Property is currently very hot and so not surprisingly both the competition and home prices have swelled.
Investor finance has also grown to double digits meaning more than half of the flow of approvals are from Investors.
With all the momentum in the market, it is always a good reminder to think of the key fundamentals to investing:
Real Estate Cycles: The property market is a cyclical investment and history provides a good idea of how the market is trending. As the market progresses through the boom and busts, some investment opportunities may present themselves and astute and persistent investors may be able to take advantage.
Sentiment and confidence: Consumer sentiment and confidence plays a significant role during the real estate cyclical periods. Property investors must appreciate and try to gain an understanding of the market they are vested.
Economy: The state of the economy directly influences the property market activity. If one location is struggling in the economy and unemployment is rising. This may see people move to locations where there are jobs and therefore reduce demand for real estate in the area. Once confidence starts to return, this population movement can be reversed and housing demand can increase.
Wage Levels: Wage levels can impact the property activity, as consumers wages increase they have more disposable income. This can give rise to more demand for real estate or people wanting to upgrade to bigger homes. Generally there are other factors to consider as well.
Interest Rates: The level of interest rates will dictate to some extent the capacity and enthusiasm of investors to purchase real estate. Periods of high interest rates can occur at the end of a long sustained period of economic growth and the subsequent inflationary pressure on the economy.
Demand for Credit: The demand for credit and the level of funds available for lending will have an impact on rates. It will either restrict or support the market and affect the interest rates. It is also worth noting that with a more deregulated and global financial system, our interest rates can also be affected by overseas rates.
Currency Fluctuations: Will impact interest rates, as the value of the Australian dollar falls, the Reserve Bank can act to reduce money supply which has the effect of increasing rates as available loan funds dry up.
Investing in property can be a daunting process for some, and it is always recommended to speak to your experts to attain the appropriate advice for your cirumstances.