If you’ve been watching interest rates while you contemplate your property investment plans, the Reserve Bank of Australia’s (RBA) decision on Tuesday 3 August 2021 (and again the following month on 7 September) to hold the cash rate at 0.10 per cent would have been no surprise.
In August it was the ninth consecutive month the central bank has chosen to keep interest rates at historic lows while the country continues to battle the economic impact of COVID-19. The decision was anticipated by experts (and armchair experts) across the financial sector.
Cheap credit, low stock, and high household cash levels have prompted many Australians to jump into the property market. And new lending continues to rise according to data from the Australian Bureau of Statistics (ABS) and the Australian Prudential Regulation Authority (APRA), with high uptake from investors and home buyers with more than one property.
In fact, the nation's property market has made an astonishing recovery while continuing to ride out the tidal wave that is the pandemic.
As a result, house prices have increased across the country, according to the most recent data from the Real Estate Institute of Victoria (REIV). In the first three months of the year Melbourne’s median house price passed $1m for the first time, after a staggering 8.8 per cent quarterly price increase. This, despite the fact that at the same time more than 32,000 Melburnians quit the city in the 12 months to March, the most of any Australian capital.
So, how does this all of this data impact your own property investment plans?
The question on everybody’s lips is whether now is a good time to invest. And the answer is simple. Yes.
Waiting for the perfect time to invest is not only difficult, it will delay your entry into the property market so you miss out on great opportunities. Or worse – it will stall your property investment strategy altogether.
While timing a purchase well can be beneficial in the short term, it becomes less important for investors over time. A successful property investment strategy is one that looks to the future, and successful property investors will tell you time in the market is more important than timing the market.
Property values are always subject to market cycles. But if you’re willing to wait these out, you will outperform in the long term.
Sure, it’s great to get a good deal on your interest rate. But if you’re basing your move into the property investment market on this factor alone, you’re missing the big picture.
Market conditions do fluctuate and the rate you sign on for when applying for a mortgage isn’t the rate you’ll have for the length of your loan. Again, property investment is a long-term proposition. Short-term market fluctuations have less impact on your financial returns if you’ve bought the right property for your overall, long-term strategy.
Focus on the important things you can control – great location and growth potential – and you will reap the benefits in the long term.
- Time in the market can have a greater impact on property returns than timing the market
- Short-term market fluctuations have less impact on returns when you’ve bought the right property for your overall, long-term strategy
- Timing is irrelevant if you’re not buying the right assets, so focus on location and long-term growth potential
As active professional property investors and mentors, we know first-hand the difference the right planning and strategy can make to any investor’s long-term success. We’ll help you to develop the skills, mindset and knowledge to grow your property portfolio. With our support and proven roadmap to success, you’ll soon exceed all your financial goals.
Other News and Videos
Investing during Covid-19
Wednesday, 22nd Sep
Australia’s property market is experiencing a boom that even a pandemic can’t dampen, with prices at all-time highs and interest rates at all-time lows.
However protracted lockdowns and slow vaccine roll-outs have left potential investors wondering what the next 12 months are going to look like for the market.
Four-legged friends causing mayhem in the rental market!
Wednesday, 15th Sep
In the biggest shake-up to the Victorian Residential Tenancies Act in more than two decades, a raft of new laws came into effect in March 2021. Covering everything from allowing renters to make minor modifications to the rental property to limiting rent increases to just once a year, the 132 amendments aim to “make renting fairer” for Victoria’s 1.5 million tenants.
Among the most contentious of these government reforms is the new pet clause, which makes it easier for renters to have four-legged friends in the home.
Capitalising on the trend towards sea and tree changes
Thursday, 2nd Sep
For any Melburnian with six lockdowns and counting under their belt, news that city dwellers are fleeing the concrete jungle in record numbers and relocating to greener pastures will come as no surprise.
APARTMENTS ON THE RISE
Monday, 23rd Aug
Traditional thinking has generally leaned towards detached dwellings, largely based on land value and the potential for long-term growth. But – price point aside – there are plenty of reasons to add an apartment to your investment portfolio right now.
Selina and Daniel - Member case study
Wednesday, 21st Jul
Selina and Daniel were looking forward to having their second child, and also had the goal of adding to their property portfolio. However, trying to get an investment loan while on parental leave can create unexpected barriers at a time when a stress-free environment is vital to any expectant parent.
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