Investing is still a good idea
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 reiwa.com 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.