Home sales head higher – but how much are people paying?
Development of an investment property strategy requires careful planning of your finances. How much will you need for a deposit? What is the highest amount you can contribute to mortgage repayments? How long will your mortgage term be?
One of the key elements of this is understanding how much you're likely to pay to buy an investment property in Queensland. Of course, remember that even though prices are rising, the other side of the coin is a strong likelihood of capital gains. So are homes selling like hotcakes at the moment?
Historic highs in the books
The Housing Industry Association has reported that new home sales are still at a long-term peak, even if they dropped a little in July. However, the figures for new detached homes in the Sunshine State remained relatively level, only going down by 0.6 per cent.
This means that our supply and demand for new properties is coasting along nicely, providing a good backdrop against which you could invest in brand new real estate. Harley Dale, senior economist at the HIA, also predicted that home building would continue to thrive over the 2015/2016 financial year. Clearly, even if you haven't put an investment strategy into place yet there is still a lot of room to get it off the ground.
Ongoing growth could be good
It's common knowledge that prices have been rising across the nation, even if Brisbane's growth isn't at the same speed as Sydney or Melbourne. But one important thing to remember here as a property investor is that in the long term, prices will nearly always be going up.
CoreLogic RP Data had a look at the proportion of houses and units that sold in the following brackets: Under $400,000, between that figure and $1 million, and over a million dollars. The research company noted that every five years since 1995, there has been a steady shift towards people buying and selling more expensive homes. As of June this year, less than a third of Brisbane homes were selling for under $400,000. In 2005, this number was a whopping 73.6 per cent.
While this does mean affordability constraints rise, remember that we are also at a point where interest rates on home loans are near record lows. Taking the opportunity to make an investment in new property in Queensland in the current climate could see you make great capital gains in the long term.
Of course, don't just follow the heat in the sales activity we mentioned above. Property investment requires careful planning, and perhaps the advice of a wealth coach. But done right, it could be very lucrative.