FIVE KEY POINTS FROM THE WEBINAR
Economic uncertainly will draw more investors to put their money into real estate, according to multi award-winning buyers’ agent Miriam Sandkuhler, guest presenter on the July 13 webinar hosted by Hotspotting.
This means that, more than ever, it’s important that buyers and investors make buying decisions based on fully-informed, evidence-based research.
In the webinar discussion with Hotspotting founder Terry Ryder, Sandkuhler reveals a number of key talking points: the figures investors need to know, what’s happening in the regions, why the market needs investors, where there are opportunities in capital cities, and the things landlords need to keep in mind before buying.
1. THE MOST IMPORTANT FIGURES
The most important figures for property investors are not median house prices but inflation and employment figures, according to Sandkuhler.
“During the early 1990s, it was unemployment which drove the property slump and a red flag to watch out for is unemployment,” she says.
At the same time inflation is important because rising inflation affects sentiment and can lead to increased interest rates.
While the recent rate rises will not result in a rush of sales due to owners facing financial hardship, as banks ensure borrowers can service much higher repayments, it will affect buyer confidence according to Sandkuhler.
2. REGIONAL MARKETS ARE CHANGING
Many investors bought properties in the more affordable regional markets during the pandemic which drove up prices, but Sandkuhler expects that to ease a little.
“Regional differences will be profound,” she says.
That’s why its essential that investors buy in the right regional areas.
“There needs to be a substantial population of a minimum 50,000 people, but ideally 80,000 to 100,000, and a very diverse economy from a growth driver perspective,” she says.
“From a regional growth perspective there’s already been a drop in some markets. A slight reduction in regional Victoria, a little bit in regional Queensland and a little bit in regional Western Australia.”
Growth may stall in suburbs within Geelong, Ballarat and Bendigo before experiencing a solid rebound in the next cycle.
The rebound will coincide with the lead-up to the Commonwealth Games in regional Victoria 2026 which will lead to job opportunities and infrastructure spending in some markets.
There are still opportunities in other regional markets with reasonable yields but maybe not as high as in recent months.
“Anyone with $500,000 to $600,000 depending on where you’re looking, you should be able to get something worthwhile,” she says.
“Over the long term, with the right growth drivers in place, there are still opportunities to invest regionally.”
3. WHY THE MARKET NEEDS INVESTORS
Governments need to stop treating investors like they are evil and recognise that encouraging investment can help improve the rental shortage crisis, Sandkuhler says.
Investors help by making accommodation available to those who otherwise couldn’t find suitable properties.
The return of overseas migrants and students will change some markets and continuing economic and sharemarket volatility will draw more investors to put their money in to real estate, which will help ease the shortage.
“When financial markets are volatile, historically people move to bricks and mortar,” she says.
4. HOW CAPITAL CITY MARKETS WILL PERFORM
Capital city markets like Melbourne and Perth are well placed to weather any downturns, and both should emergence in the next cycle as the best performing markets. Adelaide will also continue to do well.
Melbourne still has high activity in affordable areas, particularly around the $600,000 price point.
“Properties in areas that have high levels of amenity in middle ring suburbs feature strongly amongst our outperforming locations, while trophy homes and small undifferentiated high-rise units are worst placed.”
Sandkuhler advises investors to keep an eye out for three-bedroom houses on a decent sized blocks which will appeal to families.
5. DON’T BUY JUST ANYTHING: THE THINGS YOU NEED TO REMEMBER
It’s more important now than ever to ensure you don’t get caught by buying a poorly selected property in marginal suburbs.
“Watch out for poor-quality stock hitting the market,” Sandkuhler says. “Be selective.”
Investors in Victoria need to be aware of new legislation which outlines the 14 minimum rental standards that have to be met by landlords.
Sandkuhler says that’s why it’s important to buy the right investment property, as bringing a poorly-selected property “up to code” can be very costly.
New South Wales has also introduced seven minimum standards for landlords to meet.
While investors may have got around this in the past by purchasing renovated or new instead of existing properties, rising construction costs and delays mean that is not such a viable option at the moment.
“I’ve been advising my clients is it’s better and more affordable to buy properties that are already renovated, that don’t need anything done other than maybe some very basic cosmetic improvements,” she says.
“I’ve seen some insane prices being paid for fully-renovated properties.”