Trends Real Estate Investors Should Be Watching
The new year ushers in new challenges, opportunities, and trends—especially for the real estate market. If you’re investing or looking to investing in real estate this year, here are some things you should watch out for:
Still Uncertain Waters
A lot of factors contribute to the continued uncertainty of the market for at least the first half of 2019. Globally, the trade spat between the US and China combined with Donald Trump’s big spending may affect the global recovery.
Now to our own lands, APRA’s recent macroprudential tools tightening home-loan lending standards and a Labor victory possibly winding back Negative Gearing and Capital Gains Tax incentives lead to more uncertainties.
Peer-to-Peer Lending & Private Equity
Due to restrictions placed on lending by APRA, expect to see a higher level of private equity and peer-to-peer lending this year. Peer-to-peer lending removes the middlemen from the lending process. Homeowners and investors whom the banks turned away and are looking for higher returns consider them as a first choice.
The build-to-rent model involves investors teaming up with developers to build properties and rent them out to long-term tenants. This model can make investors view residential properties more like a retail space and as a low-risk and long-term investment.
One of the fiscal tightening’s consequences will be the fall of supply below demand. If the demand, especially due to overseas migration, will steadily rise and the supply will fall, chances are that prices in some segments of the property market will accelerate.
Affordability is still essential.
More affordable homes based in areas accessible to essential amenities are more favoured than high-end properties in 2018, and that trend continues on to 2019. That alongside stagnant wages, tightened lending conditions, and Baby Boomers retiring and Millennials influencing property purchases, homes on the affordable side are the most in-demand property this year. They prefer smaller, lower-maintenance, and more affordable homes in areas that are rich in amenities.
It’s still early into the new year, everything is still in uncharted territory. But despite that, investors can still look into more opportunities into growing their portfolio this 2019. If you need more advice about investing in properties, you can always reach out to me.