like The Greens and One Nation could have a surprising volume of power following the May vote. Labor is taking a policy into the election to erase negative gearing on existing homes and to reform the Capital Gains Tax, which could impact those earning $80,000 or less a year.
The time is right to get in now, in case those changes come to pass. They would likely take effect on January 1, 2020.
The current downturn is not uncommon
It can be easy to be swayed by the current downturn in housing. Australian property values fell $133.1 billion in the December quarter with the capital cities feeling the bite most of all.
This may appear scary, but it is not necessarily doom and gloom. Our current downturn is the fifth downturn is the fifth in the last 20 years and the market has recovered every single time.
Many buyers wish they could have invested when prices were low so they could cash in when they spiked back upwards, now could be that perfect time.
An interest rate cut would force house prices upwards
Australia’s cash rate has held firm at 1.5 percent for a record 32 months (current as of April, 2019).
This won’t last forever, though, and the Reserve Bank of Australia has conceded that an interest rate cut is likely to come soon. Traditionally, interest rate cuts have forced housing prices upwards which would mean it would cost more to invest.
There is no timeframe on when the interest rate could rise, but it is advisable to get into the market before it happens.
Waiting could cost you in the long run
No matter what the present market is saying, property is always a sound investment. And the longer you hold your property, the less impact market fluctuations have on your financial benefits.
Waiting for calmer waters only means you will own the property for less time and will make you more open to feeling the impact of the market shifting again in coming years.
Looking to get started in your property investment journey? Get in touch with Marc Woolfson now on 0478 304 944.