Double digit percentage property price rises might yet still be on the cards for property investors in Australia, according to one leading buyer’s agent.
Arjun Paliwal of InvestorKit, forecast the rise of listings to the market being insufficient to meet demand, with the balance still tilted towards prices rather than falls.
“Prices and rents across the majority of cities in Australia are likely to see healthy upwards movements pending no major disruptions due to this,” said Pahiwal.
“We could very easily see another year of double-digit growth. Total property listings across Australia sit close to 35% below where they were five years ago.
“Whilst Sydney and Melbourne and a few nearby coastal markets are seeing listings recover quickly and represent a heavy weighting of the overall market, they don't represent a large number of cities.
“This is why investors will need to be deeper in their analysis, as overall results will look very different to some cities that will be seeing strong levels of growth.”
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Paliwal said that one of the big trends in Australian property investment in 2022 was likely to be rentvesting, where inner city buyers continue to rent while buying investment properties elsewhere, with ‘borderless investing’, where buyers buy sight unseen in regions where they do not live, a close second.
“In my opinion borderless investing is a must for a prospective investor when rentvesting to truly achieve great results,” he said.
“From the view of a rentvestor, you are prioritising your lifestyle via renting properties that would cost a lot more to buy each month in repayments and the chunk of capital required is diverted to making the best possible investing decision by being borderless in your review of markets.”
Furthermore, the trend of migration from the cities to the regions is likely to continue as more and more city workers transition to permanent work from home (WFH).
“I don't believe sea/tree changes will ever "switch off",” said Paliwal. “The WFH wave will not be transient as we live with COVID.”
“Widely across the globe and including Australia, it is being seen as an expectation amongst many workers to offer flexibility rather than the decision simply sitting with the business without consequence.
“While I don't feel a full work from home will be the majority for all cities, it will definitely remain at elevated levels to what we are used to pre-covid. Working is also just one segment of this change, our aging population and retirement plans being fast tracked is another.
“It is in position to continue as a key trend for the coming decades (not just during "covid''). Australian Institute of Health and Welfare reported that as at 30 June 2020, 16% of the total Australian population were aged 65 and over. By 2066, this will be over 20% with large levels of growth to occur between 2009-2029 (happening now).
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“It's important to understand that those entering this age group or currently in it are also likely to be some of the biggest recipients of capital growth through a combination of matured careers, time in market and time to reduce debts – a recipe for large wealth transfers across families or across cities as they prioritise lifestyle and/or retirement.
“With prices shifting in regional areas, there are a few things to consider. Many options exist and similar to capital cities seeing ripple impacts from inner-ring price changes to middle and outer ring, the same search for affordability occurs as people change locations.
“For many years, the Sunshine Coast and Noosa were seen as affordable locations, now that has moved to Hervey Bay and Bundaberg. For others Byron Bay was once affordable in NSW; now locations like Coffs Harbour, Port Macquarie and Foster become options in the list. So yes, some regional cities won't remain as popular forever, and we will see different cities represent 'value' as time goes on.