Locked out of buying in today’s red hot property market? The truth is that it’s not all bad.
While you may miss out on gains, you may also avoid the pending price drops – and you can use the capital homeowners have locked up in their homes for other investments.
With house prices in some capitals now treading water, there is an argument which says that – in pure investment terms – this could be the best opportunity out there in the current and medium term market.
And another upside is that rents in some key capital cities are coming down.
The Sydney media, for example, made a big noise this week about landlords in outer suburbs who have been forced to drop advertised rents on properties.
A four bedroom home in the outer suburb of Narellan, for example, was rented out for $430 a week in 2013, but it was re-advertised last month for $420 a week.
In a world where prices just seem to be going up while wages stay the same, or go backwards, that is a rare bit of welcome news.
According to CoreLogic, capital city rents have been falling at the fastest pace on record, dragged down by soft rental markets in cities such as Perth, Darwin, Brisbane and Adelaide.
In Perth and Darwin, for example, the figures show that rents are at 5 year lows.
Looking to rent an apartment in Perth? You’ll be happy to know that the median price is down more than 11 percent over the last year to $320 per week.
And with lots of new apartments coming to the market soon all around the country, many of them owned by investors, we can expect tenants to continue to enjoy the upper hand.
Besides, there are lots of advantages in renting.
You can live where you want, rather than simply where you can afford to buy a house. And it makes moving around so much easier.
It also frees up capital for other uses, not just for recreation but also for investment.
So many home owners are labouring under the “asset rich but cash poor” category where they have so much invested in their homes that they can’t afford to invest elsewhere, and can’t afford to enjoy a lot of the things carefree renters take for granted.
So as you get into your weekend, have a think about the positive case for renting.
If you’re a renter, maybe you can find a better deal soon?
And if you’re a homeowner labouring with a big mortgage but with the advantage of seeing home prices spike in your city, spend two minutes thinking about this: how would life be if you sold, pocketed a big lump sum and then rented for a while?
Happy house hunting!