With the expectation that Australians will ramp up their property investments in 2014, our seasoned property investor and National Sales and Acquisitions Manager Joseph Eid, summed up the coming year in a nutshell.
“As the Australian housing market continues to show signs of life, a mixture of low interest rates, strong population growth and healthy household finances will attract more people to buy residential investment property over the next 12 months”, he said. “It’s going to be an exciting year!”
So let’s look at the main factors contributing to this positive outlook.
Low interest rates
In August last year, the Reserve Bank of Australia cut interest rates to a record low of 2.5 per cent. Low interest rates encourage homebuyers and investors into the property market, while at the same time allowing current homeowners to pay off their mortgages faster.
Our low inflation rate gives the Reserve bank room to keep interest rates low, and it’s expected they will remain at 2.5% throughout 2014, followed by an interest rate hike some time in the first half of 2015.
Strong population growth
The current average national growth rate for the Australian population is 1.7% per annum. Last year, Australia’s population grew by almost 400,000 people.
Consistent population growth will most often result in higher demand for housing, improving property prices in the medium term whilst putting upward pressure on the rental market. Population growth has a direct impact on infrastructure requirements such as roads, schools, community facilities, and public transport systems, driving private investment to take commercial advantage of the growing needs of the region.
This in turn creates jobs and opens new industries, and the cycle continues.
Healthy household finances
Surging house prices drove average household wealth up to a record $872,000 in 2013, the strongest performance for at least 13 years.
With the rise in minimum wage in July last year, and significant employment gains in construction and retail at the end of last year, it’s expected that more Australians will increase their borrowings and get into the property market in 2014.
Clearly, it’s a good year for property investment in Australia! Want to learn more about property investment in 2014? Whether you’re new to the property market or a seasoned investor, we’d love to help you develop an investment strategy or review your existing portfolio. Contact us today on 1300 989 542 to organise a free chat.