A General blog by Paul Bennion.
Low interest rates, competitive house prices and rising rental yields will combine to entice more first time investors to the Australian property market this financial year, predicts Paul Bennion, Managing Director of tax depreciation company, DEPPRO.
Typically, the start of the new financial year brings a boost in activity by property investors. However this year’s so called ‘investment market trifecta’ which comes off the back of falling interest rates is expected to produce an even more significant upswing by investors.
According to Bennion, the increase in activity by investors should be more pronounced and prolonged this financial year, due to falling interest rates, which are making properties more affordable.
“At the same time, rental yields are increasing, encouraging investors back to the property market, particularly in areas such as Darwin, Brisbane and Perth,” Bennion said.
Figures from Australian Property Monitors for the March 2012 quarter show that rental yields for apartments in Perth surged over the year by 16.6%, while in Darwin they jumped by 11.2%.
“As a result of these rising rental yields, many first time investors are attracted to purchasing property as opposed to investing in the highly volatile stock market or earning interest through poor performing cash savings,” Bennion explained.
Only a few weeks into the new financial year, DEPPRO has already recorded an increase in activity, particularly from investors aged between 25-35 years of age.
“These first time investors tend to be high income earners, who are attempting to reduce their taxation rates by taking advantage of the significant tax benefits associated with buying property. Many are working in the resources sector in regional areas of Australia and are buying properties in nearby areas because of the strong capital growth rates and rental returns currently experienced in regional towns and cities,” he said.