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Investing in property - top level considerations
14 November 2019
According to Westpac’s 2019 Home Ownership Report, location is key when choosing a home, especially among first home buyers: 44% believe that proximity to work and 51% believe access to public transport is essential.
Safety, a quiet area, and proximity to shopping centres or grocery stores are also high on the list of things for which buyers are looking.
If you are beginning to think about residential rental property as an investment, taking these sorts of findings into account could be one place to begin your research. Knowing where potential pockets of supply exist may also furnish investors with spots to look for investment properties.
Westpac recently partnered with Insight Data Solutions (IDS) to uncover the metropolitan hotspots where sellers are most likely to list in the coming months.
The Westpac Likelihood to List Rankings revealed the following suburbs where properties are most likely to list in each major city:
● Sydney: Paddington
● Melbourne: Pakenham
● Brisbane: Springfield Lakes
● Adelaide: Seacombe Gardens
● Perth: Claremont
● Hobart: Risdon Vale
● Darwin: Winnellie
● Canberra: Bonner
What should you consider if you are wanting to invest in property?
Having canvassed the thoughts of various Westpac finance and home ownership experts, we have distilled their thoughts on property investment down to these four top tips:
1) Consider your needs and financial position now and in the future, as well as the stability of the local property market and the rental market.
2) Investors typically want to buy in areas that they predict will have strong price growth - areas having transport upgrades, or new community facilities built, like shopping centres and parks, proximity to schools and jobs.
3) Rental yields are essential to consider, as this income will help to cover mortgage repayments.
4) People looking to invest in property also need to account for the costs of buying and maintaining a property - stamp duty, estate agent and legal fees, rates and maintenance. Rental income often doesn’t cover all costs, so investors need to consider their budget and monthly finances.
Investing in property as part of overall wealth planning
Investing in property has been a popular wealth generator for Australians for many years. Economists and finance experts will tell you this is due to various factors, including a history of appreciation in property prices, possibility of various tax advantages and the potential to generate rental income and yield.
Significantly, there’s also a strong emotional connection involved with property investment: investors draw great comfort from buying something tangible they can see and feel. However, as the experts will tell you, property is not the only wealth generator. Many people successfully invest in the stock market, for example, to build wealth.
While investing in property has benefits, it is a big decision that impacts many aspects of your life, which is why prospective buyers need to do thorough research and seek professional support before deciding on any investment strategy.
Buying an investment property
According to the latest research, many Australian women see property as a pathway to wealth. It's no surprise considering we retire with 37 percent less superannuation than men and may have to take time out of the workforce for caring duties. If you’re considering investing in property it pays to understand the pros and cons. For more information, see our Davidson Institute for more.