Is this a good time to buy an investment property?
Now that the Reserve Bank has confirmed what everyone else was expecting, and reduced official interest rates by another 0.25 per cent for the third this time this year, it seems that a growing number of Melbourne residents are weighing up whether now is the right time to secure their long term financial future by purchasing an investment property.
In fact, here at Barry Plant Thomastown, this question seems to have become increasingly common in the past few months.
So, while questions of this nature tend to depend on your own specific plans and circumstances, there are a couple of factors that I think are particularly relevant here.
Firstly, I came across some analysis from the Bank of Queensland which looked at four decades of property price data. They found that in the two years following each cycle of interest rate reductions over this period, (of which there were ten), the average increase in property prices was more than 19 per cent.
This figure is even more notable when you realise that the smallest price increases (5 and 6 per cent) both occurred when unemployment rates were above 10 per cent, whereas they are currently at close to record lows. So the potential for growth in the value of your investment is clear.
Secondly, when it comes to investing in anything, the combination of growing demand and decreasing supply is always hard to beat. Here in Melbourne we are seeing population growing, whilst the number of available rental properties has dropped. For example, the latest data from Victoria’s Residential Tenancies Bond Authority (RTBA) shows that the total number of active rental bonds in our state, (a measure of how many properties are being rented), has fallen for the past four quarters in a row.
When you add these key market statistics together, there is definitely a strong argument that the current market seems like an optimal setting to purchase a rental property, whether it’s your first investment or an addition to an existing portfolio.
With this in mind, I would invite you to get in touch with the team at Barry Plant Thomastown who are always happy to provide assistance and advice in this area. Don’t hesitate to give us a call this week on 9466 3233.
Regards,
Con Constantinou
Barry Plant Thomastown