Australia's economy: How do these factors affect the property investment?

There are a lot of things to keep in mind when you decide to move into the Australian property market. As an investor, there are always a number of things you need to keep an eye out for before applying for a home loan, in order to accurately gauge whether now is the right time to move into the market or not. Factors like vacancy rates and median sale prices are just two of the aspects the should be taken to heart during your investment decision.

However, there are wider economic elements that can influence and sway the way you approach the market. These operate on a higher level and can affect your financial approach the to the real estate landscape. After all, the nation's real estate market isn't exempt from the wider economic rules of the world - in fact, it's one of the most affected sectors.

Here are some of the common things to take to heart before committing to an investment home loan and beginning or expanding your property portfolio.

The official cash rate

Every month, the Reserve Bank of Australia announces an official cash rate decision in reaction to the economic trends seen over the last 30 days. This affects a wide range of different economic factors and can be a major telltale sign of whether it's a good time to consider buying investment property.

The lower the cash rate, the more likely it is that you'll be able to secure a low interest rate on your home loan. This is good news in the long term, allowing you to lock in a lower repayment figure for your mortgage. This saves you money in the long run, making the prospect of buying real estate a more attractive, appetising possibility.

However, the opposite is also true. If the cash rate begins to rise, so too will the interest being charged on your mortgage if you have a variable-rate home loan. Therefore, it's best to try secure a fixed-rate home loan during a low cash rate period - this way, even if the cash rate rises, your home loan repayments will remain steady for a set period of your mortgage.

Future population growth estimates

An important thing for investors to be aware of are the projected growth rates for the nation's population. The basic premise behind this is that, as more people move into the country and begin calling Australia home, the need for accommodation and properties also increases.

If the growth of the nation becomes stagnant, there will be no need for new homes - making portfolios an economic drain rather than an income source. Therefore, before committing to any real estate, it's a good idea to investigate the anticipated growth rates of the area.

As a general rule of thumb, capital cities and metropolitan regions are always experiencing growth. Looking for popular new suburbs with developments occurring is a great way to get in at the ground level and cement your position in the market before people begin to arrive.

Confidence in the local market

Watching the general feelings towards property is another factor to watch closely. If people are feeling confident in the market, this could lead to future infrastructure and commercial development, which is always a great boost for population and overall economic growth.

On the other hand, if these figures begin to drag and drop, this could be indicative of some systematic problems in the local area and could show possible problems with any investment properties bought in the region.

These are just some of the things to keep in mind about the wider Australian economy before committing to investment property. Speak with a local real estate agent to gain a more personalised insight into the development of the surrounding community.

Image credit: PT Money

Call us on
13 10 90
Request A Call
7am - 7pm, Monday to Friday. AEST