Talking Property

Property Talks. A roller coaster ride.
Australia is in the middle of a pandemic roller coaster ride. The BIG question is what is likely to happen?

The property market is not immune to the impacts of this pandemic. Oxford Economics is forecasting drops in property across all Australian cities in the coming months with Sydney being the hardest hit. Canberra, a public service driven economy, will be the least impacted. Unemployment, lack of international immigration, people’s inability to move around freely and tightened credit are all drivers of this drop.

Should you invest?

With this uncertainty should property investors look to invest? The answer is maybe.

Once we are rid of the virus everyone expects the economy to respond positively and relatively quickly. The market presents opportunity to buy lower in the coming months but if your income is uncertain, the opportunity may not outweigh the risk.

For those in a safe position I believe the biggest opportunity is to take advantage of record low interest rates and shop for property with high yields that service the lower end of the rental market. They are not as exposed to the unemployment factor as those who are in the executive market. The properties are more affordable for someone on reduced hours or if they happen to be unemployed for a while.

An opportunity awaits

The opportunity now is you can borrow money at 3% and put that it into a property yielding 6% or above. Rather than waiting for prices to rise, you make money immediately from the positive cash flow. A $550,000 property can clear you up to $10,000 in positive cash flow. The old saying “you can’t go broke if you’re making a profit” applies here. This generally requires getting yourself a property that delivers two rents such as granny flats or other types of dual income zoning.

If you would like to know more about this don’t hesitate to get in touch with me at matt.ivers@visionpf.com.au.