End of Year Guide for Smart Property Investors

  • Posted 24 Dec
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End of Year Guide for Smart Property Investors

At the end of each year, it’s a good idea to think about the properties that you have, the properties that you missed out on and the properties that you’re going to purchase in the coming year.

This end of year property guide will give you some tips on the year ahead, a quick review on the year that was and what your overall strategy should be to remain a smart property investor.

The Year That Was – 2013

Everyone can agree that the property market has seen some huge changes throughout the year.  Since mid 2012, the market has been on the up, with 2013 marked as the year of low interest rates and high demand for investment properties.

[quote style=”boxed”]“…in 2013 there was a change in the underlying nature of its supply and demand drivers,” says Australian Property Monitors senior economist Andrew Wilson.[/quote]

Wilson said that those markets with strong underlying factors performed better during 2013, while those with weaker underlying factors were not as good. This is no surprise to those in the property investing market, as this is how the housing market cycles run, up and down.

The stand out area that performed the best was Sydney. While other markets saw improvements, they weren’t as big as Sydney, which has pushed the Australian real estate market upwards. The growth rate for property values in Sydney was 7%. This type of growth hasn’t been seen in Sydney for many years.

The major factor driving this growth was the severe shortage of housing, with other capital cities experiencing similar results.

The key points for 2013 are:

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  • Most major cities saw growth and recovery
  • Rates fell to historic lows
  • Investors used the interest rates to start buying again
  • Small growth in first homebuyer market
  • Unemployment rate grew

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Predictions for the Year Ahead – 2014

Given the strength in market growth across major cities seen in 2013, it can be expected that 2014 will continue with this growth. With interest rates forecast to remain low, the outlook for smart property investors is a good one, particularly if you’ve got equity sitting ready to be utilised or direct access to funds.

Cities that received a lot of resource investments will likely see an easing off of growth in this area. This shouldn’t be too much of a hinder and most capital cities should still perform reasonably well.

With unemployment rates low throughout 2013, it’s expected that the economy will start to grow, but still at a modest rate.

Some key drivers for 2014 that smart property investors should keep an eye on include:

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  • New Government – with the election over and done with and the new government settled in, consumers and businesses are more than willing to loosen purse strings and start to spend again, and this includes the property sector.
  • Overseas Economies – with the USA starting to pick back up and Europe slowly but surely making some headway, this will lead to the Gross Domestic Product (GDP) improving. This creates greater business and consumer confidence around the world, and the flow on effect will also reach Australia, encouraging people to spend again.
  • Finance Availability – banks were more willing to lend money to investors in 2013 than they had done in the previous four years, so it stands to reason that they will continue to do so to increase market activity, especially as the Australian economy continues to grow and improve. The flow on effect is that with more people able to access funds, the demand for property will increase, which increases property prices too.
  • Interest Rates – as we saw in 2013, interest rates are still at an historical low. Even with these interest rates so low, the property market was slow to react because people were still wary, but now that confidence is returning, the outlook for 2014 is great for property investors, especially if you’re looking to buy. Rates will likely move up, but the prediction is that these will be small to continue to stimulate the economy.

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If you are looking to purchase property in 2014, these are the suburbs (as recommended by Peter Kouilzos, lecturer and author of several property books) you should focus on to get the most return and yield:

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  • Hobart: North Hobart, South Hobart
  • Canberra: Braddon
  • Darwin: Millner
  • Adelaide: Port Noarlunga, Thebarton, Torrensville
  • Perth: East Victoria Park, Victoria Park
  • Brisbane: Albion, Chermside, Redcliffe
  • Sydney: Darlington, Enmore, Marrickville
  • Melbourne: Coburg, Flemington, Footscray

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Recommendations for Property Investing in 2014

Whether you’re a first time property investor or a seasoned one, 2014 is a good year to be holding properties. It’s a good time to buy, so make sure you have access to equity or funds early in 2014 so you can snap up the bargains.

If you are looking to see the highest gains in the shortest amount of time, aim to purchase in the suburbs above, as recommended by Peter Kouilzos. These are the areas that are up and coming and where you’ll find the best deals.

If you are looking to sell some properties, make sure that the properties are in the best possible condition and price them according to the market – 2014 is probably not the best year to be selling, as there will be some great opportunities for capital gains as the markets continue to improve.

All in all, the predictions for 2014 look even better for the smart property investor than they did in 2013.

If you are looking for finance, pre-approval amounts or just want to know how much you can borrow, talk to the team at Australian Credit and Finance, who have over 15 years of experience in the property market.

[box type=”download” size=”large” style=”rounded”]To get a grip on the value of your property, you can also consult our free property valuation service that will provide you with a great valuation report for your specific property. Download here [/box]

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