While many investors took advantage of the Covid property boom of the past two years and sold out for a decent profit, there are growing numbers now returning to the market.
The current market presents an enticing equation for property investors: a buyer’s market in many parts of Australia, record low vacancies, rapidly rising rents and higher yields.
Hotspotting founder Terry Ryder recently spoke with Triple Zero Property Group managing director Danny Buxton, about the resurgence of investors in 2023.
Buxton says with the number of international migrants increasing substantially in 2023 and a huge influx of international students returning to our shores, now is a good time to buy.
- It’s not about prices, it’s about supply
- If you hesitate, you’ll miss out
- Opportunity exists in everyday housing
- Rate rises don’t mean market collapse
- Why it’s a good time to invest
It’s not about prices, it’s about supply
Buxton agrees Australia is experiencing a housing crisis, but says the big problem is not falling prices, but a lack of supply in both the rental and sale market.
The thing putting most pressure on the market is the lack of listings both for sale and rent and a lack of new builds.
“I’m not saying that property markets haven’t softened in places and in certain markets there’s certainly been the case,” Buxton says.
But he says any downturn has been overplayed by the media and the fundamentals are still good, particularly for investors.
Why you shouldn’t hesitate
The same sort of unfounded fears about potential price drops are starting to emerge now as did at the start of the Covid pandemic in 2020, Buxton says.
As a result, many potential buyers and investors are sitting on their hands and just waiting to see which way the market moves.
“Unfortunately, those people that wait, will miss out on opportunities that exist,” he says.
Opportunity exists in every day housing
While the higher end, $4million to $5million plus market may be softening it is the more affordable, bottom quartile which is proving to be more resilient.
“That’s where we see great opportunity,” Buxton says.
“We’re not seeing prices dropping. In fact, if anything talking to one of our local valuers they are reporting about a 5% increase in just this quarter alone compared to the previous quarter, which was very flat.”
Interest rates rises won’t make the market collapse
While there is a lot of speculation that rising interest rates will result in higher levels of mortgagee sales, Buxton says most owners still have good buffers and savings which were built during Covid lockdowns.
“We still see mortgage arrears at really all-time lows,” he says.
The impact rising rates will have is to potentially reduce the borrowing capacity of new buyers, which will put further pressure on the more affordable property market.
“That creates a high demand in that lower end,” he says.
Why it’s a good time to invest
“We are in a very tight rental market,” Buxton says.
“I’ve never seen the rental market as tight as it is right now, not just in where I live, but in multiple markets across Australia. Rental days on market lower than ever been.”
Buxton says it is always a good time to be buying property if you’re smart and you’re wise about where you buy.
He says right now there are opportunities to buy vacant land which is registered or about to be registered which will grow in value.
“Land costs and the cost to build and create land for development, which we need because we have an undersupply properties is about to rise significantly,” he says.
There are still some opportunities to buy at lower levels before those prices rise, according to Buxton.
“There is real opportunity there and we are seeing immediate uplift for some of our clients.”