Property Investment Outlook 2014: What?s Hot And What?s Not
The confidence that was waning amongst property investors in Australia has resurged and with good reason. DEPRO recorded a rise in property investor activity across all key property markets in Australia in the last half of 2013. This positive trend is expected to continue in 2014.
Bullish property price forecasts in 2014 have been the norm among several players in the property market with investors being urged to take advantage of this potential opportunity. The expectation that the property market will continue to boom in 2014 is made clearer by three factors: low interest rates, high rental yields and rising property prices.
Low Interest Rates
Although economists are split on the movement of interest rates in 2014, there is a general consensus that interest rates are highly unlikely to put any substantial pressure to rising property prices in 2014. The most optimistic economists predict a high of 2.75% interest rates in the last quarter of 2014.
Others predict a downward movement of interest rates to around 2.25% by mid 2014. The nominal interest rate or cash rate on the other hand is expected to be in the region of 2% to 3%. The bottom line is that interest rates are very likely to remain low in 2014 thus contributing to the renewed confidence among investors in the property market.
High Rental Yields
Rental yields in 2014 are projected to rise to high levels. This projection has increased investor activity in the property market. According to the latest ABS lending figures, the value of property investment loans stood at $7.63 billion in September 2013 compared to $5.88 billion in September 2012. The difference of $1.75 billion represents a significant 30% increase in the value of property investment loans.
With more positive forecasts for 2014 in the property market trimming in by the day, more investors are expected to take up property investment loans with the hope of reaping good rental yields.
Rising Property Prices
Property prices in Australia are on the rise and are expected to continue rising in 2014. Brisbane and Queensland lead the pack of cities with the highest property prices. Brisbane especially is expected to be a star performer in the 2014 due to the rush for high rental yields and potential for sky rocketing capital growth. The fire for optimism is fueled by the fact that the median price for a home in Brisbane is $200,000 lower than that for a home in Sydney. Other cities with relatively high growth outlook in 2014 include Sydney, Melbourne and Canberra.
What Investors Should Do Given The Positive Outlook For 2014
There could be a number of great investment opportunities in Australia for property investors. Solid research, financial analysis both personal and economic will need to be considered before purchasing anothe property investment.
Those interested in having a piece of this pie need will to boost their cash flow so as to participate in the property market.One sure way of boosting one?s cash flow is by utlisiing full tax depreciation benefits.
The Importance Of Tax Benefits Using Property Depreciation
The importance of tax benefits from depreciation can be understated by many investors. Most of them fail to grasp that tax benefits from depreciation can just be as importance as property rentals. What?s more? Tax benefits from depreciation can amount to 60% of the total purchase price of a property. Investors with a pool of investment property can actually claim tax benefits from depreciation retrospectively provided they had not done so in the past.
New property provides greater levels of depreciation than older property so those looking for improved cashflows may be targeted newer or off plan properties. Significant tax benefits from depreciation can be used to boost one?s cash flows and will play an important role in the 2014 Australian property market.
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