Despite the changing dynamics of the property market across the country, there has never been a better time than 2019 to invest in the Adelaide property market.
Property investors from the eastern seaboard and Perth are starting to take notice with interstate enquires on the rise. With both Sydney and Melbourne house prices down by more than 10 per cent, you can understand why.
So why are some investors still being so cautious? I believe that there are three main reasons:
The release of the findings by the Banking Royal Commission has had a negative impact on loan approvals. In fact, loans have been more difficult to access for quite a while, leading up to this point, as banks began preparing for the worst. Recent restrictions have even been placed upon the major lenders in relation to loan book percentages for investors.
Upcoming Federal Election
Looming federal elections have traditionally slowed the property market, for no tangible reason except for potential uncertainty surrounding possible changes to fiscal and monetary policies. This time around there is more to worry about than ever with the possible changes the Labor Party spruiking an anti-negative gearing policy and potential changes to capital gains tax incentives. This is creating concern and uncertainty for investors crunching their numbers.
You don’t have to look far to find negative news stories about the property market. From price falls in Melbourne and Sydney, to poorly built apartment towers, doom and gloom stories are great for headlines and selling papers. Collectively and in isolation, it is easy to see how these factors may be affecting buyer sentiment in property investors. Despite this, it is my view that the above factors have created an environment that is favourable to investors.
This is particularly the case in the wholesale property market (off the plan and new builds). With fewer buyers in the market place, many developers are offering high-quality properties at low, competitive prices.
The lifecycle of medium density and house and land property development spans many months, if not years. Properties for sale today may have been in the planning and development process for years, with the stock currently available needing to be sold in reasonable time frames to ensure that costs don’t blow out and any funding arrangements are not extinguished.
This is great news for buyers who can potentially benefit from keen pricing, additional inclusions, and favorable contract conditions.
If you are in a position to secure finance for an investment property, despite tougher lending criteria, then there has never been a better time to buy. The Adelaide market remains buoyant with property prices continuing to grow, a trend that is expected to continue.
Moreover, if negative gearing regulations are altered following a change in government, it is unlikely that any changes will be applied to pre-existing/purchased properties – in other words, investors should get in quickly and make the most of the current conditions.
Daniel Otto has been a part of the property industry for over 15 years, with experience that stretches across real estate sales, investment, rental management and development.
Please reach out if you have any further property related questions.