Investors set to return as market conditions strengthen

Did you know that four years before the most recent peak of Sydney’s market that investors were as active as they are right now?

What I mean is that way back in May 2013, there was about $2.4 billion in new investor loan commitments in New South Wales, which was a figure that pretty much kept rising for four years, according to the Australian Bureau of Statistics.

By the time new investor loan commitments started to fall in any meaningful way, the peak of the property market was nigh and those investors who had been active early in the market cycle had created hundreds of thousands of dollars of equity.

Over the past three years, Sydney’s market has had periods of small ups and downs as it moved out of those peak market conditions.

However, there are now signs that we are heading for more positive market conditions this year due to the confluence of super low interest rates, stock shortages, as well as significant demand from all types of buyers.

In October 2020, $2.4 billion in new investor loan commitments were recorded in New South Wales, which is a figure that should now sound familiar?

Rental demand strong

Among some of the media headlines of late has been one which says that all Sydney landlords are under financial pressure with properties sitting empty across the entire city.

Of course, a click-bait headline story like that fails to explain the reality of the situation of the majority of Harbour City property investors – which is most are doing quite well thank you very much.

It’s clear that Sydney’s CBD has borne the brunt of the pandemic due to the drastic reduction in international tourists as well as overseas students.

However, in most other locations across Greater Sydney and New South Wales more generally, rental markets have returned to pre-pandemic levels, and are tightening further in some locations.

According to the Real Estate Institute of New South Wales, Sydney’s vacancy rate is 3.4 per cent – the same as it was in December 2019.

The Hunter and Illawarra regions have recorded lower vacancy rates over the same period, with some locations – such as Albury – posting rates well under one per cent in December, which is very much in undersupply territory.

It’s clear that these figures fly in the face of broad-brush commentary that pigeonholes all rental properties into one “the sky is falling” nest for landlords.

Investment opportunity aplenty

In 2021, we will be continuing to seek out the best property investment locations for our clients around the nation.

There are a number of areas in Sydney that are offering solid prospects including houses in the western corridor, such as anywhere in select pockets from Blacktown to Penrith.

Newcastle and the Central Coast are also showing very positive signs for property investors this year due to their proximity to Sydney but also their affordability and lifestyle factors.

Up in Queensland, Greater Brisbane remains a sound prospect for savvy investors keen to make the most of rising market conditions as well as affordability and city changing infrastructure programs.

We remain very bullish about the bayside region of Greater Brisbane, where we still see plenty of value as well as opportunity.

In Victoria, we are also positive about Bendigo – which is an area that was already in demand from buyers and renters prior to the pandemic – but where the level of interest is expected to strengthen in the months and years ahead.

The current all time low interest rates is providing a once in a lifetime opportunity for first-time or seasoned investors to create strategic property investment portfolios.