As the real estate market shows promising signs of surging back to life after a hiatus of several years, an interesting statistic has emerged from recent market surveys. People in the industry have known for some time that the preferences investors have for certain types of property increases the competition around them, and subsequently the price. What is surprising is that first time investors in the current market are showing a clear preference for small houses.
Low Interest Rates a Major Attraction
There is a couple of reasons for this approach and one is the extremely low interest rates that have attracted them into the market. The other is that the first-timer appears to have a preference for a house and land, rather than a unit or apartment. When we at the Fountain Property Group analysed this information, we realised that, at this stage in their portfolio building journey, they are seeking land close to work and amenities with an eye on future development potential.
The other key portfolio builders in the market are those with existing properties who want to increase their asset base as part of a longer term, wealth building strategy. These buyers are also taking advantage of the extremely low interest rates, but much prefer units or apartments to reach their acquisition goals. They look for properties that are close to essential services and amenities with a well-run body corporate so they can place a tenant and leave everything under management.
Different Strategies Needed to Suit Individual Preferences
Of course, when we were drawing these conclusions we also noted that there were many exceptions to both these scenarios. Investment strategies have always been diverse and dependant somewhat on individual preferences. An investor looking for a lucrative self managed super fund property will have a completely different approach to real estate than a first timer trying to get a foothold in the market.
The most pleasing aspect of the recent survey that we were able to discern was that most first timers intend to continue building a portfolio of up to three properties and for some, as many as ten over the longer term. This says a lot for the confidence now being felt in real estate circles. Their biggest challenge will be competing with those who have a well-established portfolio and access to more funds.
Both of these groups would do well to talk to our experienced property people at Fountain Property Group. We thoroughly research selected real estate on the basis of the potential for rental income, capital growth and quality construction. If you are ready to start your real estate portfolio, visit www.fountain.com.au for more information about our services.