What is in store in 2012 for property investors?

Posted on December 5, 2011


Edgewater Apartments in Maribyrnong

Will 2012 be a good year to buy an investment property?

I’m sure this is a question that first time and seasoned investors alike have been asking their co-workers, their families and themselves. Throughout 2011, Victorian investors have, for the most part, been keeping their wallets zipped tight, with home owners leading the way in pushing demand for houses. Also, some developers have been postponing some larger projects until 2013.

But that was during 2011. With the ever increasing population and semi-stalled projects, could investors be the ones who push prices up by spending the cash they have no doubt saved up during the last year?

The people who are wanting to purchase an investment property already know its virtues. Only 1.4% of properties bought in Melbourne are worth less (negative equity) than what they were purchased for. Coupled with the fact that Melbourne is the most liveable city in the world, can give you peace of mind.

The Melbourne we all love ❤

So what could take away this peace of mind and make investors wary again? The looming shadow of a global economic recession, rising global debt (especially in Europe) and an economic slowdown (if that were possible) in China. Property prices fell for the first time this year in China, only last month, but this is viewed as a correction as prices have been rising at a very good clip over the past few years.

If any of these events were to take place, investors look for opportunities. Falling prices in Melbourne have also been viewed as a correction and many investors are seeing it as an opportunity to find a bargain. The one question that is on everyone’s mind however, is will prices continue to fall, or have they reached the bottom? (National house prices have fallen by 4.2 per cent over the year.)

Regardless, the property cycle will give investors the long-term gain they are looking for. With recent surveys proclaiming property a better investment than shares, increased demand for property by investors can be all it takes to push prices up.

Edit: Typical. As soon as I publish this, Enzo Raimondo (CEO of REIV) has his interview published online about predictions for 2012. Oh well, a little more info can be found here.

Sources: NAB Group Quarterly Australia Property survey
Smart Property Investment Magazine December 2011 Issue
Smart Property Investment Magazine November 2011 Issue

RP Data Equity Report
Sydney Morning Herald