Stocks drop: Property investors rejoice

A dip in the nation’s housing stock, the volume of properties for sale, has presented opportunities for investors, as would-be buyers look to rent property instead.

Despite a surge in May, residential property listings dipped in June, leading to stabilisation of stock levels.

The findings come from SQM Research and are sure to inspire confidence in those contemplating their property investment opportunities. 

Drop in stock levels great news for investors

Residential housing stock fell 5.3 percent month-on-month to June, according to SQM Research. Stock levels have decreased 3.3 percent year-on-year to June, making ownership of rental properties valuable. 

Australia’s capital city asking prices rose, as the stock levels fell, by 0.8 percent for houses and 0.5 percent for units.

On top of stock level activity and increased asking prices, investors have something else to celebrate: low interest rates.

Glenn Stevens, Reserve Bank of Australia Governor, highlighted on July 1 that a period of stability in interest rates is likely to persist for some time.

Which capital city is gunning ahead?

Some cities experienced more significant drops in stock levels than others, which SMSF investors would be wise to pay close attention to.

The city with the highest monthly decrease in residential housing stock was Sydney – a largely unsurprising finding, given recent activity in this incredibly active property market. 

The 12.4 percent month-on-month decrease in stock levels may indicate increasing competition among buyers to secure property. Existing homeowners and investors can tap into their equity in order to invest in rentals, putting them at an advantage over first-time buyers with lesser financial leverage.

Other capital cities to keep an eye on

Melbourne’s housing stock decreased 9 percent month-on-month to June, followed by Canberra (-8.2 percent), Hobart (-8 percent) and Adelaide (-6.3 percent).

Adelaide could be a wise pick for building an investment portfolio, given recent findings by the Australian Property Monitors (APM). Median weekly asking rents for houses have increased 1.5 percent year-on-year to June, while asking rents for units have spiked by 1.8 percent over the same period.

“Adelaide is providing highest yields for units of the major mainland capitals,” noted Andrew Wilson, Senior Economist for the APM.

By contrast, Sydney unit rents have reached a new peak level, according to APM. 

Sydney house prices increased 7.9 percent in the year to June – well ahead of the 4.7 percent capital city average, SQM research noted.

Don’t forget about Darwin

While all capital cities experienced a monthly drop in housing stock levels, Darwin had the lowest dip, down by 0.8 percent. For investors looking to foray into the property market, Darwin could present a good opportunity – the comparative dip in stock levels and 3.3 percent quarter-on-quarter decrease in asking prices makes Darwin a potentially affordable first-time investment option.

With cheap home loans and investment loans on offer, now may be the time to act – whether to buy a SMSF investment property or otherwise.

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