Weekend Gold Coast Bulletin - Property
Property still worth the money
REAL estate lost its lustre in 2022 as surging interest rates and sinking house prices combined to drive investors out the door.
Property values nationally have been falling at a record pace and the drop since 2022’s peak is more than 8 per cent, although figures vary widely between capital cities.
Reserve Bank rate rises have increased the repayments on many home loans by more than $10,000 a year, and people who previously escaped the rate-rise carnage by fixing their loans face a mortgage cliff in 2023.
Some economists predict three more RBA rate rises, starting on February 7, although others believe it has finished raising rates. Investment lending fell more than a quarter over 2022.
Amid this gloom are pockets of positivity, and the long-term wisdom of investment professionals who recommend buying in when things are bad rather than good.
While it may be wise to wait to see what the RBA does in February, these four reasons suggest investing in real estate may be a good move this year.
1. Rent Surge
Rental listings fell more than 25 per cent in 2022 while rents rose 10 per cent across capital cities, according to PropTrack data.
2. Rate Rise Impact
Eight straight Reserve Bank rate rises in 2022 dragged down property prices, and the RBA has forecast total falls near 11 per cent.
3. Mortgage Cliff Diving
Up to 40 per cent of borrowers fixed their home loan rates near 2 per cent a couple of years ago, and they are in for a nasty shock in 2023 as most of those loans revert to variable rates well above 5 per cent.
4. Population Growth
Immigration is back on after two years of Covid, and everyone moving to Australia needs somewhere to live.