By Paul Bennion, Managing Director, DEPPRO
The current very high level of investor confidence in the Australian property market is underlined by the latest ABS figures which show that lending to property investors topped $11.2 billion during January 2017.
During January 2017, a staggering $15 million was borrowed by property investors every hour throughout Australia for investment purposes.
Property investor confidence has surged over the past year especially in areas such as Melbourne and Sydney with overall lending to investors jumping by $2.6 billion during the past twelve months.
Due to very low interest rates and continued uncertainty about the world economy, more people are deciding buy property because it is seen as a low risk for of investment.
Many baby boomers in particular, are deciding to enter the property market as they simple do not have enough superannuation to fund their retirement while cash savings are delivering very low rates of return.
These baby boomers generally own their own home outright and are deciding to leverage against the equity in their home to purchase investment properties to help fund their retirement.
During the last year, DEPPRO has recorded the emergence of a growing number of new first time property investors who have not bought an investment property before.
These first time baby boomer investors are now a major factor in the current upswing in property investment lending highlighted by the latest ABS figures.
Overall, we are now living in an environment of low interest rates and property investors can look with some confidence to very competitive borrowing costs during the coming financial year. Indeed, interest rates are expected to fall even further from their current record lows.
These very low interest rates combined with the capital growth and rental returns property delivers, means that property is again emerging as a blue-chip investment choice for many Australians.
Property investors are also becoming more educated by the significant tax benefits associated with investing in property such as depreciation.
A growing number of property investors now understand that the tax benefits from depreciation can be just as important as rental income. Indeed, the tax benefits obtained through depreciation can be equivalent to 60% of the total purchase price of the property.
Property investors can fully maximize these depreciation benefits by obtaining a depreciation report of their investment property from a member of The Australian Institute of Quantity Surveyors (AIQS).
