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RateCity urges property investors to think long-term despite improvements

In a recent media release  Australia’s leading financial comparison website RateCity is urging property investors to take a traditional long-term approach and do their research of the home loan market to triumph in the property investment game.

The advice follows the latest house price report from Australian Property Monitors (APM), which found positive signs for the investment market. Median property prices in the June quarter have dropped year-on-year for most capital cities (see graph below).

 Source: Australian Property Monitors, June quarter 2012

Despite lower property prices boosting gross rental yields across many regions of Australia, Michelle Hutchison, Spokesperson for RateCity, said property investors should take a traditional approach with a long-term view of investment success as opposed to expecting a fast return.

“Australia’s property investment market has certainly improved compared to last year with property values falling and some areas saw increased asking rents, which has improved yields. Year-on-year gross rental yields for the June quarter has increased for every capital city except for units in Hobart, according to APM.

“While these are positive signs for investors, there are conflicting views on the outlook of the property market. Investors thinking about jumping into property this year shouldn’t expect an improvement every year and a more traditional long-term approach should be taken.”

Source: Australian Property Monitors, June quarter 2012

Ms Hutchison said finding the right investment loan can have a major impact on the overall return and investors need to do their research of the home loan market.

“Property is one part of the investment equation because finding a good deal on an investment loan can make a significant difference to the net return you earn from your investment. For instance, the difference between standard variable investment loan interest rates range by up to 178 basis points, which could mean an extra $350 each month or $126,000 after 30 years.

“The investment home loan market has been relatively flat since 2004, with the total value of investment loan commitments sitting at about $7 billion per month according to the Australian Bureau of Statistics (ABS, seasonally adjusted). This is compared to an increase of about $4 billion per month for residential home loan commitments since 2004 (see graph below).

“Lenders are eager to lend to investors so there is real opportunity to negotiate hard and secure a good home loan deal if you do your research,” said Ms Hutchison.

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Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and his opinions are regularly featured in the media. Visit Metropole.com.au


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