5 Tips for Buying an Investment Property During an Unstable Market

It can be scary to purchase an investment property when the market is unstable. During periods of economic uncertainty like where we are today, real estate prices tend to be more volatile and many inexperienced investors often make impulsive decisions.

While you shouldn’t rush into buying an investment property during times like this, it can also be beneficial when you do it right. As unstable as a market can be, you can still buy a property that can profit you.

Here are a few tips for buying an investment property during an unstable market:

1. Follow experienced investors.

There’s a saying that you shouldn’t follow the herd, but instead follow the one who leads the herd. When buying an investment property, look for the insights of experienced investors and professionals when it comes to the real estate industry. There will be many voices telling you what to do or what to buy, but choose to listen to only those who are credible and trustworthy to give you advice.

Experienced buyer’s agents can help give you market insights and advice on what type of property can profit you during an unstable market. They have surveyed many properties in your local area and keep up with market trends almost every day.

2. Find a location with a strong local economy.

A good property location doesn’t necessarily need to be near the Perth CBD. Accessibility is definitely an advantage when investing in a property but another thing that you can check to know if a location is worth investing in is its local economy.

A location with a strong local economy will have a higher resale value in the long run. If there are thriving industries within the community, there will be a higher demand for properties. However, you should still do your research on the area’s economy. Since the market is currently unstable, will this thriving economy last until after several years? Consult your experienced buyer’s agent as they can help you with researching your target location.

3. Look for areas with room for development.

Aside from the current local economy, one more thing that you should look for in an area is its room for development. Are there government infrastructures that are planned to be developed? Are there new businesses that will be built? New infrastructures like hospitals and schools will create a demand for workers. 

An area with a thriving community and which supports job growth is a good investment choice as it will help increase the value of the property. 

4. Be aware of additional costs.

When purchasing a property, proper financial planning is essential to ensure that you are ready to make this investment. Buyers are always advised to save up for a deposit and have a regular income to finance the mortgage. However, the deposit payment and monthly mortgage aren’t the only costs that buyers should take into consideration.

One thing that most investors overlook is the additional costs that come with purchasing a property. Buying a home requires different transactions with various professionals. Hence, these entail additional fees such as lender’s fee, settlement costs, and upgrades. Make sure to be aware of these expenses so you can factor these into your budget. When planning your finances, make sure to have enough savings buffer so these unexpected costs won’t derail your budget especially during an unstable market. 

5. Think long-term

When buying a property during an unstable market, you might be tempted to buy something that seems profitable today, but will be useless in five to 10 years. For example, today, because of the global pandemic, we see many people buying properties in isolated areas. When things get back to normal, will these properties still be valuable?

Just like we’ve mentioned earlier, learn to keep up with market insights and look at properties in areas where there is a lot of room for development and growth.

Plan carefully before you buy during an unstable market, learn to manage your risks and to assess your risk-to-profit ratio. Don’t be afraid to ask advice from real estate experts on what type of property will profit you the most in the long run. 

Contacting an experienced buyer’s agent is essential as they will have greater insights into the market, a wide base of contacts with agents, and other marketing avenues that they have built up over decades in the real estate industry. Buying Perth Real Estate has decades of experience in the Perth real estate market and has a recognised reputation of delivering positive results for all their buyers. Get a free consultation from us today.

The Future of the Perth Property Market

Given the Covid-19 pandemic happening all over the world, many industries worldwide have been suffering economic impacts. While Australia also felt these impacts, the Perth property market seems to be recovering faster than ever.

Western Australia’s well-controlled handling of the pandemic is resulting in more stable growth and faster recovery period compared to Eastern Australia. Perth is also less reliant on affected industries such as tourism and international students. They were less vulnerable to the economic blows that other cities in Australia faced. Western Australia is fortunate to have a huge continuous income from the mining industry.

Here are some forecasts to watch out for on the real estate market industry in Perth:

Perth house prices predicted to rise to 12% in 2021

real estate statistics

It has been reported that east coasters are starting to discover West Australia as they take advantage of government incentives such as the $20,000 Building Bonus grant. Plus the opportunities offering to obtain well priced established real estate.

With a more than the expected demand from applicants taking up the State Government’s $20,000 building grant, the Perth property market is experiencing a higher demand for vacant land. Perth house prices are forecasted by several of the major banks to rise by 12% in the last half of 2021, and by 18% in 2022. This will increase Perth’s median house prices to at least $532,000.

Sales increased by 56% in October 2020

perth property market increased in sales

In October last year, metropolitan Perth reported 603 sales but this October 2020, it significantly increased to 946 sales. This is a 56% jump from the previous year. Sales have rapidly increased due to fewer listings for this year. From 14,000 listings last year, it decreased to 10,000 listings. Since there is less supply entering the market, the competition becomes tighter. Contracts are being closed faster compared to the addition of new listings in the market. Hence, pushing up the value of the properties.

Western Australia Border Open on December 08, 2020

More people will now be returning back to Western Australia and will be looking for somewhere to live, as the borders open to allow Victorians and New South Wales people back into the State without quarantine restrictions. While this will only last while those States remain free from the virus, there are many already taking advantage of the freedom of moving to West Australia.

COVID-19 pushed professionals to prioritize savings and investments 

savings and investments are being used to buy from the perth property market

According to Westpac’s consumer sentiments, WA now leads the measure of “time to buy a dwelling” throughout the whole nation. After two years of slow downturn, home financing levels are finally recovering. With the pandemic and the fear related to financial security, professionals prioritized saving more with an average of almost 20% of wage savings. Before the pandemic, people usually save only 3% and spend the rest of their salary.

Although there is news that the anti-COVID19 vaccine will be available soon, people do not plan to go out and spend their extra savings just yet. It seems that they prefer to spend extra savings on housing-related expenses. The number of real estate transactions now is already above the level during the pre-pandemic period.

The Perth property market is in the early stages of a market boom

While most countries are struggling with the effects of the pandemic, West Australia is recovering fast – including the real estate industry. Given all these forecasts, Perth is once again on the journey of having a real estate boom after over a decade.

Now is the time to invest in selected real estate in the Perth suburbs. With interest rates for borrowing at an all-time low and the real estate market showing strong signs of recovery, what better time to engage an experienced buyer’s agent to stand alongside you through the journey of selection, negotiation, due diligence, building reports, and a host of unknowns to most buyers.

Learn more about the status of real estate and properties in Perth. Get a free consultation from us today.

Why You Should Buy A Retirement Home Sooner than Later

What do you plan to do after you retire? Is moving to another community and getting a new home part of your retirement plans? If yes, when do you plan to do it? 

You don’t need to wait until after you retire before you buy a retirement home. Below are some of the benefits of buying a retirement home sooner:

1. It’s an investment opportunity.

If you’re still in the workforce and do not plan on retiring anytime soon, you might think that you don’t need to worry about your retirement home yet. But purchasing early has numerous advantages. If prices of Perth real estate property start to rise to around 5-7% each year. With property prices at today’s current level, this is the time to make your move. 

Although you might not be able to move in yet, by buying now you can use it as an investment. You can use it as a vacation home. You can even rent it out; therefore, generating additional income for you.

2. It is easier to get approved for a mortgage while you are still fully employed.

Employment status is one of the factors that lenders consider for those who apply for a mortgage. They prefer to work with borrowers who have a steady salary as they feel more secure with them. Having a stable income means the borrower is capable of paying the mortgage on time.
When you apply for a mortgage after you retire, they will also look at your debt levels and assess your credit score — which leads us to our next point.

Employment status is one of the factors that lenders consider for those who apply for a mortgage. They prefer to work with borrowers who have a steady salary as they feel more secure with them. Having a stable income means the borrower is capable of paying the mortgage on time.
When you apply for a mortgage after you retire, they will also look at your debt levels and assess your credit score — which leads us to our next point.

3. You can work on your credit score.

When you plan early, you will have more time to pay off your debts. As a result, you can maintain a good credit score. Having a high credit score will help you get a good deal when applying for a loan for your new home. You will be more eligible for a lower interest rate.

Start early with being conscious about your credit score. Be mindful of your financial behaviors — pay your bills on time, avoid spending beyond your means, and clear your debts. Then, make sure to maintain your credit score even after you retire. When you retire, your income will decrease. With this, make sure to adjust your expenses and lifestyle.

4. It will give you more time to save up.

The sacrifices you will do for saving up early will benefit you in the long run. You will have more money to afford a bigger deposit; hence, lessening your monthly mortgage payments. You can also use your savings for future renovations or upgrades for your new home or even to make your home interior design dreams come true.

Buying a new home is a big move that requires a lot of planning and saving up, especially if it’s for your retirement. You need to give yourself enough time to plan as this will be where you will be settling down when you grow old. It is the place where you will spend your later years in life. You will spend all your time there so it is best to think about it carefully and decide on the lifestyle you want to have for the rest of your life.

Do you already have an idea of your dream retirement home but don’t know where to start? Planning to buy a retirement home? Let us help you turn those dreams into reality. Reach out to the buyer’s agents at Buying Perth Real Estate by sending an email to clive@buyingperthrealestate.com or check out our website.