Real Estate Market Update - March 09
While the global economic downturn has had some seriously devastating effects on superannuation funds and the stock market, the repercussions on the residential property market in our region have been relatively positive. One downside is that we are so under-stocked of properties for sale that supply is no where near meeting demand.
There has been a steady increase in demand for properties under $500,000 brought about by first home buyers and tenants moving out of rental accommodation. Latest figures available from the Real Estate Institute of NSW report that first home buyers made up 23.6% of the mortgage market in November 2008 – the highest proportion since January 2002. Our Waterfront office, which specialises in property in the Homebush Bay area, has been particularly busy the past two months with a lot of first home buyer enquiry. The Homebush Bay precinct has proven very popular amongst all buyer groups (although first home buyers make up a large portion of these) because of the fantastic lifestyle facilities many of the developments have onsite.
Drastically reduced interest rates, coupled with rising rents, means it may be more financially viable for some tenants to buy in the current market than continue renting. With the financial incentives offered by the state and federal government grants, first home buyers have an even greater kick-start into home ownership.
Investors who have been considering selling an investment property, the next few months may prove to be a great time to do so. The increased first home buyers grant is only available until 30th June and it is possible this may cause a last minute rush amongst first home buyers keen to take advantage of the extra cash incentive.
One prediction that is being made by forecasters is the return of the property investor in the coming months. With interest rates at their lowest levels in 45 years, and superannuation funds and shares in meltdown, property values have been holding up very well. For people with job security, property investment in the current market may prove to be an extremely viable investment option. Rising rents and low interest rates are seeing the divide between a negative rental return shifting into the positive narrowing dramatically. With interest rates predicted to remain historically low for sometime and many tenants happy to sign long leases, there may be no time like the present for astute investors to top up their property portfolio.