With rents rising and vacancy rates dropping, the stars are aligning for property buyers, an expert has said.
The Reserve Bank of Australia (RBA) has signalled that record-low interest rates are set to remain until 2024 at the earliest, bringing the cost of borrowing down to half of what it was at the same time last year.
As such, experts believe now is the perfect time to buy property, with some going as far as to call it a “once-in-a-lifetime opportunity”.
“Since the COVID pandemic started, interest rates have dropped from 4.5 per cent to less than 2 per cent. That means the cost of borrowing money to buy a home is now half of what it was at the beginning of 2020,” said James Fitzgerald, managing director of property investment group Custodian.
“Financial conditions like this don’t emerge all the time. That’s why anyone looking to build a property portfolio should be seriously investigating that now.”
Noting that cash flow concerns primarily top concerns for property investors, Mr Fitzgerald opined that with rents rising and vacancy rates dropping, “the starts are aligning for buyers”.
“Adelaide,and Hobart all have vacancy rates below 1 per cent, and Brisbane is just 1.8 per cent,” Mr Fitzgerald said.
“A vacancy rate of 3 per cent is considered balanced, and anything below that is tight. Rents are also going up in these cities, by 11.7 per cent in Perth in the past 12 months, 4.1 per cent in Adelaide and 3.4 per cent in Brisbane.”
According to Mr Fitzgerald, even Sydney and Melbourne rents, where the market is affected by a lack of international students and overseas migrants, have increased 2.1 per cent and 0.8 per cent, respectively.
Touting “massive” government financial incentives, Mr Fitzgerald opined that it’s “the perfect time” for first home buyers to become first-time investors.
“It means you may have to live in the home for a year, but that’s a small price to pay to receive such a big financial windfall just for buying a property,” Mr Fitzgerald said.
“If you pool together the various state government and federal government concessions for first-time buyers and take into account the reduced stamp duty, the savings can be enormous.”