No property market is ever truly stagnant - and even at a time like this where property prices in parts of Australia appear to have peaked and buyer interest has subsided due to the affordability gap having widened too far too fast, there are property investment opportunities in Australia for investors able to move funds fast and retain real estate for the medium to longer term.
As a result of the Reserve Bank of Australia’s recent run of interest rate rises, property developers already committed to extensive building projects across Australia have been caught in a difficult position where they have to progress their projects but cannot attract buyers and many are offering international investors with cash funds excessively attractive deals…
Where an investor has the ready cash to plough into multiple units a developer will always make concessions even if the market is flying high, this is because cash flow is what a property developer depends upon for the long term success of his business. In a situation like the one most parts of Australia are in currently however, where units are taking a long time to sell, buyers are wary of committing to higher interest rate mortgages and first time buyers are not in a position to enter the market, the property developers who are already into a project have no alternative but to offer deals to committed purchasers and property investment opportunities to bulk buyers.
It’s a case of developer’s cutting profit margins to remain in business and some investors are negotiating up to 20% discounts on properties with the additional advantage of having many extras thrown in for free or at cost. The property investors with the ready cash and the stomach to make such significant outlays of funds from reserves can buy in at discount to what will become a period of growth once again when the property cycle moves on. Naturally enough, when the market cycle does begin a period of growth again the investor who buys at 20% down will see an immediate return on his investment!
There are immediately attractive reasons for committing to Australian property as well – the very fact that rental housing is in demand because many cannot afford to buy real estate in Australia means that those who can supply quality stock will have massive demand to tap into. Currently demand for rental accommodation in certain pockets across Australia is outstripping supply creating the perfect environment for increasing rental rates and a strengthening of yields for investors with well placed assets.
Seemingly in a market environment like this the rich have an opportunity to get richer…!
