Is 2023 a good time to buy an investment property?
Is this year a good time to buy an investment property?
Savvy property investors are likely to re-enter the market in 2023 after a year in which many quit because of fast-rising interest rates and high prices, experts predict.
With the majority of cash rate hikes now likely behind us, as well as declining prices, high rents, tight vacancy rates and the return of migration, the market will have all the right essentials to attract investors.
“Maybe we won’t see them in as high numbers as in the past just yet,” said Domain chief of research and economics Dr Nicola Powell. “But I do think the strategic investor who isn’t fearful of purchasing in a downturn and has an eye on the fundamentals of the housing market and an understanding of the dynamics will be back.
“Declining property prices and rising rents have meant growing rental yields and astute investors will be looking for that cash flow, especially with most interest rate rises behind us. There are still very competitive conditions for tenants and with the government encouraging migration, and overseas students coming who’ll rent, it’s likely to be a good prospect for them.”
Any rise in the number of property investors would come on the heels of major drops in investment in the residential market.
On the latest Australian Bureau of Statistics (ABS) figures, new loans to investors in November 2022 fell to $8.29 billion, down 3.6 per cent from the previous month, and 23.2 per cent lower than 12 months before.
Drilling down into the actual number of new loans by investors, that decrease was even more accentuated, says Nicola McDougall, the chair of Property Investment Professionals of Australia (PIPA). The number was down from the peak of activity in March 2022 with 21,663 new loans to 16,251 in November, a plunge of 25 per cent.
“Investor activity fell off the cliff, to be honest, since all the rate rises started,” McDougall said.