In­vest­ing is still a good idea

Pilbara News - - Property - Hay­den Groves Hay­den Groves is a pres­i­dent at the Real Es­tate In­sti­tute of Western Aus­tralia.

Much has been made in re­cent times about the WA rental mar­ket favour­ing tenants.

While it is a good time to rent, and tenants who are look­ing for a home do have a healthy sup­ply of stock to choose from, this does not mean that prospec­tive in­vestors should be de­terred from util­is­ing prop­erty in­vest­ment to help se­cure their future.

Real es­tate mar­kets are cycli­cal. While at present you may not reap the higher weekly rent prices that were ex­pe­ri­enced sev­eral years ago, there are still plenty of ben­e­fits to in­vest­ing in prop­erty.

For starters, it’s a good time to buy. You could ar­gue there is no bet­ter time to take ad­van­tage of more af­ford­able hous­ing prices. The real es­tate mar­ket will even­tu­ally turn again and when it does you would have se­cured your in­vest­ment in a softer mar­ket which ought to de­liver stronger growth op­por­tu­ni­ties. It’s a smarter move than buy­ing at the top of the mar­ket cy­cle.

You may be con­cerned about find­ing a ten­ant to lease your prop­erty. Un­de­ni­ably rental stock is higher than usual at the moment, but re­cent data shows leas­ing ac­tiv­ity in Perth rose 4 per cent in the three months to Oc­to­ber — a trend we have seen through­out the year — while the rate of growth for list­ing stock has slowed. There is still plenty of de­mand from tenants, so be sure to seek ad­vice from a prop­erty man­ager or buyer’s agent about what tenants are look­ing for in a rental.

Also, keep in mind is that al­though weekly rent prices have edged back over the past cou­ple of years, so too have in­ter­est rates which now sit at his­tor­i­cal lows. This is a big ad­van­tage for in­vestors in the cur­rent rental land­scape as­sist­ing in­vestors to ride out the down­turn.

An­other ben­e­fit of prop­erty in­vest­ment is neg­a­tive gear­ing. When the Turn­bull Gov­ern­ment won the Fed­eral Elec­tion ear­lier this year, it was a sig­nif­i­cant coup for in­vestors na­tion­wide as they had pledged to re­tain neg­a­tive gear­ing in its cur­rent form. With neg­a­tive gear­ing re­tained, prop­erty in­vestors can con­tinue to utilise this tax ar­range­ment to al­le­vi­ate some of the as­so­ci­ated costs of own­ing a rental. Prop­erty in­vest­ment is a long game. Real es­tate mar­kets will al­ways ebb and flow, so it pays to not get caught up in the here and now of short-term mar­ket volatil­ity.

Look to the future and take heed of how the sub­urbs you’re con­sid­er­ing in­vest­ing in have per­formed over a longer pe­riod.

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