There’s been a noticeable slowdown in rental growth, although it’s not yet clear whether this is an out-of-the-ordinary result or sign of a trend.
Across Australia, the median rent in the December 2023 quarter experienced 11.5% year-on-year growth but only 1.8% quarter-on-quarter growth, according to PropTrack.
PropTrack Senior Economist Angus Moore said the rental market remains very tight in many parts of the country, due to “strong demand and very low vacancy rates”.
However, as far as tenants are concerned, “there are some signs that rent growth may be slowing, and some relief on the horizon.”
Five pros of investing in property
- Price growth. The median Australian property price has experienced incredible growth over the decades.
- Rental income. As a property investor, you not only enjoy capital growth, you also collect rental income each month.
- Leverage. You can use the power of leverage to acquire a very valuable asset with a relatively small amount of money (e.g. a 20% deposit) – while being entitled to 100% of the capital growth and rental income.
- Negative gearing. If the costs of managing your investment property exceed your rental income, you may be able to use that loss to reduce your taxable income (although please see a tax professional for personal advice).
- Depreciation. Depending on your scenario, there’s a good chance you can further reduce your taxable income by claiming for depreciation of the home, as well as its fixtures and fittings (again, please get professional advice).
How to buy your first investment property
There are two main ways to become a property investor.
The first is to save the money you need to fund a deposit.
The second (if you’re already an owner-occupier) is to borrow against the equity in your home and use that money to fund the deposit. That way, you can potentially buy an investment property without contributing any of your own savings. Of course, both options come with pros and cons, as does property investing in general. It’s also worth noting that while property investing is a great option for a lot of Australians, it’s not suitable for everyone. Don’t hesitate to reach out if you’re wondering whether property investing is right for you. I’ll be happy to answer any questions you might have, to help you make an informed decision.
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