Finding Value in Rising Markets

Finding Value in Rising Markets

As most people would be aware there have been significant price increases across Australian property markets over the past 2 – 3 years.

The insatiable appetite for Australian property, Covid subsidies and cheap money have created a perfect storm which resulted in over 50% capital growth in many markets across Australia during that time.

This is great news for people who were already owned property particularly residential property as the lack of supply only compounded the pressure. If you were looking to invest money or buy property is has been an incredibly difficult time.

Falling interest rates also resulted in falling returns across all investment sectors and it has been difficult to justify investment based solely on the yields being offered.

Commercial property yielding sub 4.0% net was not unheard of which was lower than some residential markets, I would argue that’s not the best investment you could of made, but every investor has their own criteria.

Finding value add or income uplift opportunities is becoming increasingly difficult as competition has increased for property with any potential once again driving down the returns.

As the cost of money starts to increase the affordability of property will become more unobtainable in many of the traditional markets.

Affordability Is the next great opportunity in the property markets.

This will require investment away from the traditional markets and require investors to be willing to look at markets where employment opportunities are growing, and quality housing still exists close to a relatively low median house price.

The opportunity to work remotely will allow owner occupiers the ability to continue to investigate sea and tree change locations, maintain their current jobs and potentially their urban incomes with lower costs of living and a more preferable lifestyle.

Towns and villages that are perhaps with in short commute to larger centres or transport hubs are the likely candidates for these opportunities.

Whilst they may offer limited services, their short commute to larger centres will offset these limitations. The smaller towns and villages often have stronger community engagement and closer neighbourly interactions due to the smaller populations and are becoming an increasingly popular attraction to people from metro areas.

Not all villages and towns are built the same and careful consideration needs to be given to any location before making an investment decision.