New data has revealed that property investors prefer to purchase older dwellings rather than off-the-plan newly built homes. Mortgage Choice’s Annual Investor Survey found 76.9% of Australians intend to buy or have bought an existing dwelling., compared to that of 23.1% who purchased a new build. The data shows there is an increasing portion of property investors are choosing established dwellings over a new build.
John believes whilst the increasing trend in established dwelling property purchases is small – from 75.8% in 2015 to 76.7% in 2016, and now current figures show 77% – he expects increases to continue over the coming years. He states there are a couple of reasons for this trend:
- Established dwellings are ready to buy and move tenants into straight away. Investors purchasing off-the-plan may have to wait several months before they can access the property. Thus in turn reduces the ability to generate an income from potential rental agreements with tenants.
- Dependant on the location and condition, existing properties can sometimes be more affordable. This allows the buyer more negotiating room when purchasing.
- Investors have the opportunity to renovate an older property and add value to the dwelling over the longer term.
A number of local agents have reported an increase in “days on market” for property sales in our local Redcliffe area. Generally speaking, days on market has gone from 30 to a 60 day time frame. This has been due to a variety of reasons such as lending requirements tightening market-wide, availability and property growth slowing .
Regardless of whether investors choose to purchase an existing dwelling or off-the-plan, it’s important to do due diligence and research and speak with people in the industry before making any final decisions. Furthermore, the investment lending space has become increasingly complicated in recent months, as many lenders have adjusted their policies and pricing in the wake of budget and regulatory reforms and market conditions.
Things to consider when purchasing an investment property:
- Using an “Interest Only” or “Principal and Interest” loan
- Who should buy the property? Should a family trust or SMSF be used?
If you are considering a rental property or have any queries on this topic, please do not hesitate to contact one of our advisers.
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