Money
Issue No. 51 - February/March 2010
Property investment for the long haul
“Not all rental property owners are necessarily investors. Some have more of a landlord mentality, while others have a true investor mindset. There is no doubt that the market has put constraints on the mindset of some investors but if it is looked at with common sense, the lowest interest rates on record for 45 years and affordability combined with very low rental vacancy levels make a good mix for an investor. “Banks have tightened lending policies for developers, not just investors, so some developers are giving great discounts on stock to reduce the exposure to their own lenders. “Often, cashflow is more important to the developer than asset worth. If an investor is in a good borrowing position, with a good line of credit backing, they are in one of the best markets to purchase right now. “Much like the rebounding share market this should mean that the average values should recover more quickly because the market already has an expectation of the previous value level.” “A positive aspect of the property market is that a property investor can purchase in many markets. I refer to “sunrise” or emerging markets. “These may be driven by business investment (McDonalds, Woolworths, Harvey Norman, etc), infrastructure investment (freeways, rail services, bridges etc), or affordability to name a few.” “I don’t believe there are enough rental properties in the market and my own experience with my last four property settlements would give testament to this.
The rental vacancies and demand levels would indicate that there is still a significant shortage of rental properties. Many areas we have been purchasing properties in have a list of tenants awaiting completion of the building process and are being tenanted within the week of completion. “Obviously this varies a bit from area to area. For example, Whyalla (has been) impacted by other factors such as mining so rental uptake there has been slower but is improving now. Population growth is ...
