While there have been some standout performances in the real estate investment market around the county, the economy as a whole did not perform excellently towards the end of 2014.
In fact, in a December 2 statement by Glenn Stevens, governor of the Reserve Bank of Australia (RBA), he acknowledged that the central bank expected below trend economic performance for the next several quarters.
While some industry experts believe this soft performance paved the way for the rate cut on February 3, many are looking at how to maximise the potential for investments in the low interest environment. It may be time to move funds out of high interest savings accounts and into investment finance home loans.
In a recent report, Dexus Property Group acknowledged that volatility in commodity prices had wreaked havoc with the Australian economy. Their prediction for when growth in the Australian economy will bounce back to global trend rates is towards the end of the 2016 financial year.
Dexus does point out that low interest rates are driving up consumer spending and residential construction, the latter, of course, being of interest to pioneering property investors. The expectation is that much of this growth will be experienced in the non-mining states, such as New South Wales and Victoria.
The property group does expect owner-occupier demand to experience measured increases this year as well.
What to buy into with your investment home loan
If you’re thinking of property this year for investment purposes, you could do well to look at freestanding homes over units and apartments.
Although asking prices for traditional housing is around one and a half times that of units, the growth of house prices over the last year is a whole percent higher, according to SQM Research. This makes it a better buy from a capital gain perspective, but the real benefit can be seen when extrapolated to even longer periods of time.
According to SQM Research’s data, over the last three years, houses across the nation have increased in value by 6.4 percent, while units only racked up 0.8 percent. However, the numbers don’t tell the whole story, and it does make a difference if you know what you’re buying.
Over the same period three bedroom houses increased in value by 4.6 per cent, while two bedroom units jumped up 4.9 per cent. It also costs about $100,000 less to by a two bedroom unit, meaning you can get substantially more bang for your buck.