Considering entering the property market? With interest rates at a 53 year low, 2013 may be the year to become a property investor.
Although property prices are a big factor when choosing an investment property, investors need to also consider the location. The right location will not only attract quality tenants, but it will also give you a better chance of maintaining consistent rental income.
If you know where the upcoming property hot spots are, it will give you a huge advantage. There are two main factors you should research when comparing locations – rental yields and population growth.
Many areas are experiencing a rise in rental yields and there are a few reasons for this. The low interest rate is one example. The closer the rental yield is to the interest rate, the smaller the gap will be between income and repayments, resulting in investors receiving a better return.
According to the RP Data capital city guide the capital city rental yields range from 3.6% to 6.0% in April 2013. The top capital cities were Darwin at 6.0%, Hobart at 5.3%, Brisbane at 4.7% and Perth/Canberra at 4.6%.
Population growth is an extremely important factor to consider as you will most likely have a better chance at securing a tenant in a town with a growing population. You may find a property in a nice area, but you may experience long vacancy periods if there is not a huge demand for housing.
According to the Australia Bureau of Statistics, the population growth average for Western Australia (3.1%), Queensland (2.2%), ACT (1.9%) and Victoria (1.5%) are all above the national average. Whereas the Northern Territory (1.3%), New South Wales (1%), South Australia (0.9%) and Tasmania (0.3%) are all below the national average.
Even though several capital cities currently have strong rental yields, they are not all receiving a strong population growth. Although national averages do give a good indication of the overall area, it is still important to research and compare individual areas. With a strong rental income and population growth, it looks as though either Perth or Brisbane is the hot spot for 2013.
It can be confusing to know whether to get a variable rate or fixed rate mortgage, and what features are important. That's why it's important to not only check the right rates, but make sure that you're getting the right features in your home loan. Get help choosing the right home loan
Anouska Linz is Manager, Online Sales at State Custodians and has over 10 years’ experience in financial services, both in broking and banking. Holding a bachelors degree in accounting, Anouska quickly discovered a love for mortgage lending and assisting people to achieve their home ownership goals. She leads a team of highly experienced lending specialists who are passionate about finding lending solutions which result in real wins for the customer. She is also a massive netball fan.
For more information on our home loans, visit www.statecustodians.com.au or call 13 72 62.