A property investors guide to this spring market.
Four things to consider if you're thinking about buying an investment property
- Some house prices have fallen
- There are more property vacancies
- Changes to Covid-19 restrictions affecting real estate
- There is still uncertainty
It’s a spring like no other, just as 2020 has been a year completely out of the ordinary.
With the September to November period normally the peak of demand for real estate, the selling season has been delayed this year due to Victoria’s COVID-19 restrictions.
No one’s really sure what will happen when Victoria’s property market opens up again but here are four things to consider if you’re thinking about buying an investment property.
1. Some house values have fallen
It comes as no surprise that housing market conditions have been very different this year. A September report from CoreLogic found that Australian housing values were down for the fourth month in a row, with a 0.4% decline in August1. Melbourne performed worse than this recording a 1.2% fall, according to CoreLogic. This is likely the result of Melbourne’s property market effectively closing in August due to Stage 4 restrictions. This result was on the back of a 2% fall in property prices over the June quarter.
2. Increased property vacancies
It might take you longer to find a tenant and your rental yield may be lower than you expected. According to Domain.com.au, Melbourne’s vacancy rate was up to 3.8% in August, with one in ten homes empty within the CBD, making it a renter’s market2.
Regional Victoria is performing better though with Property Observer reporting that Bendigo’s vacancy rate was below 0.5%, with Ballarat having a similar result.
3. Changes in restrictions
Restrictions limiting the property market in Victoria are now easing with private inspections now allowed and in person auctions expected to resume in Victoria from late October should COVID-19 cases continue to fall. Melbournians can also travel further than 5km from their home to inspect a property, but restrictions on travel to regional areas remain.
4. The future is still uncertain
There are still opportunities for buyers. Lower property prices and low interest rates could make it easier to invest than you previously thought.
But there are risks to watch out for. Further falls in value, and further job losses, mean that it might be even harder to find a tenant than it is now.
So, do your research. Find out for which locations values have held up, find out why and if they are expected to grow. Don’t over-extend yourself and budget to receive lower rents. Remember, property is a long-term investment so you should think beyond 2020 and 2021.
And if you find a property that’s the right investment for you, we can help you make it happen. At BankVic, our lending team has helped thousands of Victorian Police, emergency and health workers secure investment properties with an investment loan that’s right for them.
Get in touch with our lending team on 13 63 73. They are available to assist you over the phone or via video conference at a time that suits you.