Is 2022 the Right Year to Buy That Investment Property?

Property investors are poised to purchase homes and apartments in 2022, encouraged by low interest rates and tight rental vacancy rates.

However, experts are saying that it won’t be all rosy, with both federal and state elections bringing uncertainty to future landlords and still unclear housing policies. There is also a potential increase in interest rate, which could be forthcoming due to inflationary pressures.

Interest rates may not increase straightaway, but stricter lending regulations enacted in 2021 have already resulted in investors not getting a mortgage easily. Thankfully, that hadn’t yet brought a significant effect on the number of people who are considering investing.

Amendments to loan regulations, including how debt to income ratios are calculated, (the amount a person is allowed to borrow depending on their income), and of interest rate buffers that ascertain whether a borrower can pay mortgage if interest rates increase by 3%, had seen the amount that could be borrowed decline by 5- 10%.

Though budgets are slightly declining, a fairly decent amount of confidence remains, with people still keen to invest. That confidence comes on the back of an excellent year for investors, with the volume of new loan commitments rising by 89.6 percent across the year to October 2021 according to the Australian Bureau of Statistics.

In October, $9.73 billion in new loan commitments for investment properties were reported, even with the hit to rental markets in Sydney and Melbourne.

Apartment rents in Sydney declined by 2% over 2021, while house rents increase as people search for larger properties during the pandemic.

Both the Sydney and Melbourne markets are dependent on foreign migration to fill rental vacancies, including foreign students who were locked out of the market because of COVID-19.

An increase in tenant numbers is forecast for Sydney and Melbourne as foreign students, tourists and workers are allowed back in, providing an opportunity for properties in the city to rebound.  I’m already seeing an influx of overseas students looking for apartments in Newcastle and I have plenty of qualified prospects who have missed out on recent rental listings.

Airbnb demand could also return to pre-pandemic levels, giving investors entry back into the short-stay rental market.

Plus with the reopening of borders, rents may increase. However, the increase may not be much until migration goes back to normal levels. 

Searching outside our city and in suburban areas, where the properties are bigger, would help pull in tenants who are looking for larger space.  Especially for those who are still working from home.

Investors should see more opportunities with a balance of supply and demand as more homes becoming available across Newcastle.

The number of homes for sale dropped 20-40%, depending on the location, with sellers delaying their listing during 2021 due to the lockdowns.  That’s one of the reasons why we are seeing more new listings now!

With supply and demand starting to become more balanced, the hope is that many property owners who held off during the pandemic will finally list for sale providing more options for home buyers and investors. 

The problem is this may not eventuate as we know from experience and history that sellers are likely to hold off until the state and federal elections are over!

I guess, time will tell!  My recommendation to you, is to list anyway.  The buyers will still be there as people still need to move.  Think about it, some are going through breakups, some are downsizing, others need to move to be closer to infrastructure like transport, hospitals or schools.

What’s your situation and do you know what your property is worth in today’s marketplace?

I’m available for a 15-20 minute confidential market appraisal appointment if you are interested.  Just let me know!



Contact Annette Pinkerton directly on 0418447856 to book your appraisal.

NAB: House Price Growth Expected to Slow to Just 3% in 2022

Economists from the National Australia Bank (NAB) have revised their house price predictions, and they are now expecting prices to increase by roughly 3% in 2022 and to fall by roughly 10% in 2023. The change reflects the impact of affordability issues and increasing mortgage rates putting downward pressure on prices.

This trend should be obvious across the capital cities, though more significant drops are expected in Sydney and Melbourne and less significant declines in Brisbane and Adelaide.

NAB also forecasts the first rate increase from the Reserve Bank of Australia to happen in November, with a steady succession of increases occurring through 2023 and 2024.

According to the latest NAB Residential Property Survey report, average dwelling prices in capital cities are expected to rise by 2.7% in 2022, down from the original forecast of 4.9%.

AMP Capital economists also amended their dwelling prices forecast, from 5% to 3%, and brought forward their forecast for the first rate increase from November to August. Property prices are expected to peak around the September quarter and then decline in 2023.

PropTrack economists forecast combined capital city home prices to increase by 6-9% this year. Though prices are expected to continue to climb, the rate of price growth will slow.

The price growth is attributed to historic low interest rates, economic stimulus and controls on how people can spend their money.

Commonwealth Bank (CBA) economists also forecast the pace of lending for housing and house price increases to slow in 2022. It had predicted an increase in prices of 7% in 2022, before a 10% drop in 2023.

With its revised RBA call of a rate increase in August 2022 (from November), an earlier peak is expected for home prices and a smaller increase this year.

RBA governor Philip Lowe admitted that interest rates may increase later this year. It is also possible that the first gain in rates could happen in a year or so.

The RBA’s latest Statement on Monetary Policy indicated that dwelling prices rose by 22.4% across Australia last year. Housing price gain has slowed in recent months in Sydney, Melbourne and Perth, from high levels recorded in early 2021.

Nonetheless, prices have continued to rise in certain minor capital cities and regional areas like Newcastle, though this does depend on the ‘grade’ or quality of the property and of course the location.

6 Ways to Design the Perfect Entertaining Area

When designing your outdoor entertaining area, consider how you want to interact with the space. From planning your kitchen layout to choosing essential appliances, here are tips on how to create the perfect entertaining outdoor space.

  1. Decide on your kitchen layout

Determine how you want to utilise the space and plan based on it. While the size of the area will influence many things, the next thing you need to think about is the cooking area, or the barbeque, and the table/sitting area.

There are now apps that can help you plan your cooking area. These apps provide you a variety of options, including different colour templates and barbeques. You can also get help deciding on whether you want drawers, a fridge, wok burners or a sink.

  1. Your must-have appliances

Whatever you envision for your outdoor entertaining area is possible – whether you just want a barbeque and a table or you dream of a kitchen with all the works.

There is a broad range of options for wok burners, fridges and sinks. Even a simple barbeque will have tons of available features and options.

Make sure your outdoor space is functional and fits your lifestyle. If you love alfresco, you don’t have to cook indoors again.

  1. Put up a cover

Covering your outdoor area will allow you to use it all-year round. It will keep your kitchen area clean, ensuring that your appliances and outdoor furniture last longer.

The shade also offers extra protection from the weather for you and your guests. It also helps preserve the longevity of your outdoor kitchen.

  1. Ensure good ventilation

Your outdoor area will need plenty of space for walls. Barbeque areas must be well ventilated and you could encounter a problem with installation if your area lacks space. Regulations state that outdoor gas appliances need to have at least 50% permanently open wall area.

If you’re considering blinds, they are considered as permanently closed.

  1. Install good outdoor lighting

Outdoor entertaining area needs good lighting because it is not only used during the daytime. You should be able to cook comfortably whether it is day or night.

If you’re doing nighttime entertaining, you want the lighting to create the mood and also allow you to see what you’re cooking on the barbeque.

  1. Think of the social aspect

The perfect outdoor area will not force you to shuffle back and forth from the indoors to the outdoors, especially if you’re entertaining.

Aside from allowing you to cook in one place, your outdoor kitchen should also have storage space and other useful features. So, it is worth considering adding a sink, a fridge, and then being able to simply turn around from the barbeque grill to the dining area.

People chat while sitting around waiting for food, and you shouldn’t miss out on all the fun because you’re cooking. 

Upgrade These 5 Areas Before Selling Your Home

If you’re selling your home, there are many ways you can use to boost its sale price. Here are the 5 areas in your home that you should improve to get the biggest impact for the lowest cost.

  1. The walls

First thing on the list is painting because for every dollar you spend on painting, the return is usually well in excess of a thousand. With so many colours available, what should you choose?

Choose neutral but avoid anything stark. For example, there are many variations of white, so the choice will be determined by the light your space has, and the colours of the floors and fixtures.

  1. The floor

It’s not easy to change flooring, but sometimes the existing flooring is totally worn out and drab. If you have a decades-old carpet, an overhaul is in order.

The type of home and who is looking to buy it will determine what new flooring you choose. If you’re trying to attract buyers, rather than investors, then that should be reflected in the flooring. Experts suggest purchasing quality engineered floorboards that can be placed directly on top of the existing floors.

If you’re selling to property investors, choose quality, affordable options like a laminate.

Floating floorboards is one easy way to upgrade your floors. The floorboards easily interlock and are laid over existing foundations, minimising installation time.

For carpets, both buyers and investors still prefer softness underfoot in bedrooms and upstairs spaces. If you are targeting investors who want to rent out the property, choose a low-maintenance, stain-resistant carpet, such as those of synthetic dyed nylon varieties. If you want something more luxurious, a wool blend is the perfect material.

You should also consider the architecture and style of the rest of your home when choosing a colour or flooring style.

  1. Street view

Curb appeal is important because buyers often drive past a house first before they decide if they’ll look inside. Declutter, mulch the garden, put in a new lawn, if budget allows. These are just a few simple things that will earn your house a good price come inspection and sale day.

Additionally, if you’re planning to paint your interiors, you may as well consider painting the outside of your home too.

  1. The kitchen

Kitchens and bathrooms sell homes. However, before you demolish your kitchen, make sure the improvement will benefit you.

Make sure that the cost of updating your kitchen will be reflected in the sale price. If not, simply tidy it up if it’s messy and add a few select styling items.

If you’re not sure whether to remodel your kitchen, ask your selling agent. They should know the type of buyers your home appeals to and whether or not they would prefer a fully-furnished kitchen or a fixer-upper.

  1. The lighting

Clean your windows, so people can see straight to your garden and establish a connection to the home. Trim the trees that block the view or light. A well-lit home is an important item in most buyers’ checklist.

Check your fittings to see if you need to replace them to allow more light in. 

Annette Pinkerton knows what buyers are looking for in today’s property market place.  If you are looking for an opinion for your home, then ask Annette!

Alternative Ways to Enter the Property Market

Though interest rates are low, it’s not easy for most first home buyers to save for a home deposit. Though home values are rising, there’s no reason why you can’t get into the property market.

If you’re looking for an affordable way to enter the property market, here are alternative ways you can do it.

  1. Have others buy with you

You can buy a property with friends or family easily with the help of some leading lenders. This way you can divide the debts across two or more people. However, you have to be aware that this type of loan is creating a business partnership, which can be risky. For example, problems could arise if only one party is willing to sell in the future.

Banks have different rules that affect both lending requirements and the terms of a joint loan, so having a solicitor study the terms first will be beneficial.

To avoid future problems, draw up an exit strategy and an agreement in case there is a change in circumstances before you sign up for this loan.

  1. Family equity loans

Family equity loans let parents guarantee a loan and use their own home as security. This leaves the principal borrower as the only name on the loan and the title.

This option is ideal for those who have difficulty saving for a deposit, which is probably most young people. These include people who are not ready to rentvest or live out of the city.

This loan allows first-time homebuyers to avoid lender’s mortgage insurance.

  1. Consider the various property types

There are different types of properties, and one type to consider is off-the-plan purchase. This is when you buy a property before it has been built, typically as part of an apartment block or a series of townhomes or units.

It is worth considering because of the significant amount of stamp duty concessions for these property types. However, note that their prices are not determined by market forces, but by whatever price the developer sets on it.

  1. Rentvesting

Rentvesting is another way to enter the property market. This is when you rent where you’d like to live but can’t afford while owning and renting out property in an area where you can afford but wouldn’t like to live.

Investment property is generally cheaper to own, thanks to tax deductions, the tax deductible on the interest, and the rent you are receiving. These three items combine means that you can afford a $700,000 investment property, but probably not a $700,000 home loan.

  1. Homes in the rural and regional areas

You can find more affordable homes in rural and regional areas. For investors, the returns can also be favourable, if the property is in the right location.

This is an option for people looking for a lifestyle change or want to live in a commuter town, but buyers should carefully consider this approach.

Make sure the property you choose meets your lifestyle requirements. Whether you want to live in a beachside area, on a large block or in a slightly far off rural town, you should factor in in your choice of property.