Navigating The Residential Investment Property Market In 2023
A Look At The 2023 Property Market
The Australian residential investment market still has plenty of opportunities to deliver in 2023.
The key to success for your next property is understanding your own limitations and staying within them. This will put you in a position to take advantage of some extraordinary opportunities, if you know where to look.
Investors have continued to make high returns on real estate over the past 63 years and there is every indication that Australian property will remain an effective investment strategy well into the future.
Interest rates are unlikely to drop again for quite some time now, however it is equally unlikely that they will increase at an aggressive unmanageable rate. Australia is a long way off being able to say we have recovered from the economic impacts of COVID-19, recent floods, droughts, and fires. Therefore, it is not a question for investors of if or when they invest it is a question of where and how they invest.
So, in essence the questions have not changed for investors serious about making their hard-earned money work for them. The key question for any property investment strategy is; where can I get the best returns and how much can I invest to ensure a sustainable cash flow?
Run your Own Race In 2023
It is very important with any investment to have a strategy, that is why we spend a great deal of time listening and understanding what our purchasers’ needs are.
It is equally important that your strategy is what works best for you and your family. Now more than ever it is critical not to get swept up in the media noise. Seek council with professionals to determine if you have the appetite and ability to invest.
Sometimes after you have factored in everything it is better to wait until you are in a healthier position and that is fine, there is no point putting yourself at risk if you are not ready.
This is not to be confused with procrastination and speculation which are simply signs that you need more information.
New Properties
It is no secret that the building industry is experiencing difficulties and there have been many high-profile builders closing down over the last 12 months. Not to mention the:
Land registration delays
Build costs increases
Building material delays
Skilled labour shortages
Exorbitant prices followed by low valuations
Although there are still some opportunities in new property, they are extremely difficult to find. For many of the buyers we are working with, we have found in most cases that the risk is too high for their appetite and not in line with their particular circumstances.
That being said, we have certainly seen value for buyers that have invested in a new property in sought after locations within the past 18 – 24 months as a majority of these buyers have experienced tremendous increases in land value which has balanced out any time delays or changes to their construction price. Timing is always crucial with this type of purchase.
Established Properties
The benefits of buying established properties in 2023 far outweigh any potential benefits of purchasing new properties while construction challenges are still prevalent:
Faster settlement times – Less risk regarding finance approvals.
Finished product – You know exactly what you are purchasing.
Tenants – There can be the added benefit of a tenant already leasing the property eliminating the guess work for your expected rental yield.
Established infrastructure – Roads, shops, schools, emergency facilities etc, are already operational and drawing people to the suburb.
Established valuations – With more resale data available on established dwellings, valuations are often well supported.
Depreciation – Tax minimisation is not just for the new properties.
Adding value – In many cases there can be an opportunity to manufacture additional equity via subdivision or future renovations.
Matching Strategy With The Market
Sometimes it is better to buy new and sometimes it is better to buy established. Your personal goals, timeframes, financial position, and emotional appetite are all factors to consider.
With the growth success of their first property, many of our clients from 2019-2020 have already engaged us in 2022-2023 to purchase their next investment property proving that our philosophy is sound.
Leading into 2023 it is clear that the data and our experience is showing that established investments will potentially deliver better returns and be more suitable for most purchaser’s risk profile.
This of course is only part of the solution, there is still the questions that remain around:
Region,
Suburb,
Type of Dwelling,
Negotiating under market prices,
Negotiating best terms.
But don’t worry, that is why amazing Buyers Agents like us exist!
Image source: Pixabay
Disclaimer: The views of the author, either expressed or implied, may not represent the views of Astute Property Network Pty Ltd. Every effort is made to ensure the accuracy of the information contained within this document. The information is not intended as financial advice and does not take into account your personal financial position or needs. You should always consult your financial specialist before making any changes to your finances.