Prices are rising, but affordability is improving
It's easy to get caught up in the rising price of homes across the country and put property investment in the too-hard basket. After all, the year-on-year growth in Melbourne and Sydney can be intimidating. But remember that here in Queensland, our growth is much steadier.
The CoreLogic RP Data Hedonic Home Value Index shows that the value of property in Brisbane went up over the year to August. That's steady, stable growth you can count on. And judging by some recent research, even when prices go up, property can actually become more affordable!
How does that work?
The Real Estate Institute of Australia (REIA) and Adelaide Bank team up every three months to present a report on the affordability of real estate across the nation. They do this by working out how much of a household's income would be required to meet mortgage repayments – an ideal metric for those families who have bought their first home and are perhaps looking at opening up a property portfolio.
For the June quarter of this year, affordability improved everywhere in Australia but New South Wales. That means Queensland households would pay less to get going with their property investment.
Why has this happened?
According to REIA President Neville Sanders, the low interest rates and a boost to income across the board has been behind affordability improving. Given the recent moves from the Reserve Bank of Australia to keep the cash rate at 2 per cent, we could see interest rates on home loans stay low for quite a while yet too!
In fact, the Housing Industry Association's Chief Economist Harley Dale says there's been a lot of speculation that the cash rate could go down even further. If it brings interest rates down with it then property investment in Queensland could become even more affordable!
Prepare yourself financially
Given this great news for affordability, you'd be forgiven for thinking a little more intently about picking up investment property. It's an excellent way to generate wealth through capital gains, and can be a significant nest egg for later in life.
Of course, just because the landscape is good doesn't mean you should rush out and buy the first property you see. It's important to pick something that will generate the right returns for you, without breaking the bank. Speaking to our wealth coaching team to develop a great first step for your strategy.