Anthony Toop – Property Advice
Like any form of investment, real estate has its risks. Buy on the market upturn and you can capitalise quickly, buy in a boom and you’ve got yourself a long term asset.
Then there’s the chance of a dodgy tenant, loss of rent, maintenance costs, interest rate rises plus an odd natural disaster, and it all starts sounding a lot harder than simply picking up the newest float on the stock exchange.
The upside is that while public companies may fold, and your invested shares with them, property remains a tangible asset which will always appreciate over time and can deliver some strong yields while you wait.
2010 is being hailed as the year of the investor which is no surprise when you look back at the two years we’ve had. During the global financial crisis many property investors took a huge hit on the stock exchange, forcing them to sell property in order to gain cash flow and remain buoyant.
With less properties available, the rental market momentarily tightened, until record low interest rates in hand with increased government grants saw huge numbers of tenants break lease to buy their first home.
At this time vacancy rates increased and investors began realigning rents.
Now the tables are turning. The First Home Buyer boost finished in December and grants have returned to normal levels. Interest rates are continuing to climb and those who failed to factor this in are now feeling the pinch – you have to wonder who provided their financial advice.
While some will be able to retain their asset, others will be forced to sell and go back to renting.
This is when investors will pick back up the properties they lost and as tenant demand increases, so will weekly rents, balancing out any rate rises for landlords.
Overseas and interstate investors are already circulating throughout our local market, focusing on student accommodation in preparation for when Uni heads back in late February.
As for Adelaide’s next real estate hot spot: While the crystal ball on my mantel piece isn’t telling all, I’d suggest keeping an eye on the inner north suburb of Collinswood. Bordered by Walkerville and Medindie Gardens, this boutique area of around 13 streets often flies under the investor radar.
Anthony Toop is managing director of Toop & Toop.