Since January, a number of factors have come into play to create a perfect storm for those targeting investor buyers.
If your property is one that could attract interest from investors, here’s why I believe 2018 is an ideal time to sell.
Banks are competing for investor lending
Even though we’ve had no news on changes to the RBA’s 1.5% cash rate for more than 12 months, the major banks are now starting to compete for investor loans. Since January we’ve seen CBA reduce their rates on interest-only loans, causing Westpac and some smaller lenders to follow suit. The latest data from the ABS confirms investor enthusiasm for loans across NSW with these borrowers accounting for 51% of all new mortgage demand.
Rental yields are starting to lift
After hitting record lows, gross rental yields across Sydney are now beginning to increase, reaching their highest level since October 2016 in March this year. CoreLogic now puts Sydney’s average yield for all dwellings at 3.2% – just below the national average of 3.4% for capital cities – with houses returning 2.9% and units at 3.7%.
Tax and super benefits remain major factors
For high net worth individuals, investment properties still offer enticing financial gains through negative gearing. Meanwhile, downsizers are increasingly seeing the logic in buying investment property through their self-managed super funds. Both groups of continue to be active in the market, with many focused on the higher end properties offered across Sydney’s east.
Sydney’s eastern suburbs are still short on stock
The fundamental housing shortage across Sydney’s metropolitan areas, particularly in the highly prized eastern suburbs, is good news for investors. Consistently lower supply in these suburbs means steady tenant demand for properties close to transport, schools, hospitals and beaches. Lower supply also makes capital growth much more likely, ensuring safer investments in the long term.
Employment growth bringing even more tenants
With strong employment growth across Australia in 2017, and NSW recording 3.5% annual growth, Sydney now has plenty of new residents focused on access to employment hubs. This is excellent news for those selling investment properties close to the CBD and other areas across the east that will ultimately appeal to tenants.
Units are outperforming detached dwellings
Yet another factor in this ideal market for those selling to investors is the ongoing increase in values for units across Sydney and Melbourne. According to CoreLogic’s March report, Sydney’s unit values increased 1.9% over the 12 months to April 2018, suggesting higher demand from buyers looking for medium to high density properties. Again we can see the influence of employment growth across Sydney bringing more tenants into the market, which in turn makes investment properties more appealing.
As always, my advice to sellers is to research their market and be guided by local expertise when it comes time to put their property up for sale. But for those with a property that has investment potential who are ready to advertise, there’s no better time to make your move.