This is an edited version of a live discussion about the conundrum of property investing. Some are selling as quickly as they can, others are piling in. We look at the latest data to figure out what is going on. The key is a realistic assessment of net investment yield, which varies across locations and property types.
You can ask a question live!
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
https://digitalfinanceanalytics.com/blog/dfa-one-to-one/ for our One to One Service.
Digital Finance Analytics (DFA) Blog
DFA Live Q&A Replay: Property Investing: Nightmare Or Great Deal?
This is an edited version of a live discussion about the conundrum of property investing. Some are selling as quickly as they can, others are piling in. We look at the latest data to figure out what is going on. The key is a realistic assessment of net investment yield, which varies across locations and property types.
You can ask a question live!
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
https://digitalfinanceanalytics.com/blog/dfa-one-to-one/ for our One to One Service.
In my stress surveys I have been calling out the pressures on renters and property investors, especially in the Centre of Melbourne and other inner-city areas across the country. The math is obvious. Despite rental increases, there is a limit on how much property investors can lift them, as renters are under pressure already. And property investors are also faced with significantly higher interest charges and other costs, to the point that the proportion of investors making cash flow positive returns has dropped to an all time low. Given that capital appreciation, the only other growth lever, is at best anemic, and in some cases non-existent, and the fact that you can now get 5 per cent of more on other investments, including term deposits and bonds, investors are continuing to bail. Inner City apartments are on the front line, as listings grow.
The AFR picked this topic up in an recent article, saying low capital gains and the large increase in holding costs are prompting more residential property investors to bail out of inner Melbourne and Sydney markets, data from CoreLogic shows.
The portion of investor-owned listings has ballooned to 60 per cent across Melbourne city over the three months to the September quarter, up from 56.7 per cent from the previous quarter and a sharp jump from the 50.9 per cent share a year ago.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
Today’s post is brought to you by Ribbon Property Consultants.
In my stress surveys I have been calling out the pressures on renters and property investors, especially in the Centre of Melbourne and other inner-city areas across the country.
The math is obvious. Despite rental increases, there is a limit on how much property investors can lift them, as renters are under pressure already. And property investors are also faced with significantly higher interest charges and other costs, to the point that the proportion of investors making cash flow positive returns has dropped to an all time low. Given that capital appreciation, the only other growth lever, is at best anemic, and in some cases non-existent, and the fact that you can now get 5 per cent of more on other investments, including term deposits and bonds, investors are continuing to bail. Inner City apartments are on the front line, as listings grow.
The AFR picked this topic up in an recent article, saying low capital gains and the large increase in holding costs are prompting more residential property investors to bail out of inner Melbourne and Sydney markets, data from CoreLogic shows.
The portion of investor-owned listings has ballooned to 60 per cent across Melbourne city over the three months to the September quarter, up from 56.7 per cent from the previous quarter and a sharp jump from the 50.9 per cent share a year ago.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
Today’s post is brought to you by Ribbon Property Consultants.
If you are buying your home in Sydney’s contentious market, you do not need to stand alone. This is the time you need to have Edwin from Ribbon Property Consultants standing along side you.
Buying property, is both challenging and adversarial. The vendor has a professional on their side.
Emotions run high – price discovery and price transparency are hard to find – then there is the wasted time and financial investment you make.
Edwin understands your needs. So why not engage a licensed professional to stand alongside you. With RPC you know you have: experience, knowledge, and master negotiators, looking after your best interest.
Shoot Ribbon an email on info@ribbonproperty.com.au & use promo code: DFA-WTW/MARTIN to receive your 10% DISCOUNT OFFER.
Our latest dissection of the property market – at the start of an important week in the future of housing with our property insider Edwin Almeida.
We look at the range of serious issues ahead, with an uptick in potential visitors to Australia, a small rise in listings, and a fall in rental availability as some of the factors crimping property investors bite.
We also look at the proposed rental freeze legislation from the Greens.
In such an important week, we will be live tomorrow with Edwin and taking questions on these critical issues. https://youtube.com/live/KpdkhMrhl_k
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
Many property investors are choosing to leave the field, leading to a rise in the number of ex-investment property being listed for sale. There are many reasons why this is occurring, and we explore some of them today.
But in short, the marginal costs of borrowing on a rental mortgage have risen far faster than the rental income. And given the limited prospects of capital gains, and the removal of some offsetting perks from a tax perspective, investors are exercising their rights to quit. Another reason why rental supply is so limited, and a sign again of how broken the system is.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
Queensland has been a state where property investors have traditionally made better returns on a net and gross basis, from investment property in the state, compared with those in New South Wales and Victoria.
To recap, gross investment returns is the ratio of current property market value compared with the current rental paid, assuming the property is fully let. The Net Investment return is a more real-world measure, which takes account of actual vacancy rates, cost of mortgage, maintenance, and management of the property. In our surveys, many property investors have no feel for their true net returns, clinging to the prospect of eternal capital gains.
Those in Victoria are worst placed, which explains the very strong interstate investment in Queensland, one reason why prices and rents had shot up in the past couple of years.
But there is something afoot in Queensland, which could change this picture, possibly significantly. Indeed, those following the AFR will have noted its fever pitch campaign against an Australian-first move whereby landholders will have to voluntarily disclose their interstate holdings in other states before being taxed for their Queensland holdings. These land tax changes were first announced in the 2021-22 budget update on 16 December 2021. Queensland Treasury has said the tax change will raise only $20 million a year from 2023-24 and impact about 10,000 landholders, most of whom who live interstate.
Investors are irate with the changes, saying they will drive investors out of Queensland as well as push up rents and that they felt like they were being taxed twice in two different states. A spokesman for Mr Dick acknowledged this week the tax change would affect some Queensland investors.
So now Queensland owners are now working out how they will be stung by the tax.
Go to the Walk The World Universe at https://walktheworld.com.au/
Digital Finance Analytics (DFA) Blog
A Taxing Time For Queensland Investors... [Podcast]
I caught up with Evan Thornley, Executive Chair of Melbourne based Property Buyers Agents LongView. We discussed the optimal approach to property investment, and why so many get it so wrong.
Join us tonight for a live Q&A as we walk though the latest data from our models, and explore financial confidence and property investor yield using our mapping tools.
We will also have our post code stress tool online to answer specific location queries…
We look at the latest data from our core market model and find the best and worst areas to make a property investment, based on returns over the past year.
It is important to do the work to avoid significant losses.
Go to the Walk The World Universe at https://walktheworld.com.au/
