Why 2022 is the right Year to invest in property and how best to be prepared

REAL ESTATE

With the official cash rate at an all-time low, it is an incredible time to be in the market to purchase a home or investment property. With Victoria’s lockdown restrictions finally easing and additional supply coming onto the market, buying conditions for first home buyers, upgraders and investors continue to improve each week.  2022 is set to be a very promising year to invest in property.  Why is this? How best should you prepare yourself? Let’s delve in to see why. 

Why is 2022 the right year to invest in property?

As we progress through 2022, the Victorian property market will continue to grow; however, the price growth will be less frantic as compared to the 2021 property boom we’ve experienced. 

2022 is likely to be a positive year of strong economic growth, high business and consumer confidence, and where new jobs are created. ANZ expects Melbourne’s house prices to lift by 7% this year. CBA sees Melbourne property prices rising by 8%, while NAB forecasts growth of 5%. Finally, Westpac is more bullish, expecting dwelling values to rise 8% in 2022 – which ultimately is not great news for first-home buyers.

However, we are starting to see many cities start to show a trend of reduced sales pressure with increased supply (number of quality property listings) and stabilising consumer demand (sales volume), which ultimately is leading to a slower price growth rate – which is great news for first home buyers and those looking to invest. 

COVID-19 has significantly reshaped our lifestyle preference and our desire for how (and where) we want to live. As we continue throughout 2022, the migration trend from the big cities to outer suburbs or from metropolitan cities to sun-filled beach towns is very likely to continue – and not just by those ‘working from home’, but by those seeking to bring forward their retirement plans.

How best to be prepared?

Investing in property is all about the long-term game. It’s important to not think about “quick gains” or short-term market speculation, as this can impact your decision making. Remember, never ignore your due diligence, even in a hot market, as not all assets are the same. To mitigate key risks, ensure you stick to the core fundamentals, select the right type of property and are prepared financially. To learn more about key property investment terms, see our article Key Property Investment Terms and Jargon explained.

If you can, try buy an existing property with decent land size in well-established suburbs that will rent easily.  Property is all about supply and demand – try buy in an area where there is enough demand, yet limited supply.  And remember to only listen to experts who have already achieved success in property investing.

Before looking for a property, get pre-approval. 

Before you even start looking at properties, ensure you have pre-approval from your lender. Having your finance ready is essential in this competitive market. Once you are pre-approved, you will know what you can comfortably afford, and you can be flexible with the offer you present to vendors.

As a buyer, you must be ready to submit your offer. Even submitting an offer that is “subject to finance” can negatively impact you – with those in the position to submit an “unconditional offer”, currently having an upper hand. 

To avoid disappointment and frustration, it’s strongly advisable to have your pre-approval confirmed before you begin seriously searching and inspecting properties. 

Prices in Regional Victoria are moving quickly and it’s important to set realistic expectations and always be prepared. Remember most pre-approvals only last 90 days. Circumstances can sometimes change, so make sure you stay in contact with your lender or mortgage broker. Even once you have pre-approval, be prepared to share updated bank statements and documentation when you go for final approval – for example, updated credit card statements and payslips.

What makes an ideal suburb for an investment property?

It is critical to get the suburb selection right.  Always look at a suburb and street, from an owner-occupier’s perspective. Owner-occupiers vastly outnumber investors in the market – in terms of absolute numbers, and in terms of the capacity to pay due to being emotionally charged. Therefore, in the long-term demand from owner-occupiers has a stronger effect on price growth, than demand from investors – who are typically, more price sensitive. 

It is wise to select a location and property that will appeal to a diverse range of buyer types, but particularly upgraders, families with children and couples.

When considering a suburb there are key elements to look for. Ideally, the property should be situated in a predominantly family-friendly residential area with a variety of attractive lifestyle benefits within close range, including parks, recreational facilities, cafes, restaurants, medical centres, day-care facilities, good transport connections, and shopping centres. 

It’s wise to choose a property in a strong school catchment, or in close proximity to well-regarded primary and secondary schools. Quiet, safe suburbs with low crime levels will always be highly desirable.

It’s not always possible to purchase in the best street, in the best suburb at the best price – but purchasing as close as possible to highly desirable suburbs, even one or two suburbs further, will ensure your property’s value will likely increase due to its proximity to sought-after local amenities.  

Keep in mind, as part of your search and selection, there are key elements to avoid too. Properties that are located on busy main roads, next to industrial areas and business parks, boarding train lines, or lacking in transport options will see less “emotional” demand from buyers, and are likely to not appreciate as much as well-positioned properties. Remember the age-old saying – “buy-cheap, sell-cheap”.  

Always research recently sold comparable properties to form an understanding of what the “market price” truly is. Never purchase a property sight unseen; even if the price is perceived to be “under-market” value. Always visit the property. Drive past the property and walk around the surrounding streets to get a really good sense of the neighbourhood.

Try visit the property multiple times, both during the week and weekends. If you come across any neighbours, ask them what they think of the suburb and street too.

Always seek advice from a trusted professional.

Purchasing and investing in real estate is exciting and when done well, can significantly transform your life.  Your local One Agency specialist, lives and breathes real estate in your area and has insights into exactly what is happening in your community.  

Now is a great time to get started on your property journey, or continue climbing the property ladder, as interest rates are at an all-time low. Our agency is also seeing high-quality family-oriented supply begin to come onto the market, and this is set to continue as we progress through summer.

To learn more about the benefits of real estate investing and what prices may do long-term, please contact us at One Agency.  With One Agency being one of Mildura’s most trusted real estate agencies, we are well placed to provide you with our view of the current market based on our local experience. We’ll thoroughly guide you through the process and help you take advantage of this opportune time in the property market.

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