Is 2023 a good year to buy an investment property?
As we all know, the last two years has been a little crazy for property investors, with many opting out entirely due to the fast-rising interest rates and high prices. But as we enter into 2023, there’s a feeling of optimism in the air, and it comes in the form of declining prices, high rents, the return of migration, and tight vacancy rates.
Now, it seems, the fundamentals for a fabulous rental return are all in alignment once again, meaning buyers are most likely to invest again on a wide scale.
Investors will benefit
Declining property prices and rising rents are leading perceptive property investors to pounce on investment opportunities as they appear in the new year. As growing rental yields and smart investments that offer good cash flow become more readily available, investors with good financial backing can snap up the properties they have their eyes on without hesitation.
Though tenants will find the rental market is still very competitive – especially with the Australian government encouraging migration and the arrival international students in particular, property investors can rest assured they’ll be getting bang for their buck if they purchase an investment property in the current climate.
Rental yields in every major Aussie city
As a buyer’s agent and Sydney auction sniper, my observations tell me that we are coming to the tail end of the rising interest rate cycle. What that means to me is that investors will start actively looking for property investment opportunities, and feel more confident in their decision to buy for the purpose of selling.
The rental yield for the major cities is also looking great, suggesting rental returns will be quite prosperous throughout 2023. In Sydney, the median unit rental yield is 4.11% – up 23.2% compared to the year prior. Melbourne is a little higher at 4.51% rental yield – an increase of 18.4% based on figures collected this time last year. In Brisbane and Adelaide, the rental yield is upward of 5% while in Perth it is 6.32%.
If we take into consideration the above yields and the currently super low rental vacancy rate of 1.4% in Sydney and Melbourne as of December 2022, the expectation that yields will continue to increase into 2023 is highly likely, which will lead to more investments being snapped up quickly by eager buyers.
Prediction for interest rates 2023
Word on the street is that interest rates will peak in early 2023, along with the possibility of a population growth and continued housing shortage, leading to ideal investment conditions.
Though most buyers and investors know the best time to buy is in a declining market, many feel more secure in their decision to buy once prices start to climb again. And considering there will likely be a couple more interest rate hikes to come, I predict enormous growth due to investors feeling confident to step into the market either as a first-time investor or back in as a seasoned landlord with a new property plan.
Considering we have a rising population and a shortage of homes, investors should feel pretty excited about getting their hands on a lucrative investment property in 2023. We also have strong employment, which is a good indicator for investors as it means there is less chance of losing your rental return due to tenant job loss and financial hardship.
So if you’re a potential investor looking to locate your next purchase, Kitty & Miles can help! Our Australian buyers agency will set you on the right path with a serviceability check to see what you can afford, then help guide you in your search for the perfect investment property for your budget in a suburb that fits your criteria and gives you a great rental return.
Give our buyers agency a call on (02) 8916 6172 or email the Kitty & Miles team at firstname.lastname@example.org to get started on your investment property journey today!