As the “property hysteria” fuelled by record-low interest rates during the pandemic subsides, savvy property investors are re-entering the market, recognising a strategic opportunity to buy, according to Propell Property.
Michael Pell (pictured above), managing director of Propell Property, noted a significant shift back to more historical levels of investment activity.
“It’s important to understand the difference between the number of investors and the value of their activity as this clearly shows that investment activity has returned to more historical averages,” Pell said.
The ABS lending indicators for March highlighted a nearly 22% drop in new loan commitments for investors over the past two years, signaling a cooldown from the frenzied buying during the pandemic.
“Everyone gets caught up in the value of loans increasing of late but, of course, this is merely a reflection of the fact that property prices are much higher than they were a few years ago,” Pell said.
With market conditions stabilising and becoming less “exciting,” Pell suggests it’s an ideal time for educated investors to make their move.
“Those days are done, so, we now have market conditions that are more stable and sustainable – but perhaps not as exciting as they once seemed – which is actually the perfect time for investors to strike with the most educated ones currently doing so,” he said.
Investors are now focusing on long-term gains over short-term cash flow challenges posed by higher interest rates.
According to the 2023 PIPA Annual Investor Sentiment Survey, about 55% of investors believe the next 12 months will be a good time to buy, particularly in areas like South East Queensland, regional and coastal New South Wales, and Melbourne.
“Melbourne has plenty of upside potential for investors who can look past its new land tax regime,” Pell said.
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